Gujarat Chamber of Commerce and Industry vs Union of India

D.A. Mehta, J.

Heard Mr. K.H. Kazi, the learned advocate on behalf of the petitioner. Notice returnable on 15-11-2005.

For the purposes of ad interim relief, the learned counsel have invited the attention of the Court to the speeches made by the Finance Minister of Union of India at various stages. They have also submitted that, as such, there would be three categories in which the assessees would broadly fall; the first category where they are covered by the provisions of the Fringe Benefit Tax, the second category where the case may be governed partially, and the third category wherein the circular seeks to levy Fringe Benefit Tax despite the fact that the employer is not making any payment to any employee or not incurring any expenditure for any employee so as to attract Fringe Benefit Tax. It was, therefore, submitted that so far as the category Nos. 2 and 3 are concerned, the assessees must be protected, and in the alternative, insofar as the third category is concerned, there should be absolute protection and qua the second category, if the petitioners, and similarly situated assessees are required to make any payment, each individual assessee must be permitted to compute the tax on its own in light of the principal statute and not be compelled to pay tax as stipulated by the impugned circular being Circular No. 8/2005, dated 29-8-2005.

At this juncture, it is not possible to permit any such segregation as proposed by the learned counsel. However, it would be in the fitness of things if the petitioner and similarly situated assessees are directed to deposit the amount of Fringe Benefit Tax as per installment due on 15-1-2006 in a separate account to be opened and maintained with a Scheduled Nationalized Bank, subject to the condition that the amount so deposited shall not be utilized by the assessee in any manner whatsoever for any purpose, no charge shall be created nor shall the said account be used or permitted to be used as a collateral for obtaining any loan against the same. Upon such deposit being made in separate bank account and production of the necessary proof of such deposit before the Income Tax department, it shall amount to sufficient compliance qua the provisions of the Act levying Fringe Benefit Tax. The aforesaid deposit shall be only in case where the assessee disputes the liability to the extent of being covered by category No. 2 or 3 as per the say of the petitioner. Insofar as the assessees who are covered and fall under category No. 1 and are not disputing their liability, they shall make the payment of the Fringe Benefit Tax with the exchequer as required in accordance with law.

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