ACIT vs. Epson India Pvt. Ltd (Karnataka High Court)

(i) The issues raised in the present writ petition have larger implications and connotations rather than deciding one case in peculiar facts. It is the unnecessary dogged approach of the Revenue to multiply the litigations in the Constitutional Courts, in turn wasting the precious public hours of time and unholy desire to become a litigant in the Constitutional Courts at Government costs, though there may be absolutely no justification for doing so. The efforts of the Revenue to prove their point that they had a good case on merits before the Constitutional Courts rather than respecting the orders passed by the statutorily created Tribunals not only shows lack of judicial discipline and hierarchical discipline which they should maintain, but treating the constitutional remedies as a vested right with them. The public functionaries and public officials cannot be allowed to spend Government money and public time much less public time of the Constitutional Courts just for the sake of proving their such fictional desires. First raising unsustainable, illegal and high pitched demands and then seeking to coercively recover the same even showing scant regard to the orders passed by highest Tribunal under the Act and for that invoking the writ jurisdiction to seek support to their such effort is nothing but an utterly irresponsible and unfair behaviour. It is the lack of such discipline with the Government Officials which turns Government Departments as a major litigant in the Constitutional Courts, in turn depriving the Constitutional Courts to devote their time for looking into the causes of poor people, which deserve their time and attention of the court more than such Government Departments.

(ii) Turning back to the facts of the present case, one can very clearly see that the entire demand raised by the authorities below prima facie was not even sustainable when once the controversy was apparently covered by the decision of the Delhi High Court and also the Bench of the Tribunal itself at Bengaluru, in favour of assessee. Therefore, the grant of absolute stay against the recovery would have been more appropriate in the circumstances, rather than calling upon the assessee to deposit a further sum of Rs.2.00 Crores. The ITAT, perhaps to serve the interest of the Revenue leaned to some extent in favour of Revenue for the time being subject to the final decision of the appeal itself and chose to pass this order, which brought to the kitty of Revenue more than a sum of Rs.5.00 Crores against a prima facie unsustainable demand of Rs.22.17 Crores, still the Revenue did not feel satisfied and instead of pursuing hearing of the appeal before the ITAT, chose to file the present writ petition before this Court which is absolutely misconceived remedy availed by them. Were these officials trying to prove their superior wisdom over the wisdom of Tribunal and already rendered precedent or overawe the Tribunal by the intervention of the higher constitutional courts, even on a misconceived petition?

(iii) In these circumstances, the reliance placed by the learned counsel for the petitioner-Revenue on the decision of the Hon’ble Supreme Court in the case of ASSISTANT COLLECTOR OF CENTRAL EXCISE v/s DUNLOP INDIA LIMITED is also equally without any merit. The Hon’ble Supreme Court while dealing with the case of Central Excise, an indirect taxation in which the incidence of tax is admittedly passed on by the assessee to the customers as against the direct taxes, like Income Tax in the present matter, where the demand is raised against the assessee and is required to be paid by them, was laying down certain guidelines for the Constitutional Courts while exercising writ jurisdiction under Articles 226/227 of the Constitution of India. The blanket interim orders in such indirect tax matters causes prejudice to the public interest and therefore should not be so granted blindly. The directions of Constitutional Courts to the assessees to furnish Bank Guarantees, which is nothing more than a piece of paper under which the Bank stands guarantee for the default of the assessee, the Governments cannot be expected to meet the public expenses out of their general funds and the Hon’ble Supreme Court expressed their concern about the public revenue of the public bodies like Municipal Corporation which have to incur huge day to day expenses for the public services rendered by them was laying down their guidelines.

(iv) The said guidelines laid down by the Hon’ble Supreme Court in Dunlop India case are not at all attached in the circumstances, in which the ITAT has passed the interim order, nor does it fortify the stand of petitioner-Revenue for having chosen to file this writ petition before this Court against the said interim order of Tribunal. The Income Tax Department can neither be compared with the Municipal Corporation nor do they deal with the indirect taxation. Therefore, both the basic parameters on which the observations of Hon’ble Supreme Court in DUNLOP case is relied upon by the learned counsel for the petitioner-revenue before this Court justifying the filing of the present writ petition are not applicable. It further shows a non-application of mind on the part of the Principal Commissioner, while sanctioning the filing of this writ petition before this Court.

(v) Seeking adjournments from the ITAT on the dates fixed by it for hearing the appeal itself which was apparently covered in favour of the respondent-assessee by the Departmental counsel adds insult to the injury. The irresponsible and uncoordinated manner in which authorities of the petitioner-Income Tax Department have displayed their dealing of the serious matters like invoking the constitutional remedy has prompted this Court to take up this matter to deprecate strongly such tendency on the part of the Revenue authorities and other Government Departments, who choose to avail constitutional remedies for not so good reasons at all, wasting the public money and court’s time taken even to hear and reject such frivolous writ petitions.

(vi) Irrespective of the policy decisions taken at the highest levels of Government in the form of National Litigation Policy and CBDT Instructions restricting these authorities not to invoke superior courts’ even regular appellate jurisdiction with the small stakes and petitions not involving larger and important questions of law which require interpretation by the constitutional courts, the individual officers at their own lower level continue to defeat these avowed policies, as is reflected in the present case.

(vii) Therefore, in the considered opinion of this Court, the present writ petition deserves to be dismissed with exemplary costs on the officials involved in filing of this writ petition. The costs are quantified at Rs.50,000/- to be paid by each of the Principal Commissioner of Income Tax-2, Bengaluru Mr.Yogesh Pande, who has filed the response Affidavit justifying the filing of this writ petition, the Principal Commissioner who sanctioned filing of this writ petition and the Assistant Commissioner of Income Tax, Circle-2 (1)(2), Bengaluru Ms.Preeth Ganapathy, who has filed this writ petition and the said costs will be paid by these officials from their personal resources and not from the Government fund within a period of two months from today to the Legal Services Authority of the State, to be utilized for the cause of poor litigants.

Cases referred:

ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR, WEST BENGAL v/s DUNLOP INDIA LTD. AND OTHERS reported in (1985) 1 SCC 260 has

CIT v/s CANON INDIA PVT. LTD. reported in 374 ITR 118 and

ESSILOR INDIA PRIVATE LIMITED v/s DCIT (ITAT)