Kerala High Court
Shahull Hameed vs State Of Kerala on 29 October, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
FRIDAY, THE 29TH DAY OF OCTOBER 2021 / 7TH KARTHIKA, 1943
WP(C) NO. 35512 OF 2019
PETITIONER :
SHAHULL HAMEED,
AGED 46 YEARS,
S/O. KOCHUMUHAMMED, PUTHEN PURAYIL HOUSE,
THALAYOLAPARAMBU P.O, VAIKKOM,
KOTTAYAM DISTRICT.
BY ADVS.
BINU GEORGE
SMT.HEMALATHA
RESPONDENTS :
1 STATE OF KERALA
REPRESENTED BY SECRETARY TO REGISTRATION DEPARTMENT,
SECRETARIAT, THIRUVANANTHAPURAM, PIN 695 001.
2 SUB REGISTRAR,
KOTTARAKKARA SUB REGISTRAR OFFICE,
KOLLAM, PIN 691 506.
3 AUTHORIZED OFFICER,
INDIAN BANK, THYCADU BRANCH,
THIRUVANANTHAPURAM,
PIN - 695 014
R1 & R2 BY SENIOR GOVT.PLEADER SRI.JUSTIN JACOB
R3 BY STANDING COUNSEL SRI.S.EASWARAN
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
29.10.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) NO. 35512 OF 2019
2
BECHU KURIAN THOMAS, J.
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W.P.(C) No.35512 of 2019
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Dated this the 29th day of October, 2021
JUDGMENT
Petitioner questions the demand of TDS on sale
consideration paid by him towards the auction purchase of a property
held on 10.10.2011. In view of the nature of challenge raised, the
effect of Section 194 1A of the Income Tax Act, 1961 (for short, 'the
Act') arises for consideration. Petitioner urges that, if TDS is liable to
be deducted from the sale consideration, the responsibility to pay the
same is not on the petitioner, but on the secured creditor for whose
benefit the property was sold.
2. Pursuant to securitisation proceedings initiated by the
Indian Bank, Thycadu Branch, Thiruvananthapuram, petitioner was
declared as the auction purchaser and a certificate of sale dated
10.10.2011 was issued to the petitioner. The sale was made free
from all encumbrances and the bank acknowledged the receipt of the
sale price of Rs.81,00,000/-. Petitioner complains that, when he
sought registration of the certificate of sale, the Sub Registrar,
Kottarakkara rejected his request, initially on the ground that there
was an encumbrance on the property due to an attachment effected
WP(C) NO. 35512 OF 2019
in a civil suit. Refusal to register the property due to an alleged
encumbrance pointed out by the Sub Registrar compelled the
petitioner to approach this Court in W.P.(C).No. 22823/2018 and by
judgment dated 09.07.2018, this Court directed the Sub Registrar to
ensure registration of sale certificate immediately on presentation.
The legal position that an attachment from a civil court subsequent to
the creation of a mortgage has no effect on the mortgage, was
restated in the aforementioned judgment.
3. Thereafter, when the petitioner approached the Sub
Registrar for registration of the certificate of sale, he was in for yet
another rude shock. The Sub Registrar directed the petitioner to
produce evidence of remittance of an amount of Rs.81,000/- as TDS
allegedly required for the aforesaid transaction. The evidence of tax
deducted at source was based on Section 194 1A of the Act. It is in
the aforesaid circumstances that petitioner approached this Court
through this writ petition, claiming that petitioner cannot be imposed
with the liability to pay the TDS, since the burden falls only on the
Bank, who had already received the entire consideration for the
transaction.
4. A counter affidavit was filed by the Sub Registrar
stating that, though the property was purchased by the petitioner in
WP(C) NO. 35512 OF 2019
an auction held on 10.10.2011, since there was an attachment on the
property issued by the Sub Court, Kollam on 13.12.2011, the sale
was not registered and subsequently by the judgment in WP(C)
No.22823/2018, this Court directed the Sub Registrar to register the
document. However, when the document was presented for
registration, it was noticed that, petitioner had not remitted 1% of
the sale consideration towards TDS as contemplated under Section
194 1A of the Act. It was also pleaded that the Income Tax
Department had directed the Inspector General of Registration to
ensure compliance of the provisions of tax deducted at source in all
transactions, and that he cannot ignore the mandate of the statute
and it was in such a scenario that the registration was refused.
5. In the counter affidavit filed by the 3 rd respondent
Bank, it was stated that, the liability under Section 194 1A to deduct
an amount equivalent to 1% of such sum as income tax was on the
purchaser of the immovable property and not the seller and viewed
in the above perspective, there was no liability on the Bank to deduct
tax and remit the same. It was pleaded that, due to the priority of
charge created over a secured asset in favour of the secured creditor
as per Section 26(E) of the SARFAESI Act, there was no liability to
pay tax contemplated under the Income Tax Act. It was further
WP(C) NO. 35512 OF 2019
averred that, the provisions of Section 194 1A of the Act can have an
application only for sale that took place after 01.06.2013,
irrespective of the date on which the registration is carried out and
therefore the demand for proof of remittance of TDS was uncalled
for.
6. I have heard the arguments of Adv.Binu George, the
learned counsel for the petitioner, Sri.Justin Jacob, the learned
Senior Government Pleader and Adv.S.Easwaran, the learned counsel
for the 3rd respondent Bank.
7. Section 194 1A of the Act was inserted by Finance Act,
2013 with effect from 01.06.2013. As per the said provision, a
transferee of immovable property, who is responsible for paying to a
resident transferor, any sum as consideration of the transfer of such
immovable property, other than agricultural land, is bound to deduct
an amount equivalent to 1% of the sum credited to the account of
the transferor for payment as income tax thereon.
8. Though the liability under Section 194 1A of the Act to
deduct the tax on the amount credited to the transferor is obviously
on the transferee, in the instant case, the amount was credited to the
transferor without deduction of tax. So viewed, the claim of the 3 rd
respondent Bank that Section 194 1A of the Act will not operate
WP(C) NO. 35512 OF 2019
against the respondent Bank since the liability to deduct the tax was
on the petitioner who failed to deduct such tax may not be correct in
the peculiar factual situation. Since the entire amount sale
consideration was paid to the bank, without deducting the TDS, the
responsibility to remit the TDS would be on the bank itself. The TDS
contemplated under Section 194 1A of the Act is on the amount paid
to the transferor and it is only the liability for deduction and
payment that has been fastened on the transferee. The benefit of
crediting such amount as TDS obviously enures to the benefit of the
respondent Bank. Thus the contention of the 3rd respondent Bank
that there is no liability on the 3rd respondent Bank to remit the TDS
on the transaction is not legally justified in the peculiar facts.
9. However, the issue involved in the present dispute has
a completely different implication when the date of sale that took
place in the instant case is reckoned. It is evident from Ext.P1
certificate of sale that the amount of Rs.81,00,000/- was paid by the
petitioner and its receipt was acknowledged by the 3 rd respondent
Bank atleast as on 10.10.2011. As mentioned earlier, Section 194
1A of the Act was introduced only on 01.06.2013 and the liability for
deduction is imposed "at the time of credit of such sum to the
account of the transferor or at the time of payment of such sum in
WP(C) NO. 35512 OF 2019
cash or by issue of a cheque or draft or by any other mode whichever
is earlier". These words appearing in Section 194 1A of the Act,
clearly evinces that the liability to deduct 1% towards income tax
thereon is at the time of payment or at the time of credit of amount
to the transferor. The wordings of Section 194 1A of the Act clearly
indicate that the said provision has no retrospective operation. In
the absence of any express stipulation on applicability of the
provision for past transactions or past payments, it is lucid that the
time of registration of the sale deed has no relevance for deducting
the tax under the said section.
10. Viewed in the above perspective, there is no liability
either on the transferor of the transaction covered by Ext.P1 or on
the transferee, to deduct any income tax thereon as contemplated
under 194 1A of the Act. Thus neither the petitioner nor the 3 rd
respondent can be found fault with for not deducting TDS for Ext.P1
certificate of sale. Therefore, the Sub Registrar cannot insist on
evidence of remittance of tax deducted at source for the transaction
covered by Ext.P1 certificate of sale when the said transfer is sought
to be registered. Ext.P1 certificate of sale is entitled to be registered
without payment of TDS as contemplated under Section 194 1A of
the Act. It is therefore declared that the petitioner is not liable to
WP(C) NO. 35512 OF 2019
deduct TDS on the amount covered under Ext.P1 certificate of sale
and further the certificate of sale covered under Ext.P1 is liable to be
registered without insisting on the TDS certificate.
11. In view of the above, the 2nd respondent is directed to
register Ext.P1 sale certificate/ sale deed, without insisting on
obtaining the TDS certificate under Section 194 1A of the Act within
an outer period of 30 days from the date of receipt of a copy of this
judgment.
The writ petition is allowed in part.
Sd/-
BECHU KURIAN THOMAS, JUDGE
RKM
WP(C) NO. 35512 OF 2019
APPENDIX OF WP(C) 35512/2019
PETITIONER'S EXHIBITS :
EXHIBIT P1 A TRUE COPY OF SALE CERTIFICATE DATED
10-10-2011
EXHIBIT P2 A TRUE COPY OF THE JUDGMENT DATED
09-07-2018 IN WP(C) NO. 22823/2018
EXHIBIT P3 A TRUE COPY OF THE APPLICATION DATED
27-11-2018
EXHIBIT P4 A TRUE COPY OF THE COMMUNICATION DATED
08-01-2019.
