M/s Tamil Nadu State Marketing Corporation Ltd. Versus Union of India and others
CIVIL APPEAL NO. 3821 OF 2020 (Arising from S.L.P.(Civil) No.10613/2020)
Forum-Supreme Court of India
Sub-Ultra Vires of Section 40(a)(iib) challenged before High court-not entertained by High court- held by Supreme Court to be not sustainable.

The State Government undertaking in the above case challenged the vires of Section 40(a)(iib) before the Madras High court which was not entertained by the high court on the pretext that the assessment on merits was pending at the assessing officers’ level. The Apex Court however noted that when the vires of Section 40(a)(iib) of the Income Tax Act were challenged, which can be decided by the High Court alone in exercise of powers under Article 226 of the Constitution of India, the High Court ought to have decided the issue with regard to vires of Section 40(a)(iib) on merits, irrespective of the fact whether the matter was sub judice before the Income Tax Authority. Vires of a relevant provision goes to the root of the matter. The matter was therefore set aside to High court for deciding the challenge to the vires of the section

This judgement by three judges bench of the Supreme Court thus reiterates that the high court is bound to entertain a writ when vires( the legality of legislation itself)of the section is challenged

Ramesh Patodia
25/11/2020