Finally, a constitutional Court in India could see the sinister design surreptitiously injected by Parliament into a Central Legislation, till now thwarted by all Courts in India.

1. The First In-Road Into The Impregnable Section 234E (TDS Fee)
Peculiarly Designed Fort, A First of Its Series
SHRI BISWAJIT DAS, Advocate, Supreme Court of India.
Managing Partner, Juris & Juris,
B-4/115, Safdarjung Enclave,
New Delhi- 110029.
www.jurisnjuris.com
Tel: 011-46562550, 26162550; Te-Fax: 01126174550.
Finally, a constitutional Court in India could see the sinister design surreptitiously injected by
Parliament into a Central Legislation, till now thwarted by all Courts in India.
The Division Bench of the Hon’ble High Court of Delhi presided by Justice Dr. S. Muralidhar and
Hon’ble Justice Anup Jairam Bhambhani vide its order dated 26.04.2019 recalled its earlier
Judgment dated 20.12.2018, authored by Justice Anup Jairam Bhambhani in a bench comprising
of Justice Sanjiv Khanna. It was earlier swayed by the leading Judgments such as Rashmikant
Kundalia Vs UOI on Section 234E while dismissing the Constitutional challenge but now, in a
Review Petition preferred by me, it realised it's mistake & recalled its own said Judgment
agreeing with him that the issue involved far larger issue than it decided earlier.
This result could be realised when I preferred the Review of the said Judgment dated 20.12
2018 rather than approaching the Hon'ble Supreme Court of India, as according to me it is my
fundamental right to get my grievance redressed by the first layered Constitutional forum
justly. Since the Judgment was delivered on wrong premise, a Review was the just answer
seeking correction from the forum which committed an error.
It is the Section 234E, which was introduced into the Income Tax Act, 1961 w.e.f 01.07.2012
vide Finance Act, 2012. This Section levy Fee of Rs.200/- per day for default in furnishing the
TDS/TCS statements within the time prescribed u/s 200(3) or proviso to Sub-Section 3 of
Section 206C.
When a person fails to deliver/furnish the quarterly TDS/TCS Statement within the prescribed
time, he/it is a liable to pay a Fee of Rs. 200/- per day for every day of default, which may
appear to be an innocuous and meager levy but the same in reality is very onerous and
oppressive and thus invited several challenges before various Courts throughout India. All
these challenges attacked its constitutionality by citing the ground that this levy is an exaction
in the nature of “Tax” in the guise of “Fee”.
However these challenges were rejected by Courts after Courts, beginning from Bombay High
Court division Bench Judgment dated 09.02.2015 rendered in Rashmikant Kundalia vs. Union Of

2. India, 2015 on the twin ground that such Fee confirms to the Test of “Doctrine of quid pro
quo” and is a “Regulatory Fee”, where Government provides a special benefit of removing the
defect to file the Statement beyond the time period. Following these reasoning recorded in the
Rashmikant Kundalia Case, other High Courts such as Rajasthan, Karnataka, Kerala, Gujarat and
Madhya Pradesh etc. have also dumped the challenge. Even ITATs followed the suit.
Emboldened by repeated success, Parliament assisted by Central Government brought in
similar Law in GST Act, Companies Act etc.
However, this section was challenged on a completely different ground by me before the
division bench of Delhi High Court stating that Parliament has no power to legislate a levy, in
any form, linked to the default unless the said levy is a Penalty, which can only be imposed
following the due process of Law while observing the Principles of Natural Justice through a
Court of Law. According to this challenge, withdrawing the redressal mechanism hitherto
provided u/s 272A(2)(k) prior to 01.07.2012 and putting the same provision as a Legislative
policy u/s 234E w.e.f. 01.07.2012 giving the power of relaxation to CBDT u/s 119(2)(a) violates
the basic structure of the Constitution.
I firmly believe that Section 234E is a very mischievously designed Legislation surreptitiously
introduced into the Statute book for the very first time in the legislative history without putting
into any debate whatsoever since it was passed as a Money Bill and these challenges before
Courts never got the desired attention for a critical analysis.