HC commences final hearing on Centre’s appeal against order in favour of Kalanithi Maran in SpiceJet TDS dispute case

Madras High Court hears Centre's appeal against SpiceJet ex-Chairman Kalanithi Maran in TDS dispute, arguments to continue Monday.

The Madras High Court on Thursday commenced the final hearing on a writ appeal filed by the Centre in 2018 against a single judge’s order in favour of SpiceJet former Chairman Kalanithi Maran in a dispute related to the alleged non-remittance of Tax Deducted at Source (TDS) on time.

A Division Bench of Justices R. Suresh Kumar and C. Saravanan heard the arguments advanced by Additional Solicitor-General (south zone) R. Sankaranarayanan for the Union Finance Ministry and decided to hear senior counsel G. Masilamani for Mr. Maran on Monday.

The appeal had been filed against the March 28, 2013 order passed by Justice M. Duraiswamy (since retired), who had quashed the November 3, 2014 proceedings of an Assistant Commissioner of Income Tax in Delhi declaring Mr. Maran the ‘principal officer’ of the airline. The Assistant Commissioner had also observed that Mr. Maran was liable to be prosecuted under Section 276B of the Income Tax Act, 1961, which prescribes rigorous imprisonment of three months to seven years for failure to remit TDS to the credit of the Centre.

However, Justice Duraiswamy set aside the Assistant Commissioner’s order after accepting Mr. Maran’s submission that he was only a non-executive chairman not involved in the day-to-day affairs of the airline and therefore he could not be treated as the ‘principal officer’. “Unless the second respondent (the Assistant Commissioner) makes out a prima facie case against the petitioner of his liability and obligation as Principal Officer in the day-to-day affairs of the company..., the petitioner could not be prosecuted for the offence committed by the company,” the judge had said.

He also took note that the entire TDS had been remitted by the airline after the initiation of recovery proceedings and also held that Mr. Maran was entitled to approach the Madras High Court since the Assistant Commissioner’s proceedings had been served upon him at his Chennai residence.

However, claiming that the single judge had erred in determining the jurisdiction of the Madras High Court to entertain the writ petition filed against the proceedings issued by the Assistant Commissioner based in Delhi, Mr. Sankaranarayanan said the petitioner could not choose a forum of his convenience.

He told the Division Bench that Mr. Maran had filed a petition before the Delhi High Court in 2015 to quash a criminal complaint lodged against him pursuant to the Assistant Commissioner’s proceedings, but had challenged the latter alone before the Madras High Court in 2014.