Calcutta High Court
West Bengal State Electricity ... vs Union Of India & Ors on 12 May, 2009
Author: Soumitra Pal
Bench: Soumitra Pal
WP No. 399 of 2009
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
WEST BENGAL STATE ELECTRICITY TRANSMISSION COMPANY LIMITED ............Petitioner
Versus
UNION OF INDIA & ORS. Defendant/Respondent
For Plaintiff/Petitioner : Mr.N.K.Poddar, Sr. Advocate with Mr.A.Gupta,Adv For Defendant/Respondent : Mr.R.N.Banerjee,Advocate with Ms.S.Das De,Adv. BEFORE:
The Hon'ble JUSTICE SOUMITRA PAL Date : 12th May, 2009.
The Court : In this writ petition the West Bengal State Electricity Transmission Company Ltd., a Government of West Bengal Enterprise, the petitioner no.1 and its Director (Finance), the petitioner no.2, have challenged the order dated 16th April, 2009 passed by the Deputy Commissioner of Incom Tax, Circle-59, TDS, Kolkata, respondent no.4 directing all tax deductors responsible for making payment to the petitioner no.1 to deduct income tax at the rate of 3% by way of fees of professional 2 and technical services as referred to in Section 194J of the Income Tax Act, 1961 after deducting the income tax at source at the rate of 3% plus applicable surcharge and education cess on a sum of Rs.66,546.61 lakhs.
The facts as stated are that the main activity of the petitioner no.1 is to discharge all functions of planning and coordination relating to intra-state transmission system including load dispatch function to ensure development of efficient, coordinated and mechanical system of intra state transmission lines and to provide non-discriminatory open access to its transmission system on payment of transmission charges and surcharge thereon, as may be specified by the State Electricity Regulatory Commission constituted under sub-section 1 of Section 82 read with Section 2(64) of the Electricity Act, 2003. It has been stated that the West Bengal State Electricity Distribution Company Ltd, the respondent no.5, also a Government of West Bengal Enterprise, is a long term open access customer of the petitioner no.1. The respondent no.5 uses the standard mechanical transmission system and network, owned and operated by the petitioner no.1 for conveyance of electricity from the Central/State Power Station to its distribution system and pays transmission charges to the petitioner no.1 as per the tariff fixed by the West Bengal Electricity Regulatory Commission in accordance with the provisions of the Electricity Act, 2003. 3
According to the petitioner, in terms of the tariff order dated 23rd September, 2008 passed by WBERC a sum of Rs.66,546.61 lakhs was directed to be payable by the respondent no.5 to the petitioner no.1 by way of transmission charges for using its transmission system and network. Submission is such transmission charges for using its transmission system and network do not fall within the scope and ambit of section 194J and it does not come within the ambit of professional and technical services. Since it does not come within the scope of the said section the petitioner made an application in statutory Form No.13 prescribed under Rule 28 of the Income Tax Rules, 1962 read with Section 197(1) of the Act to the Assessing Officer, ITO, Ward 59(4), Kolkata requesting him not to deduct income tax. According to the petitioner, as the Assessing Officer, ITO, Ward No.59(4), Kolkata had no pecuniary jurisdiction to deal with the matter, it was transferred to the Deputy Commissioner of Income Tax, Circle 59 (TDS), Kolkata, respondent no.4 for disposal. It has been stated that the authorized representative of the petitioner personally appeared before the respondent no.4 for clarification and since no professional and technical services were rendered prayer was made for issuance of no deduction certificate. However, ignoring the plea, the order dated 16th April, 2009 was issued. Being aggrieved this writ petiton has been filed.
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Mr. Poddar, learned senior advocate reiterating the statements made in the writ petition submitted that in view of the judgements delivered in SKYCELL COMMUNICATIONS LTD. & ANR. vs. DEPUTY COMMISSIONER OF INCOME TAX & ORS (2001)251 ITR 53 (Madras) as well as the judgement in COMMISSIONER OF INCOME TAX vs. BHARTI CELLULAR LTD (2008) 175 Taxman 573 (Delhi), while carrying on transmission services provided by the petitioner as there is no human interface, it cannot come within the definition of professional and technical services under Section 194J of the Act. According to him, the authorities while passing the order impugned ought to have taken into consideration the technical aspect of the matter involved and as order has been passed without considering the same, it cannot be sustained. Submission is as the amount mentioned in the Schedule XI to Form 13 was due to mistake, it cannot empower the authorities to direct deduction of tax at source as has been done.
Learned advocate appearing on behalf of the respondents submits that since the petitioner in Schedule XI has specified an amount, the order passed on 16th April, 2009 is just and proper.
I find that the respondent no.4 had passed the order impugned without going into the fact whether the West Bengal State Electricity Transmission Company Ltd., a Government of West Bengal Enterprise, the petitioner no.1 is providing any professional and technical services. In my view, without going into the question 5 whether the petitioner is providing professional and technical services the respondents no.4 should not have come to the conclusion and should not have directed deduction of income tax at source at the rate of 3% plus applicable surcharge and education cess thereon. Therefore, the order dated 16th April, 2009 being Anenxure-P/1 to the writ petition passed by the respondent no.4 cannot be sustained and is, thus, set aside and quashed.
The respondent no.4 is directed to consider the matter afresh and shall pass a reasoned order in the light of the judgements in Skycell Communications Ltd.(supra) and Bharti Celular (supra) and other decisions, if any, cited by the parties, after giving an opportunity of hearing to the petitioner no.1 and the respondent no.5. At the time of hearing, the parties are at liberty to rely on the documents which have been annexed to the writ petition as well as the supplementary affidavit and the respondent no.4 in his reasoned order shall deal with the same.
The writ petition is allowed to the extent as indicated. I make it clear that I have not gone into the merits of the case and all points are left open to be dealt with by the respondent no.4.
Since the writ petition is disposed of at the admission stage without calling for filing of affidavits by the respondents, the allegations made in the petition are deemed not to have been admitted by them.
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No order as to costs.
Urgent photostat certified copy of this order, if applied for, be furnished to the appearing parties on priority basis.
(SOUMITRA PAL, J.) ssaha AR(C.R.)