An exploration of the ITA No. 1364/Del/2021 case, where ICMC Projects Pvt. Ltd. disputes the application of late fees levied by the ITD, CPC, Bengaluru for the 2013-14 fiscal year’s second quarter on non-salary returns.
The case focuses on the validity of late fee charges under Section 234E, which were applied retroactively before the provisions were officially inserted by the Finance Act 2015 effective from June 1, 2015.
ICMC Projects argued against the retrospective imposition of late fees, claiming it was contrary to the legal provisions active at the time of their filings. The tribunal examined whether the charges were justifiably applied based on the statutes then in effect.
The tribunal noted conflicting High Court decisions on the retrospective application of such amendments. However, following the principle of favoring the taxpayer in scenarios of legal ambiguity, as stated in Supreme Court precedents, the tribunal ruled in favor of ICMC Projects.
This case sets a precedent on the non-retroactive nature of tax law amendments, highlighting the need for clear legislative directives when enforcing fiscal obligations. The decision underscored the judiciary’s role in interpreting tax laws and protecting taxpayer rights against retroactive government claims.
The final decision was announced in open court on February 25, 2022, offering significant relief to the appellant and similarly situated entities.
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