High Court Of Madras
Around The World Travel & Tours (P) Ltd. & Ors. vs. Union Ofindia & Ors.
Section 194H
R. Jayasimha Babu & S.K. Krishnan, JJ.
Writ Appeal No. 3255 of 2003 & WAMP No. 5203 of 2003
22nd October, 2003
Counsel Appeared
V. Ramachandran for M/s Anita Sumanth, for the Appellants : Arvind P. Datar for H. Karthik Seshadri Caveator, for the Respondents
JUDGMENT
R. Jayasimha Babu, J. :
The appellants are agents for several airlines. They receive commission on tickets they sell to passengers who travel on those airlines. According to the appellants, they receive commission on the amount for which tickets are sold to the passengers. The airlines however in their accounting system have shown the difference between the air fare fixed in accordance with the regulations framed by the IATA (International Air Travel Association) and the amount at which the agents are enabled to sell the tickets to the passengers as “supplementary commission” paid to the agents.
It is that nomenclature given by the airlines to that amount, which has resulted in the airlines having been called upon to pay tax under the provisions of s. 194H of the IT Act, 1961, the authorities having regarded the supplementary commission as being an addition to the regular commission paid to the agent.
We are informed that the proceedings initiated by the Revenue for recovery of the TDS on that “supplementary commission” had been challenged by the concerned airlines without success and that they have preferred appeals before the Tribunal at Delhi, which appeals are pending.
The prayer in the writ petition filed by the appellants before us is for a declaration that “tax shall be deducted at source under s. 194H of the Act only in respect of commission actually paid or payable by respondent Nos. 4 to 21 to the petitioners on the face value of the tickets and no tax can be deducted in respect of discount or rebate on the price of the tickets allowed by the airlines to the customers against lesser price of the tickets”.
An interim order was sought by the petitioners in the writ petition against respondent Nos. 4 to 21 restraining them from recovering from the petitioners any amount by way of deduction of tax at source under s. 194H of the Act in respect of rebate or discount actually allowed to the customers. Initially, an ex parte interim order was granted, but was later vacated at the instance of one of the airlines which opposed its continuation.
The prayer in the writ petition which we have extracted earlier refers to “commission actually paid or payable”. It is the case of the airlines that what is regarded by the appellants as a discount had in fact been described by the airlines in their books as “supplementary commission”, that nomenclature having been used to refer to the amount in excess of the normal commission of nine per cent of the normal value of the ticket which was made available to the agent at a much lesser price. The airlines could very well have described that difference as a discount given to the agents but they have not chosen to do so. The description of that amount as supplementary commission attracted the attention of the Revenue which has regarded the amount so described as falling within the ambit of s. 194H of the Act, thereby making the airlines liable to deduct tax at source and remit it to the Revenue. Sec. 194H of the Act is unambiguous. It refers to commission. So long as what is being deducted is tax on commission, it is not only lawful but is obligatory on the person who makes the payment.
The injunction sought by the appellants to restrain the airlines from deducting tax is not an injunction that can be granted. The liability for payment of tax arises in terms of the statute and the perception of the appellants cannot determine the true content of the statutory provision and cannot afford a sound basis for the Court injuncting the person, who may otherwise be liable to deduct tax, from deducting tax on payment made to the agents.
We must also notice that the appellants have not placed before the Court the scheme under which the payments are made or accounted. It is the definite stand of the caveator-airlines that what is made available to the agents is supplementary commission, which amount the agents are free to deal with in any manner they like. The agents, according to the airlines, can pass on the entire amount of supplementary commission to the passengers or may retain a part of it and pass on only a portion of that commission.
The learned senior counsel for the appellants submitted that the observations which may come in the way of the petitioners persuading the learned single Judge to their point of view at the final hearing of the pending writ petition, may not be made. Having regard to that submission, we refrain from saying anything more on the matter. We, however, do not find any justification whatsoever for interfering with the order of the learned single Judge [reported as Around the World Travel & Tours (P) Ltd. & Ors. vs. Union of India & Ors. (2004) 190 CTR (Mad) 463—Ed.] vacating the interim injunction.
The writ appeal is dismissed. Consequently, WAMP No. 5203 of 2003 is closed.
[Citation : 268 ITR 477]
