DEBANGSU BASAK,J. - (1.) The petitioners have assailed Chapter XII-H of the Income Tax Act, 1961 as unconstitutional being opposed by Article 14 and 246(1) read with Entry 82 in List I of the Seventh Schedule to the Constitution of India.
(2.) Learned Additional Advocate General appearing in support of the writ petition has contended at the hearing of the writ petition that, the impugned Chapter if read down in the manner suggested, then, the entire Chapter can pass the test of constitutionality. He has referred to the budget speech of the Hon'ble Finance Minister while introducing Chapter XII-H to the Act of 1961. He has submitted that, Fringe Benefits Tax was introduced by such Chapter. The Chapter was, thereafter, deleted subsequently in the year 2009-2010. He has referred to the budget speech for such year also.
(3.) Referring to Section 115WB(2) of the Act of 1961 learned Additional Advocate General has submitted that, Section 115WA provides for Fringe Benefits Tax to be charged in respect of fringe benefit provided or to be provided by an employer to his employees during the previous year at a stipulate rate. He has submitted that, Section 115WA(1) of the Act of 1961 creates a legal fiction. The legal fiction created cannot be stretched to include items of expenditure which has no nexus with the object of the levy. He has referred to Section 115WB particularly Sub-section (2) and has submitted that, the items provided thereunder would not attract Fringe Benefits Tax unless it satisfies the legal fiction created in Section 115WA of the Act of 1961. The existence of an employer employee relationship is a condition precedent for the purpose of charging Foreign Fringe Benefits Tax. Such legal fiction may not exist in the provisions of Section 115WB of the Act of 1961. He has relied upon 2004 Volume 11 Supreme Court Cases page 417 (Nandkishore Ganesh Joshi v. Commissioner, Municipal Corporation of Kalyan and Dombivali and Ors.) and 2004 Volume 6 Supreme Court Cases page 59 (State of West Bengal v. Sadan K. Bormal and Anr.) in support of the contentions that, a legal fiction cannot be extended beyond the purpose for which it is created. He has contended that, Section 115WB (2) has to be read down to mean that only items which satisfies the test of Section 115WA(1) and which are relatable to employer employee relationship can be charged for Fringed Benefits Tax. He has relied upon 2017 Volume 3 Supreme Court Cases page 467 (Southern Motors v. State of Karnataka and Ors.) and has submitted that, although equity and taxation are often strangers, the Court should attempt that they do not remain always so.;