M/S US TECHNOLOGIES INTERNATIONAL PVT. LTD versus THE COMMISSIONER OF INCOME TAX

Citation: [2023] 4 S.C.R. 382 · Decided: 10-04-2023 · Supreme Court of India · Bench: M.R. SHAH, C.T. RAVIKUMAR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2023] 4 S.C.R.
M/S US TECHNOLOGIES INTERNATIONAL PVT. LTD.
v.
THE COMMISSIONER OF INCOME TAX
(Civil Appeal No. 7934 of 2011)
APRIL 10, 2023
[M. R. SHAH AND C. T. RAVIKUMAR, JJ.]
Income Tax Act, 1961 – s.271C – Interpretation of – Belated
remittance of the TDS after deduction, such assessee if liable to
pay penalty u/s.271C – Held: No –s.271C(1)(a) shall be applicable
in case of failure on the part of the concerned person/assessee to
“deduct” the whole or any part of the tax as required by or under
the provisions of Chapter XVIIB – Words used in s.271C(1)(a) are
‘fails to deduct’ – It does not speak about belated remittance of the
TDS – Thus, there shall not be any penalty leviable u/s.271C on
mere delay in remittance of the TDS after the same is deducted by
the concerned assessee.
Income Tax Act, 1961 – ss.201(1A) and 276B – Held:
Consequences on non-payment/belated remittance of the TDS would
be u/ss.201(1A) and 276B.
Interpretation of Statutes – Penal provisions – Construction
of – Held: Penal provisions are required to be construed strictly
and literally – They are to be read as they are, nothing is to be
added or taken out of them.
Circulars/Notices – CBDT’s Circular No.551 dated
23.01.1998 – Reliance was placed by Revenue on the said Circular
and it was contended that over and above the prosecution, the person
who has deducted tax at source but not remitted the same to the
Government shall also be liable to pay penalty and that is why s.271C
was inserted – Held: The Circular favours the assessee – Even the
CBDT has taken note of the fact that no penalty is envisaged
u/s.271C for belated remittance/payment/deposit of the TDS –
Income Tax Act, 1961 – s.271C.
Words & Phrases –”fails to deduct” in s.271C(1)(a), 1961
Act – Meaning and scope of – Discussed – Income Tax Act, 1961 –
s.271C(1)(a).
[2023] 4 S.C.R. 382
382
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Allowing the appeals, the Court
HELD: 1.1 All these cases are with respect to the belated
remittance of the TDS though deducted by the assessee and
therefore, Section 271C(1)(a) shall be applicable. As per Section
271C(1)(a), if any person fails to deduct the whole or any part of
the tax as required by or under the provisions of Chapter XVIIB
then such a person shall be liable to pay by way of penalty a sum
equal to the amount of tax which such person failed to deduct or
pay as aforesaid. So far as failure to pay the whole or any part of
the tax is concerned, the same would be with respect to Section
271C(1)(b) which is not the case here. Therefore, Section
271C(1)(a) shall be applicable in case of a failure on the part of
the concerned person/assessee to “deduct” the whole or any part
of the tax as required by or under the provisions of Chapter
XVIIB. The words used in Section 271C(1)(a) are very clear and
the relevant words used are “fails to deduct.” It does not speak
about belated remittance of the TDS. The penal provisions are
required to be construed strictly and literally. The penal provision
are required to be read as they are. Nothing is to be added or
nothing is to be taken out of the penal provision. Therefore, on
plain reading of Section 271C of the Act, 1961, there shall not be
penalty leviable on belated remittance of the TDS after the same
is deducted by the assessee. Section 271C of the Income Tax
Act is quite categoric. Its scope and extent of application is
discernible from the provision itself, in unambiguous terms. When
the non-deduction of the whole or any part of the tax, as required
by or under the various instances/provisions of Chapter XVIIB
would invite penalty under Clause 271C(1)(a); only a limited text,
involving sub-section (2) of Section 115O or covered by the
second proviso to Section 194B alone would constitute an
instance where penalty can be imposed in terms of Section
271C(1)(b) of the Act, namely, on non-payment. It is not for the
Court to read something more into it, contrary to the intent and
legislative wisdom. [Paras 7.5, 7.6][393-A-G]
1.2 Wherever the Parliament wanted to have the
consequences of non-payment and/or belated remittance/payment
of the TDS, the Parliament/Legislature has provided the same
M/S US TECHNOLOGIES INTERNATIONAL PVT. LTD. v. THE
COMMISSIONER OF INCOME TAX
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SUPREME COURT REPORTS
[2023] 4 S.C.R.
like in Section 201(1A) and Section 276B of the Act. Section
201(1A) provides that in case a tax has been deducted at source
but the same is subsequently remitted may be

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