Vedanta Limited(Successor Of Sterlite Industries (India) Ltd.,) v. The Deputy Commissioner Of Income Tax (International Taxation),Room

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT Reserved on : 30.11.2022 Pronounced on : 24.02.2023 CORAM THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ W.P.(MD).Nos.11831 of 2019, 7939 of 2022, 8269, 8270 of 2017, 8344 and 8351 of 2021 and W.M.P.(MD).Nos.6322,6324, 6325, 6321 of 2021, 6338 of 2017, 5956, 5958 of 2022, 8950, 8951 of 2019 and 6337 of 2017 W.P.(MD).No.11831 of 2019 Vedanta Limited(Successor of Sterlite Industries (India) Ltd.,)No.20, Sesa Ghor, EDC Complex,Patto, Panaji, Goa 403 001Represented by Authorised Signatory ... Petitioner Vs. 1.The Deputy Commissioner of Income Tax (International Taxation),Room No.207,VP Rathinasamy Nadar Road,C.R.Building, Bibikulam,Madurai 625 002. 2.The Commissioner of Income Tax (International Taxation) 4th Floor,BSNL Building, Tower I,Greams Road, Chennai 600 006. ... Respondents W.P.(MD).Nos.11831 of 2019 etc., batch Prayer: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari, quashing the order dated 28.03.2019 for AY 2012-13 passed by the respondent No.1. For Petitioner : Mr.R.V.Easwar Senior Counsel Assisted by Mr.Rohit Garg for Mr.V.Meenakshisundaram For Respondents : Mr.N.Dilip KumarSenior Standing Counsel COMMON ORDER Two questions arise for consideration in this batch of writ petitions viz.,a. Whether in the absence of limitation being prescribed for the purpose of passing orders under Section 201(1) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) deeming a person to be an "assessee in default" in view of failure to deduct the whole or any part of the tax in relation to payments made to a non-resident it is permissible for the Court to determine the limitationfor passing such orders. b. If the answer to the above question is in the affirmative, a further question arises as to what would constitute reasonable period for passing such orders. W.P.(MD).Nos.11831 of 2019 etc., batch 2. Brief Facts: a. At the outset, it may be relevant to note that both the counsel for the Petitioner and the Respondents would submit that the facts and issues that arise for consideration are common in all the six writ petitions. The petitioner in this batch of writ petitions viz., Vedanta Limited is the successor entity of Sterlite Industries (India) Ltd. The petitioner company is engaged in the business of mining and exploration of metals and exploration of oil and natural gas. For the relevant period viz., Financial Years 2009-2010 to 2014-2015, the petitioner company entered into two agreements with Vedanta Resources Public Limited Company (hereinafter referred to as "VR PLC") viz., Consultancy Agreement and Representative Office Agreement on 29.03.2005. Under the said agreement “VR PLC” provided legal advice, marketing and IT support to the petitioner. In lieu of these services, “VR PLC” was remunerated on a cost-plus basis. The remuneration paid by the petitioner was disclosed through Form No.15CA/CB filed for the relevant financial year to the Respondents/Income Tax Department. “b. VR PLC” being a non-resident, petitioner was under an obligation to deduct tax at source on payments made to “VR PLC”. Petitioner failed to deduct tax at source. Failure to discharge the obligation to deduct taxes at source would result in the petitioner being deemed to be an “assessee in default” in terms of Section 201(1) of the Act. There is no limitation prescribed W.P.(MD).Nos.11831 of 2019 etc., batch for passing an order under Section 201(1) of the Act, deeming a person to be an “assessee in default” for failure to deduct tax at source (hereinafter referred to as “TDS”) on payments to non-residents. “b. VR PLC” being a non-resident, petitioner was under an obligation to deduct tax at source on payments made to “VR PLC”. Petitioner failed to deduct tax at source. Failure to discharge the obligation to deduct taxes at source would result in the petitioner being deemed to be an “assessee in default” in terms of Section 201(1) of the Act. There is no limitation prescribed W.P.(MD).Nos.11831 of 2019 etc., batch for passing an order under Section 201(1) of the Act, deeming a person to be an “assessee in default” for failure to deduct tax at source (hereinafter referred to as “TDS”) on payments to non-residents. c. The respondent issued Show Cause Notice under Section 201(1) of the Act for failure on the part of the petitioner to deduct TDS in respect of the payments made to VR PLC/non-resident by the petitioner for the assessment years 2010-11 to 2015-16. Thereafter, the respondent passed the impugned orders under Section 201(1) of the Act for the Financial years 2009-2010 to 2014-2015 i.e, assessment years 2010-11 to 2015-16, deeming the petitioner to be an “assessee in default” and levying consequential interest under Section 201 (1-A) of the Act. 3. The ground of challenge in these writ petitions is limited to impugned proceedings under Section 201(1) of the Act being barred by limitation on the premise that it is made beyond “reasonable period”. The year-wise summary of the relevant dates are as follows: W.P.(MD).Nos.11831 of 2019 etc., batch 4. Case of the petitioner: a) Shri.R.V.Easwar, learned Senior Advocate appearing for the petitioner would submit that all the six impugned orders have been passed under Section 201(1) of the Act, treating the petitioner as “assessee in default”, for failure to deduct tax at source with regard to payments made to “VR PLC” towards Consultancy Agreement and Representative Office Agreement under which legal advice, marketing and IT support was provided to the petitioner. The impugned orders also levied interest in terms of Section 201(1-A) of the Act. There is no limitation prescribed under Section 201 of the Act to pass orders deeming a person to be an “assessee in default” for failure to deduct TDS on payments to non-residents. In the absence of a limitation prescribed /stipulated under the Act for passing orders, the same ought to be done within a reasonable period. It has been held that four years would constitute a reasonable period for passing orders under Section 201 (1) of the Act, in case of failure to deduct tax at source in respect of payments to non-residents, by various High Courts, some of them being:- i. Commissioner of Income-Tax v. NHK Japan Broadcasting Corporation, 2008 (305) ITR 137 (Delhi) ii. Bharti Airtel Ltd. v. UOI, (2017) 291 CTR 254, iii. Vodafone Essar Mobile Services Limited v. Union of India, W.P.(MD).Nos.11831 of 2019 etc., batch (2016) 385 ITR 436 (Del). iv. CIT vs. Hutchision Essar Telecome Ltd., (2010) 323 ITR 230 (Delhi) v. Director of Income Tax vs. Mahindra and Mahindra Limited [2014] 365ITR 560 (Bom. ) vi. CIT v. U.B. Electronic Instruments Ltd 92015) 371 ITR 314 (AP) vii. CIT v. Bharat Hotels Ltd (2016) 384 ITR 77 (Kar.) viii. CIT (TDS) v. Anagram Wellington Assets Management Co. Ltd (2016) 389 ITR 654 (Guj.) Relying upon the above judgments, it was submitted that the reasonable period for passing orders deeming a person to be an “assessee in default” for failure to deduct TDS on payments to non-residents is four years from the end of the financial year in which payment is made or credit is given. The impugned proceedings are barred by limitation and a nullity inasmuch as it has been passed beyond 4 years from the end of the financial year in which payment is made or credit is given. b) Originally, there was no provision prescribing any limitation for passing an order under Section 201(1) of the Act deeming a person to be an “assessee in default”, for failure to deduct TDS on payments to both residents as well as non-residents. Subsequently, sub-section (3) to Section 201 of the Relying upon the above judgments, it was submitted that the reasonable period for passing orders deeming a person to be an “assessee in default” for failure to deduct TDS on payments to non-residents is four years from the end of the financial year in which payment is made or credit is given. The impugned proceedings are barred by limitation and a nullity inasmuch as it has been passed beyond 4 years from the end of the financial year in which payment is made or credit is given. b) Originally, there was no provision prescribing any limitation for passing an order under Section 201(1) of the Act deeming a person to be an “assessee in default”, for failure to deduct TDS on payments to both residents as well as non-residents. Subsequently, sub-section (3) to Section 201 of the W.P.(MD).Nos.11831 of 2019 etc., batch Act was inserted vide Finance (No.2) Act, 2009 w.e.f. 01.04.2010 providing that order under Section 201(1) of the Act, shall be passed deeming a person to be an “assessee in default” for failure to deduct TDS on payments to residents within four years from the end of the financial year in which payment is made or credit is given. Thereafter, such limitation was extended vide Finance Act, 2012, w.r.e.f. 01.04.2010 to six years and later to seven years from the end of the financial year in which payment is made or credit is given, vide Finance (No.2) Act, 2014 w.e.f. From 01.10.2014. Despite successive amendments made post 2009 fixing/stipulating and extending limitation for passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct TDS on payments to residents, Parliament has chosen not to prescribe any limitation deeming a person to be an “assessee in default” for failure to deduct TDS on payments made to non-residents. It was thus submitted that Parliament must be understood to have intended not to disturb the period of four years determined by Courts in the judgments referred above as constituting reasonable period for the purpose of passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents. The impugned orders having been passed beyond four years from the end of the Financial Year in which payment is made or credit is given is thus beyond W.P.(MD).Nos.11831 of 2019 etc., batch reasonable period and thus barred by limitation and a nullity. 5. Case of the Respondents: It was submitted by Shri. Dilip Kumar, learned Senior Standing Counsel for the Respondents that the writ petitions ought not to be entertained inasmuch as the petitioner has an alternative remedy under Section 246 of the Act. 5.1. In any view, the submission of the petitioner that the impugned orders are barred by limitation needs to be rejected for the following reasons: a) It is not permissible to read reasonable time/period when the Legislature has chosen not to stipulate/ prescribe, limitation for passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents. b) Assuming that orders under Section 201 of the Act ought to be made within reasonable time/ period it cannot be less than the period prescribed in relation to residents. c) Mere filing of Form 15CA and 15CB by the petitioner would not amount to compliance of the Act. The conclusions arrived by the Transfer Pricing Officer related to Arm's Length price of transaction with respect to Cost Recovery and Corporate Guarantee, whereas the present proceedings are on foreign remittances made in the nature of fees for Technical Services and W.P.(MD).Nos.11831 of 2019 etc., batch applicability of TDS on foreign remittance transaction. d) The Doctrine of "Reasonable Time Period" will not attract to an action b) Assuming that orders under Section 201 of the Act ought to be made within reasonable time/ period it cannot be less than the period prescribed in relation to residents. c) Mere filing of Form 15CA and 15CB by the petitioner would not amount to compliance of the Act. The conclusions arrived by the Transfer Pricing Officer related to Arm's Length price of transaction with respect to Cost Recovery and Corporate Guarantee, whereas the present proceedings are on foreign remittances made in the nature of fees for Technical Services and W.P.(MD).Nos.11831 of 2019 etc., batch applicability of TDS on foreign remittance transaction. d) The Doctrine of "Reasonable Time Period" will not attract to an action under Section 201(1) of the Act as no right gets vested in favour of the petitioner/assessee and it is only an enabling provision authorizing the Revenue to seek compensation for the wrongful loss caused to the Revenue by failure of the assessee to deduct tax upon payment made to the non-resident. 6. Discussion: To resolve the above controversy, it may be necessary to trace the legislative and judicial history. i) Section 201 of the Act, as it originally stood did not prescribe any limitation for passing an order under Section 201 of the Act. ii) Subsequently, vide Finance (No.2) Act, 2009 w.e.f. 01.04.2010 sub- section (3) to Section 201 of the Act was inserted thereby providing limitation for passing an order under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to residents.The relevant provision reads as under:- "(3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure deduct the whole or any part of the tax to from a person resident in India, at any time after the expiry of (i) two years from the end of the financial year in which the statement is filed in a case where the statement referred to in section 200 has been filed; (ii) four years from the end of the financial year in which payment is W.P.(MD).Nos.11831 of 2019 etc., batch made or credit is given, in any other case : Provided that such order for a financial year commencing on or before the 1st day of April, 2007 may be passed any time on or before the 31st day of March, 2011" 6.1. Thereafter, vide Finance Act, 2012, the limitation of four years was extended to six years for passing orders deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to residents with retrospective effect from 01.04.2010. 6.2. Subsequently, another amendment was brought in vide Finance (No.2) Act, 2014, whereby limitation was further extended from six years to seven years in sub-section (3) to Section 201 of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to residents. The amended provision reads as under: "(3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given." From the above, it is clear that prior to the year 2009, there was no time limit prescribed for passing an order under Section 201(1) of the Act irrespective of whether or not the recipient of the payment is a resident or non-resident. Importantly, even after successive amendments made post the year 2009 introducing and extending limitation for passing orders under Section W.P.(MD).Nos.11831 of 2019 etc., batch 201(1) of the Act, deeming a person to be an “assessee in default” for failure to deduct TDS on payments to residents, no limitation was however prescribed insofar as passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents. From the above, it is clear that prior to the year 2009, there was no time limit prescribed for passing an order under Section 201(1) of the Act irrespective of whether or not the recipient of the payment is a resident or non-resident. Importantly, even after successive amendments made post the year 2009 introducing and extending limitation for passing orders under Section W.P.(MD).Nos.11831 of 2019 etc., batch 201(1) of the Act, deeming a person to be an “assessee in default” for failure to deduct TDS on payments to residents, no limitation was however prescribed insofar as passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents. 7. It is trite law that in the absence of statutory prescription of limitation for passing an order, the same ought to be passed within a reasonable period. In this regard, it may be relevant to refer to the following judgments: i. S.B. Gurbaksh Singh v. Union of India (1976) 2 SCC 181: "15... It may well be that for an exercise of the suo motu power of revision also, the revisional authority has to initiate the proceeding within a reasonable time. Any unreasonable delay in exercise may affect its validity. What isa reasonable time, however, will depend upon the facts of each case.” ii. J.M. Baxi & CO v. UOI – 2016 (336) ELT 285 (Mad): "17. .. Though the statute does not prescribe a period of limitation forpassing an order of adjudication, the law is well settled that anything in respect ofwhich no period of limitation is prescribed, should be done at least within areasonable time. What is reasonable time, would depend upon the facts andcircumstances of each case...." iii. Santosh- kumar Shivgonda Patil v. Balasaheb Tukaram Shevale, 2009 (9)SCC 352: “Thus, we can safely say that the law is well settled that when there is no period of limitation prescribed for taking action under any provision of law, the sameshould be taken within a reasonable period, which would depend upon the facts ofthe case and the provisions of the Act under which action has to be taken. This is necessary, also because if any right has accrued in favour of a person or party by passage of time, same cannot be unsettled by a statutory authority at any time or W.P.(MD).Nos.11831 of 2019 etc., batch after an indefinite period, as the same would amount to unsettling a settled position, which can only be done within a reasonable period, and not at any time in the future after an unlimited period.” iv. J. Sheik Parith v. Commissioner of Customs reported in 2020 SCC OnLineMad 15651: "As regards what would construe a reasonable period for completion of proceedings where no time period or limitation had been set out in the relevant statute, Courts have held that such proceedings should be completed within a reasonable period, also taking note of the scheme of limitation prescribed in other provisions in that statute, where relevant. (emphasis supplied) W.P.(MD).Nos.11831 of 2019 etc., batch after an indefinite period, as the same would amount to unsettling a settled position, which can only be done within a reasonable period, and not at any time in the future after an unlimited period.” iv. J. Sheik Parith v. Commissioner of Customs reported in 2020 SCC OnLineMad 15651: "As regards what would construe a reasonable period for completion of proceedings where no time period or limitation had been set out in the relevant statute, Courts have held that such proceedings should be completed within a reasonable period, also taking note of the scheme of limitation prescribed in other provisions in that statute, where relevant. (emphasis supplied) 8. It is thus clear that orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents, must be passed within a reasonable period in the absence of any limitation provided under the Act. The question that now arises for consideration in this batch of writ petitions is whether this Court in exercise of its jurisdiction under Article 226 of the Constitution of India can determine as to what would constitute reasonable period for passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents or should it be left to the assessing authorities to decide in individual cases depending on the facts of each case. To answer the above question it would be useful to refer to the judgment of the Hon'ble Supreme Court in the case of State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd., reported https://www.mhc.tn.gov.in/judis12/38 W.P.(MD).Nos.11831 of 2019 etc., batch in (2007) 11 SCC 363, wherein question arose as to what would constitute a "reasonable period" for exercising revisional jurisdiction in the absence of limitation provided under the Act and whether it could be left to the statutory authorities to decide the same. It was held the authorities under the Act being creatures of the statute would not be able to determine the same. Thus, it is for this Court in exercise of its plenary jurisdiction under Article 226 of the Constitution of India, to determine what would constitute reasonable period for passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents. In this regard, it may be relevant to refer to the judgment of the Hon'ble Supreme Court in Bhatinda[1], wherein it was held as under: "17. A bare reading of Section 21 of the Act would reveal that although no period of limitation has been prescribed therefore, the same would not mean that the suo motu power can be exercised at any time. 18. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors. 19........... Reasonable period, keeping in view the discussions made hereinbefore, must be found out from the statutory scheme. ........ 25. We are, however, not oblivious of the fact that ordinarily the writ court would not entertain the writ application questioning validity of a notice only, particularly, when the writ petitioner would have an effective remedy under the Act itself. This case, however, poses a different question. Therevisional authority, being a creature of the statute, while exercising itsrevisional jurisdiction, would not be able to determine as to what would be the 1State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd., (2007) 11 SCC 363 W.P.(MD).Nos.11831 of 2019 etc., batch 19........... Reasonable period, keeping in view the discussions made hereinbefore, must be found out from the statutory scheme. ........ 25. We are, however, not oblivious of the fact that ordinarily the writ court would not entertain the writ application questioning validity of a notice only, particularly, when the writ petitioner would have an effective remedy under the Act itself. This case, however, poses a different question. Therevisional authority, being a creature of the statute, while exercising itsrevisional jurisdiction, would not be able to determine as to what would be the 1State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd., (2007) 11 SCC 363 W.P.(MD).Nos.11831 of 2019 etc., batch reasonable period for exercising the revisional jurisdiction in terms of Section21(1) of the Act. The High Court, furthermore in its judgment, has referred tosome binding precedents which have been operating in the field. The HighCourt, therefore, cannot be said to have committed any jurisdictional error inpassing the impugned judgment. (emphasis supplied) 8.1. It is for this reason, that these writ petitions are entertained albeit for the limited purpose of examining the question as to what would constitute reasonable period for the purpose of passing order under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents. 8.2. The second reason which necessitates fixing a reasonable period in the absence of legislative prescription is also in view of the fact that, in fiscal matters, certainty and finality are important and assessee’s cannot be put in a situation where the liability would remain hanging on his head for all times to come. 8.3. Yet another reason for entertaining these writ petitions is the fact that different views had been expressed by different High Courts, on this issue while some High Courts had proceeded to determine the reasonable period for passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct TDS on payments to non-residents to be four years. Few other Courts have taken a view that reasonable period W.P.(MD).Nos.11831 of 2019 etc., batchcannot be fixed but would depend on the facts of each case. The cleavage of judicial opinion is another compelling factor for entertaining the present writ petitions. For the above reasons, it is for this Court to determine as to what would constitute reasonable period for passing orders under Section 201(1) of the Act, deeming a person to be an “assessee in default” for failure to deduct TDS on payments to non-residents in exercise of its jurisdiction under Article 226 of the Constitution of India. 9. Precedents on the issue: The question as to what would constitute a "reasonable period" for the purpose of passing an order under Section 201(1) of the Act, deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents was considered on more than one occasion by various High Courts and as stated above different views have been expressed. In the following judgments, it has been held that four years from the end of the relevant Financial Year would be a reasonable period for the purpose of passing orders under Section 201 of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents viz., i. Commissioner of Income-Tax v. NHK Japan Broadcasting W.P.(MD).Nos.11831 of 2019 etc., batch Corporation, 2008 (305) ITR 137 (Delhi) ii. Bharti Airtel Ltd. v. UOI, (2017) 291 CTR 254, iii. Vodafone Essar Mobile Services Limited v. Union of India, (2016) 385 ITR 436 (Del). iv. CIT vs. Hutchision Essar Telecome Ltd., (2010) 323 ITR 230 (Delhi) v. Director of Income Tax vs. Mahindra and Mahindra Limited [2014] 365ITR 560 (Bom ) vi. CIT v. U.B. Electronic Instruments Ltd 92015) 371 ITR 314 (AP) i. Commissioner of Income-Tax v. NHK Japan Broadcasting W.P.(MD).Nos.11831 of 2019 etc., batch Corporation, 2008 (305) ITR 137 (Delhi) ii. Bharti Airtel Ltd. v. UOI, (2017) 291 CTR 254, iii. Vodafone Essar Mobile Services Limited v. Union of India, (2016) 385 ITR 436 (Del). iv. CIT vs. Hutchision Essar Telecome Ltd., (2010) 323 ITR 230 (Delhi) v. Director of Income Tax vs. Mahindra and Mahindra Limited [2014] 365ITR 560 (Bom ) vi. CIT v. U.B. Electronic Instruments Ltd 92015) 371 ITR 314 (AP) vii. CIT v. Bharat Hotels Ltd (2016) 384 ITR 77 (kar) viii. CIT (TDS) v. Anagram Wellington Assets Management Co. Ltd (2016) 389 ITR 654 (Guj). 9.1. It may also be relevant to note that the SLP filed by the Revenue against the judgment of the Delhi High Court in Vodafone Essar, was dismissed by the Hon'ble Supreme Court. 9.2. On the other hand while dealing with the question as to what would constitute “reasonable period” for the purpose of passing orders under Section 201(1) of the Act, deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents, it was held that one cannot read limitation in the absence of any prescription by the W.P.(MD).Nos.11831 of 2019 etc., batchlegislature and what would constitute a reasonable period ought to be decided on the facts of each case in the following judgments: a. Mass Awash (P) Ltd. v. CIT, (2017) 397 ITR 305 (Allahabad) b. Bhura Exports Ltd. v. Income-tax, (2014) 365 ITR 548 (Calcutta) c. Income Tax v. H.M.T. Ltd., (2012) 340 ITR 219 (Punjab and Haryana) 9.3.Both sets of cases referred above dealt with periods prior to 2010 i.e., when no limitation was stipulated for passing orders under Section 201(1) of the Act in respect of default in deducting TDS in respect of payments made to residents as well as non-residents. Though in Bharti Airtel one of the Financial years under challenge related to the Financial year 2010-2011 i.e., after introduction of limitation for residents. The Delhi High Court in Bharti Airtel followed the judgments in the case of NHK Japan and Vodafone Essar, both of which were concerned with orders passed under Section 201 of the Act in relation to periods prior to introduction of limitation even in respect of residents. The impact of the amendment introducing limitation vide sub-section (3) to Section 201 of the Act albeit with reference to residents and the subsequent amendments made thereto, in determining the limitation for passing orders deeming a person to be an “assessee in default” for failure to deduct W.P.(MD).Nos.11831 of 2019 etc., batch TDS on payments to non-residents was not examined. Thus the judgment of the Delhi High Court in Bharti Airtel case would not constitute a precedent in respect of the issue on hand i.e., what would constitute reasonable period for passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents in view of the “Doctrine of sub-silentio" which has been explained by the Hon'ble Supreme Court in the case of Municipal Corpn. of Delhi v. Gurnam Kaur, reported in (1989) 1 SCC 101, the relevant portions of the order readsas under: "11 ........Professor P.J. Fitzgerald, editor of the Salmond on Jurisprudence, 12th Edn. explains the concept of sub silentio at p. 153 in these words: TDS on payments to non-residents was not examined. Thus the judgment of the Delhi High Court in Bharti Airtel case would not constitute a precedent in respect of the issue on hand i.e., what would constitute reasonable period for passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents in view of the “Doctrine of sub-silentio" which has been explained by the Hon'ble Supreme Court in the case of Municipal Corpn. of Delhi v. Gurnam Kaur, reported in (1989) 1 SCC 101, the relevant portions of the order readsas under: "11 ........Professor P.J. Fitzgerald, editor of the Salmond on Jurisprudence, 12th Edn. explains the concept of sub silentio at p. 153 in these words: A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio." 9.4.From the judgments referred above, it would be clear that four years was determined as a reasonable period for the purpose of passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents prior to W.P.(MD).Nos.11831 of 2019 etc., batchintroduction of limitation for passing orders deeming a person to be an “assessee in default” for failure to deduct TDS on payments to both residents as well as non-residents. Importantly, after the judgment of the Delhi High Court in NHK Japan, Parliament had videFinance (No.2) Act, 2009 inserted sub- section (3) to Section 201 of the Act w.e.f. 01.04.2010 thereby providing limitation of 4 years for passing an order under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to resident.Thus, the limitation of 4 years which was determined judicially to constitute a reasonable period for deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents was granted legislative recognition by incorporation or adoption of the same for passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to residents. However soon thereaftervide Finance Act, 2012, the limitation of four years was extended to six years w.r.e.f. 01.04.2010. Subsequently, another amendment was brought in vide Finance (No.2) Act, 2014 whereby the limitation was further extended from six to seven years. W.P.(MD).Nos.11831 of 2019 etc., batch W.P.(MD).Nos.11831 of 2019 etc., batch 10. It is the case of the petitioner that the Courts having determined the reasonable period for passing orders under Section 201(1) of the Act at four years deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents and Parliament having not stipulated any limitation for passing orders under Section 201(1) of the Act, deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents. The above limitation determined by various High Courts should continue to govern in the absence of any limitation having been provided deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to non-residents. On the other hand, it is the case of the revenue that in the absence of any limitation having been provided for passing orders under Section 201 of the Act for failure to deduct tax in respect of payments to non-residents it is impermissible to fix any limitation, in any view, the limitation should not be less than the period provided for residents. 11. Keeping in view the above background, I am of the opinion that the submission of the respondents that the limitation for passing orders under Section 201(1) of the Act with regard to non-residents must not be less than what is provided for residents, has merit for the following reasons viz., W.P.(MD).Nos.11831 of 2019 etc., batch I. Plea of Parity in treatment in fixing limitation for passing orders underSection 201(1) of the Act between residents and non-residents: It is the case of the revenue that in the absence of any limitation having been provided for passing orders under Section 201 of the Act for failure to deduct tax in respect of payments to non-residents it is impermissible to fix any limitation, in any view the limitation should not be less than the period provided for residents. Interestingly, the assessee before the Delhi High Court i.e., in Bharti Airtel case also submitted that there is a need for parity in treatment between residents and non-residents in respect of the period within which orders must be passed under Section 201(1) of the Act. This Court is conscious of the fact that the above statement/submission would not bind the petitioner nor the revenue but is being referred only to show that both the revenue and assessee's have sought for parity in treatment between residents and non-residents insofar as limitation for passing orders under Section 201(1) of the Act. The extracts from orders of assessments and written submissions filed by the revenue and the recording of submission in Bharti Airtel case is relevant in this regard: i) Order of Assessment: "3. Hence, the reasonable time period as of now is seven years from the end of the financial year in which the payment is made to non-residents as well for the purpose of passing order u/s 201 (1) of the Act, even though the Act does not prescribe any time limit for initiationof such action in relation to non-residents''[2] ii) Written Submission of the Respondents: '' Reasonable time period if held attrached even for payment to non-resident cannot mean to be any period less than what is provided under Section 201 of the Act in regard to payments made to residents'' The observation in the case of Bharati Airtel vs. Union of India, reads as under: ''At all material times, payments made to residents and non residents were treated alike'' II. The object behind TDS is common for both residents as well as non-residents: The object behind any TDS provisions be it with reference to residents/non-residents is to secure the taxes or a portion of it at the earliest. TDS provisions are useful in two ways. They ensure that the Revenue Department can collect taxes in advance, that is, before the final assessment and '' Reasonable time period if held attrached even for payment to non-resident cannot mean to be any period less than what is provided under Section 201 of the Act in regard to payments made to residents'' The observation in the case of Bharati Airtel vs. Union of India, reads as under: ''At all material times, payments made to residents and non residents were treated alike'' II. The object behind TDS is common for both residents as well as non-residents: The object behind any TDS provisions be it with reference to residents/non-residents is to secure the taxes or a portion of it at the earliest. TDS provisions are useful in two ways. They ensure that the Revenue Department can collect taxes in advance, that is, before the final assessment and this is helpful in meeting their urgent requirement for money. TDS provisions are essentially meant to ensure easier collection of taxes. The logic is that certain sums, though taxable in the hands of the payee might escape tax because of problems in enforcement machinery in the case of payees, the problem becomes more acute where the payee is a non-resident. Hence, those sums should be deducted by the payer, from whom they can be recovered more 2at Page 3 paragraph 3 of Assessment order W.P.(MD).Nos.11831 of 2019 etc., batcheasily.Chapter XVII provides for collection and recovery of tax under the Act. These provisions are enacted for the purpose of easy collection of taxes and to avoid evasion thereof by suitably tailoring the account.[3] The object of TDS being common for payments both to residents and non-residents, I am of the opinion that the limitation prescribed by the legislature to pass orders under Section 201 (1) of the Act, deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to residents should be applied in respect of passing orders deeming a person to be an “assessee in default” for failure to deduct tax at source even in respect of payments to non-residents. III. Presumption of Reasonableness vis-a-vis legislative action: The third reason which compels me to think that the limitation prescribed vide amendments made to Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to residents must be applied to non-residents as constituting a “reasonable period” for passing orders under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct TDS on payments to non- 3 United Breweries Ltd. vs. Assistant Commissioner of Income Tax and Ors., [1995 ]211ITR 256 (KAR);Commissioner of Income Tax, New Delhi vs. Eli Lilly and Company (India) Pvt. Ltd. [2009 ]312 ITR 225 (SC);Vodafone Essar Mobile Services Limited v. Union of India, (2016) 385 ITR 436 (Del);Commissioner of Income Tax, New Delhi vs. Eli Lilly and Company (India) Pvt. Ltd. [2009 ]312 ITR 225 (SC);Vodafone Essar Mobile Services Limited v. Union of India, (2016) 385 ITR 436 (Del); Transmission Corporation of A.P. Ltd. v. CIT, [1999] 239 ITR 587 at 594. W.P.(MD).Nos.11831 of 2019 etc., batch residents, is in view of the fact that legislative actions are presumed to be reasonable and there is also a presumption that the legislature enacts laws that are directed to problems which are made manifest by experience and that legislature enact laws which they consider to be reasonable for the purpose for which they are enacted. In this regard, it may be relevant to refer to the following judgments: i) Hamdard Dawakhana v. Union of India (AIR 1960 SC 554): Transmission Corporation of A.P. Ltd. v. CIT, [1999] 239 ITR 587 at 594. W.P.(MD).Nos.11831 of 2019 etc., batch residents, is in view of the fact that legislative actions are presumed to be reasonable and there is also a presumption that the legislature enacts laws that are directed to problems which are made manifest by experience and that legislature enact laws which they consider to be reasonable for the purpose for which they are enacted. In this regard, it may be relevant to refer to the following judgments: i) Hamdard Dawakhana v. Union of India (AIR 1960 SC 554): ''Another principle which has to be borne in mind in examining the constitutionality of a statute is that it must be assumed that the legislature understands and appreciates the need of the people and the laws it enacts are directed to problemswhich are made manifest by experience and that the elected representativesassembled in a legislature enact laws which they consider to be reasonable for thepurpose for which they are enacted. Presumption is, therefore, in favour of the constitutionality of an enactment.'' ii) Bharat Petroleum Corpn. Ltd. v. Maddula Ratnavalli, (2007) 6 SCC 81 22.Parliament moreover is presumed to have enacted a reasonable statute [see Breyer, Stephen (2005): Active Liberty: Interpreting Our Democratic Constitution, Knopf (Chapter on Statutory Interpretation, p. 99 for “Reasonable Legislator Presumption”]. iii) Delhi Subordinate Services Selection Board v. Praveen Kumar, (2017) 11 SCC 283: ''Presumption of constitutionality and reasonableness ordinarily attached to legislative enactment, applies to statutory rules also. In P.V. Mani v. Union of India [P.V. Mani v. Union of India, 1985 SCC OnLine Ker 92 : AIR 1986 Ker 86] a Full Bench of the Kerala High Court observed as under: (SCC OnLine Ker para 18) W.P.(MD).Nos.11831 of 2019 etc., batch iv) Orient Paper and Industries Ltd. v. State of Orissa, 1991 Supp (1) SCC 81 at page 102: "34. ... These measures are undoubtedly well within the province of the legislature and reasonably and rationally adapted to the end sought. The legislative findings and the subject matter of the legislation; the area of its operation; its purpose and intent; its legislative history; the objects and reasons for the amendments made consequent on judicial decisions; the vice that is sought to be remedied; the legislative response to compelling necessities; all this lends support to the presumption in favour ofreasonableness, legality and constitutionality of the legislative actions inquestion... (emphasis supplied) Reasonableness forms the foundation on which Courts would determine limitation in the absence of a legislative prescription for passing orders / taking action. The period prescribed under Section 201 (3) of the Act with regard to residents would constitute reasonable period inasmuch as there is a presumption of reasonableness with regard to legislative action as would be clear from the judgments referred above. The above limitation is thus adopted/applied in determining what would constitute reasonable period for passing orders under Section 201(1) of the Act even in respect of non-residents. Yet another reason for adopting/applying the period prescribed for passing orders under Section 201(1) of the Act with regard to payment to residents to non-residents is in view of the position that while determining as to whatwould constitute a reasonable period for passing an order deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments W.P.(MD).Nos.11831 of 2019 etc., batchto non-residents, the same ought to be determined keeping the legislative Scheme in mind. If the above exercise is carried out, the most proximate if not analgous provision would be Section 201(3) of the Act which prescribes a limitation for passing an order under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to residents. The legislature having prescribed the limitation for passing order under Section 201(1) of the Act deeming a person to be an “assessee in default” for failure to deduct tax at source in respect of payments to residents, the above prescription of limitation is instructive and would serve as a guide to the Courts in determining what would constitute a reasonable period under Section 201(1) of the Act deeming a person to be an “assessee in defa