Karnataka High Court
M/S Astrazeneca Pharma India Ltd vs Smt Seethalakshmi on 17 December, 2024
Author: Jyoti Mulimani
Bench: Jyoti Mulimani
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WP No. 9180 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF DECEMBER, 2024
BEFORE
THE HON'BLE MS. JUSTICE JYOTI MULIMANI
WRIT PETITION NO. 9180 OF 2024 (L-PG)
BETWEEN:
M/S. ASTRAZENECA PHARMA INDIA LIMITED,
BLOCK N1, 12TH FLOOR,
MANYATA EMBASSY BUSINESS PARK,
RACHENAHALLI OUTER RING ROAD,
BANGALORE-560 045.
THE COMPANY IS INCORPORATED
UNDER COMPANIES ACT 1956,
DEALING WITH PHARMACEUTICALS.
REPRESENTED BY ITS COUNTRY HR
DIRECTOR SMT.AMARPREET KAUR AHUJA.
...PETITIONER
(BY SRI. C.K.SUBRAHMANYA., ADVOCATE FOR
SRI. B.C.PRABHAKAR., ADVOCATE)
AND:
1. SMT. SEETHALAKSHMI,
W/O.RAGHAVENDRA.K.R.,
Digitally signed by AGED ABOUT 58 YEARS,
THEJASKUMAR N
Location: High NO.540, 9TH MAIN, 3RD CROSS,
Court of Karnataka 2ND BLOCK, BANASHANKARI 1ST STAGE,
BANGALORE-560 050.
2. LABOUR OFFICER AND CONTROLLING AUTHORITY
UNDER PAYMENT OF GRATUITY ACT 1972,
SUB-DIVISION-3, BENGALURU,
NO.45, 1ST FLOOR, KARMIKA BHAWANA,
BANNERGHATTA ROAD, NEAR DIARY CIRCLE,
BENGALURU-560 029.
...RESPONDENTS
(BY SRI. RAMESH.S., ADVOCATE FOR R1;
SRI. S.H.RAGHAVENDRA., AGA FOR R2)
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THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, SEEKING CERTAIN
RELIEFS.
THIS WRIT PETITION IS LISTED FOR DICTATION OF
ORDERS, THIS DAY, AN ORDER IS MADE AS UNDER:
ORAL ORDER
Sri.Subramanya., counsel on behalf of Sri.B.C.Prabhakar.,
for the petitioner, Sri.Ramesh.S., counsel for respondent No.1
and Sri.Raghavendra., AGA for respondent No.2 have appeared
in person.
2. The short facts are these:
Smt.Seethalakshmi – the first respondent joined the
services of the petitioner’s Company on 01.02.1994. On
06.04.2012, she left the Company’s services by opting for
voluntary retirement under the Scheme introduced by the
Company. As per the Gratuity Fund Trust Rules of the
Company, she was entitled to Gratuity to the tune of
Rs.4,52,304/-, whereas under the Payment of Gratuity Act,
1972, she was entitled to Gratuity of Rs.2,35,814/-.
The workman, Smt.Seethalakshmi opted to receive the
gratuity as per the Gratuity Fund Trust Rules. The petitioner
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Company deducted the income tax of Rs.66,896/- and remitted
the same to the Income Tax Department. The workman
received the balance of Rs.3,85,408/- without any demur.
Thus, after a lapse of almost six years, the first
respondent filed a claim application claiming a sum of
Rs.2,29,332/-. She also filed an application to condone the
delay. The Controlling Authority condoned the delay. The
Controlling Authority vide order dated 07.12.2023 allowed the
application in part and directed the petitioner to pay a sum of
Rs.66,896/- deducted towards the Income Tax amount to the
first respondent. The portion of the order directing the
petitioner to refund the income tax amount is called into
question in this Writ Petition on several grounds as set out in
the Memorandum of Writ Petition.
3. Counsel for the respective parties urged several
contentions.
4. Sri.Subramanya., counsel for the petitioner submits
that the order of the Controlling Authority is arbitrary, illegal
and without jurisdiction.
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Next, he submits that the Labor Officer is required to
exercise authority only under the Payment of Gratuity Act of
1972 and not under the Income Tax Act of 1961. Hence, the
order/direction to refund the Tax amount is not only without
jurisdiction but also perverse.
A further submission is made that the authority failed to
note that Income Tax deducted from the source was remitted
to the Income Tax Department in 2012. Even assuming that
the first respondent is entitled to a refund, he must approach
the Income Tax Authority to claim a refund by filing an Income
Tax Return as mandated under the Income Tax Act.
Counsel vehemently contended that the Authority had no
jurisdiction to entertain the claim application filed by the first
respondent when there was an inordinate delay of six years.
Lastly, he submits that viewed from any angle, the order
of the Controlling Authority is untenable. Counsel, therefore,
submits that the order of the Controlling Authority is liable to
be set aside and the Writ Petition may be allowed.
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5. Sri.Ramesh.S., counsel for respondent No.1 submits
that the first respondent has filed an appeal before the
Appellate Authority.
Next, he submits that the petitioner should have
preferred an appeal before the Appellate Authority. However, it
has filed the present Writ Petition without availing the alternate
statutory remedy.
A further submission is made that the petitioner must
seek refund of the Income Tax amount from the Income Tax
Department.
Counsel vehemently contended that the Ceiling limit was
Rs.10,00,000/- and hence, the petitioner has erred in
deducting the income tax amount.
Lastly, he submits that the order of the Controlling
Authority is well merited and fully justified and does not call for
any interference by this Court. Accordingly, he prayed for the
dismissal of the Writ Petition.
6. AGA submits that a detailed statement of objections
is filed and the same may be taken note of. In presenting his
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arguments, AGA submitted that the petitioner has not availed
the alternate remedy by filing an appeal before the Appellate
Authority. Hence, he submits that the Writ Petition is not
maintainable.
Next, he justified the order of the Controlling Authority.
He drew the attention of the Court to the relevant provisions of
the Payment of Gratuity Act, 1972 to contend that the
Controlling Authority has the power to determine the amount of
gratuity and pass an order to refund the income tax.
A further submission is made that there is no provision
concerning the payment of income tax on the gratuity paid
beyond what is mentioned in Section 4 (3) of the Payment of
Gratuity Act 1972. He vehemently contended that as per
Section 10(iii) of the Income Tax Act, 1961, the Management
has no power to deduct Income Tax. To substantiate the
contention, AGA relied on the order in W.P.No.5759/2006 in
the case of NORTH WEST KARNATAKA TRANSPORT
CORPORATION, HUBBALLI Vs. THE DEPUTY LABOR
COMMISSIONER AND THE APPELLATE AUTHORITY
UNDER THE PAYMENT OF GRATUITY ACT AND OTHERS.
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AGA vehemently contended that the Ceiling limit was
Rs.10,00,000/- and hence, the petitioner has erred in
deducting the income tax amount.
Lastly, he submits that the Writ Petition is devoid of
merits and the same may be dismissed.
7. Heard the arguments and perused the Writ papers
with care.
8. The following points would require consideration.
1. Whether the Controlling Authority is vested
with the power to decide the issue about the
refund of the Income Tax?
2. Whether the Controlling Authority is justified
in entertaining the application that was filed
beyond the period of limitation?
3. Whether the petitioner has made out good
grounds to exercise power under Article 226?
9. The issue revolves around a narrow compass and
relates to the power/ authority of the Controlling Authority to
decide about the tax exemption and pass an order to refund
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the income tax. Before I answer the points, let us quickly
glance at the concept of Gratuity and income tax exemption.
As we all know, gratuity is a monetary benefit given by
the employer. Gratuity is a single-time payment made to the
employee. It is a token of appreciation for the employees’ time
and effort spent with the management. Gratuity is regarded as
an appreciation for hard work. Gratuity is a payment made to
an employee for services given to the company, hence, it is
only the statutory gratuity that is exempt from income tax.
Reverting to the facts of the case, the first respondent
left the services of the company on the Sixth day of April 2012
by opting for voluntary retirement under the scheme that was
introduced by the company. There was a settlement and the
first respondent received the gratuity under the Private Trust
Rules i.e., Employees Gratuity Fund Trust Rules. Accordingly,
the first respondent was entitled to a sum of Rs.4,52,304/-.
Since the gratuity was paid under the Private Trust Rules, the
management deducted the income tax of Rs.66,896/- and
immediately after the deduction of income tax at source, Form-
16 was furnished to the first respondent. The income tax
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deducted at source was remitted to the Income Tax
Department.
It is relevant to notice that the first respondent had no
grievance either about the payment of the gratuity or the
deduction of the income tax. Strangely, after a lapse of almost
six years, she filed an application before the Controlling
Authority contending that she is entitled to receive the balance
of Gratuity amount of Rs.2,29,332/- with 18% interest per
annum. An application to condone the delay was filed. Despite
the objections, the Controlling Authority condoned the delay
and passed an order directing the petitioner to refund the
amount deducted towards Income Tax. This is untenable. The
reason is simple and apparent. The order of the Controlling
Authority is furnished along with the Writ Petition and marked
as Annexure-C. A careful perusal of the same would reflect that
the Controlling Authority assumed the jurisdiction as if it were
an authority under the Income Tax Act and concluded that the
petitioner was not justified in deducting the income tax. In my
view, the authority has unnecessarily tried to discuss much on
the tax ceiling limit and erroneously went ahead with the
matter.
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The Management deducted the income tax over and
above the amount to which the first respondent was entitled to
the gratuity. The Controlling Authority ordered to refund of the
income tax. The Controlling Authority is not the proper Forum
to pass an order to refund the income tax. If the first
respondent had any grievance about the deduction of the
income tax, she must approach the appropriate authority to
claim a refund by filing an Income Tax Return as mandated
under the Income Tax Act. Moreover, under the provisions of
the Payment of Gratuity Act, 1972, the Controlling Authority is
empowered to determine the amount of gratuity and not to
pass an order for the refund of the income tax. The Labor
Officer has overlooked this aspect of the matter and has acted
more than his authority. I may venture to say that the
Authority has failed to have regard to the relevant
considerations and disregarded the relevant matters. Hence, a
Certiorari under Article 226 is issued to correct the gross error.
10. Next, let me answer about the delay. The petitioner
paid the gratuity to the first respondent in 2012. However, she
applied before the Controlling Authority claiming a difference in
gratuity in 2018. The authority condoned the delay. The
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authority is not justified in condoning the delay. As per the
Rules, the application must be made within ninety days.
However, in the present case, the first respondent applied after
a lapse of six years. In my view, the application ought to have
been rejected on the grounds of delay and laches.
11. Lastly, let me answer the objection about the
existence of an alternate remedy and the exercise of power
under Article 226 of the Constitution of India. A remedy under
Article 226 in general is discretionary. The law is well-settled
that the existence of an alternate remedy does not affect the
jurisdiction of the Court to issue a writ in an appropriate case.
Whether the alternate remedy is equally efficacious or
adequate is a question of fact to be decided in each case and
the onus is on the applicant/petitioner to show that it is
adequate. In the present case, the petitioner has made out
good grounds to hold that the Labor Officer has acted more
than his authority to pass an order to refund the income tax.
Moreover, the statutory provision of filing an appeal before the
Appellate Authority to question the issue about the power of
the Controlling Authority is not an alternate or equally
efficacious remedy as such filing an appeal would be an empty
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formality or a futile exercise or attempt. I may say that the
statutory remedy is ill-suited to meet the demands of an
extraordinary situation. Therefore, I deem it proper to exercise
discretion to interfere in a petition under Article 226.
For the reasons stated above, the portion of the order
directing the petitioner to refund the amount deducted towards
income tax is liable to be set-aside and so, it is set-aside.
12. The Writ of Certiorari is ordered. The order dated
07.12.2023 passed by the Controlling Authority in ¥ÀæPÀgÀt
¸ÀASÉå:PÁC¨ÉA-3/¦fJ/¹Dgï-112/2017-18 as far as directing the
petitioner to refund the amount deducted towards income tax
vide Annexure-C is quashed.
13. Resultantly, the Writ Petition is allowed.
Sd/-
(JYOTI MULIMANI)
JUDGE
TKN,MRP
List No.: 1 Sl No.: 18