Directed CBDT to dispose the representation w.r.t. TDS on e-commerce transactions within 6 months

Last updated: 22 September 2021

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The Calcutta High Court has ordered the Central Board of Direct Taxes (CBDT) to address representations from MJunction Services Ltd. regarding Tax Deducted at Source (TDS) on e-commerce transactions. MJunction had challenged the obligation to deduct TDS on sale consideration under Section 194-O of the Income Tax Act. The court directed the CBDT to dispose of these representations within six months, granting interim relief by preventing penalties on MJunction while they continue to deposit the TDS.

Court :
Calcutta High Court

Brief :
In MJunction Services Ltd. and Anr. v. Union of India and Ors. [WPO/441/2021 dated August 25, 2021], MJunction Services Ltd. ("the Petitioner") filed a writ petition being aggrieved by the new provision of Section 194 - O of the Income Tax Act, 1961 ("the IT Act") that took effect from October 1, 2020.

Citation :
WPO/441/2021 dated August 25, 2021

In MJunction Services Ltd. and Anr. v. Union of India and Ors. [WPO/441/2021 dated August 25, 2021], MJunction Services Ltd. ("the Petitioner") filed a writ petition being aggrieved by the new provision of Section 194 - O of the Income Tax Act, 1961 ("the IT Act") that took effect from October 1, 2020.

The Petitioner was aggrieved by the fact that Section 194 - O of the IT Act cast an obligation on the part of the Petitioner to deduct and deposit Tax Deducted at Source ("TDS") on account sale consideration received from e-acommerce participant, customers and buyers. The Petitioner sought relief of declaration on the same.

The Petitioner is also aggrieved by inaction on the part of the Central Board of Direct Taxes ("CBDT") ("the Respondent No. 8") and sitting over and not disposing the representations of the Petitioner for redressal of its grievances in this regard, made under Section 194 - O (4) of the IT Act.

In the case, the Respondents were unable to justify the inaction on the part of the Respondent No. 8 which is causing great difficulties to the Petitioner in carrying on its business.

Taking perusal of all the facts and evidences, the Honorable Calcutta High Court directed Respondent No. 8 to dispose of the aforementioned representations made by the Petitioner within a period of 6 months. Furthermore, the Court added that the Petitioner shall go on depositing the TDS in question but there shall be no penalty imposed on him by Respondent No. 8. The Court, therefore, granted an interim relief to the Petitioner with a liberty to seek appropriate relief in the said case.

FAQ :

The main issue was MJunction's grievance with Section 194-O of the Income Tax Act, which requires them to deduct Tax Deducted at Source (TDS) on sale consideration from e-commerce participants, and the CBDT's inaction on their representations.

The court directed the CBDT to dispose of MJunction's representations concerning TDS on e-commerce transactions within a period of six months.

MJunction was granted interim relief, meaning they must continue to deposit the TDS, but no penalty will be imposed by the CBDT while their representations are being considered.

Section 194-O of the Income Tax Act took effect from October 1, 2020.

TDS stands for Tax Deducted at Source, a mechanism where tax is deducted at the point of origin of income.

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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