'Badly Drafted Petition' : Supreme Court Dismisses PIL Challenging TDS System Of Income Tax Act

The Supreme Court today (January 24) refused to entertain a Public Interest Litigation challenging the provisions of the Income Tax Act which impose an obligation on private employers to deduct tax at source (TDS) on the salaries paid by them.A bench comprising Chief Justice of India Sanjiv Khanna and Justice Sanjay Kumar said that the petition filed by BJP leader Ashwini Upadhyay was "badly drafted" and asked him to approach the High Court"This is a very badly drafted petition. You move the High Court. There are judgements where the provisions of the tax law are upheld," CJI told the petitioner who appeared in person.The petition was dismissed giving liberty to the petitioner to approach the High Court. The Court clarified in its order that it has not expressed anything on the merits of the matter.The PIL argued that the TDS provisions impose an onerous task on private individuals to collect tax at source on behalf of the Government. The petitioner submitted that TDS assesses (the private employers who are tasked with deducing tax on the salaries paid by them and credit the same to the government) are "encumbered with the onerous task of tax collection by putting in their own resources, that too without remuneration, and are subject to heavy penalties in case of non-compliance or error.""The costs of deducting tax at source including salaries for staff, professional fees paid to chartered accountants, salary paid to the staff for complying with the provisions of TDS and other such experts and other costs of office, often range from 10 to 20% of the tax collected by way of TDS. It is pertinent to note that government Assessment officers (hereinafter referred to as AOs) are not subject to the same heavy penalties as TDS assesses," the petitioner said. The PIL also states that assessees are wrongly held liable if any faults occur in the tax-collecting procedure however, the same liability is not seen if an Assessing officer makes a mistake "TDS assessees (responsible for deducting and collecting tax at source) are not paid compensation/remuneration for their work, not even a nominal amount. They are not provided any training either, unlike the already highly qualified AOs who are provided intensive training, nonetheless. If AOs commit any error in collecting tax by way of assessment or allowing disallowable expenses or not taking taxable income, they are not liable to any punishment. Conversely, TDS assessees are made liable and also become subject to disallowances." "AOs are empowered to rectify errors committed by them. Also, they have the power to recover the under-assessed tax dues through rectification. Both of these privileges are not shared by the TDS assessees, where commonsensical logic dictates that the person not having the requisite expertise should be allowed such privileges. Article 14 and its spirit stands defeated from such legal provisions and procedures." It further states that since Article 23 prohibits forced labour, the fact that the Government imposes TDS collecting liability on private individuals and entities without paying them is a violation of Article 23. Case : Ashwini Upadhyay v Union of India | W.P.(C) No. 20/2025Click Here To Read/Download Order

'Badly Drafted Petition' : Supreme Court Dismisses PIL Challenging TDS System Of Income Tax Act

LIVELAW NEWS NETWORK

Tags