The Service Tax and Income Tax Advertisements stating 31-Mar-2014 as the “last date” are MISLEADING w.r.t Karnataka, Tamil Nadu, Andhra Pradesh, Maharashtra, Goa and Jammu and Kashmir.

The Service Tax and Income Tax Advertisements stating 31-Mar-2014 as the “last date” are MISLEADING w.r.t Karnataka, Tamil Nadu, Andhra Pradesh, Maharashtra, Goa and Jammu and Kashmir.


If you happen to read newspapers or watch any TV, you are likely to be bombarded with advertisements that state that 31-Mar-2014 is the last date for payment of your service tax and failing to do so, you could be prosecuted. Similarly, advertisements by the Income Tax Department say that 31-Mar-2014 is the last date for filing of returns by certain class of assesses.


After an interesting query from a person on how 31-Mar-2014 which is a ‘public holiday’ in Karnataka could become the last date for payment of any tax, my legal team set out to work and has come out with the following stupendous information. I have carefully verified it all and state with legal certainty that:


The following six States in India have declared 31-Mar-2014 as a ‘public holiday’ in their respective territories:

Sl.No.
State
Circular No.
Public Holiday Description

1
Karnataka
No.DPAR 25 HHL 2013
Chandramana Ugadi

2
Tamil Nadu
G.O.Ms.No.1310
Telugu New Year’s Day

3.
Andhra Pradesh
G.O. Rt.No.5237
Ugadi

4
Maharashtra
No.PHD.1113/ C.R.299/2013/XXIX
Gudi Padwa

5
Goa
No.2/1/2013-GAD-H
Gudi Padava

6
Jammu And Kashmir
No.GAD(Adm) 231/2009-I
1st Navratra

So, the query becomes, if a central law states that a certain thing should be done by a certain date and that date happens to be one on which the concerned office remains closed, then that thing may be done on the next day when the office would open. This is what Section 10 of the General Clauses Act, 1897 states in a detailed form. Interestingly, the Income Tax Department as well as the Service Tax Department have themselves come out with circulars that effectively say that when the due date for payment of tax or filing of return falls on a public holiday, then the due date gets extended to the next working day.


The Service Tax Department (actually, the service tax law in this country is administered by Central Excise Department) has itself issued a circular (No.63/12/2003 dated 14-Oct-2003) which goes on to say:
“3. Adequate precautions should be taken by the service providers to deposit the tax in time. In case of genuine hardship on account of public holiday on (date omitted)… which a service provider has to pay the service tax or file the returns, he may pay the service tax in Government account on next working day immediately following the holiday. Same thing applies with regard to the filing of return.”


So, the Service Tax Advertisements proclaiming that 31-Mar-2014 is the last date for payment of service tax are misleading in so far as the States of Karnataka, Tamil Nadu, Andhra Pradesh, Maharashtra and Goa are concerned as 31-Mar-2014 is a ‘public holiday’ in these five States in view of ‘Ugadi’ or ‘Gudi Paduva’. The last date for this purpose, therefore, gets legally pushed to the next working day in these five States. Note that the service tax law is not applicable to Jammu and Kashmir.


What about Income Tax Returns? Many advertisements similarly proclaim that 31-Mar-2014 is the last date for filing of returns by certain class of assesses. The Income Tax Department (technically called as the Central Board of Direct Taxes) too has come out with a circular (CBDT No.639 dated 31-Nov-1992) that says in very clear terms:

1. Representations have been received by the Board seeking clarifications as to whether, the assessee could file a return of income/loss under the Income-tax Act, 1961 on the next working day following a holiday and claim it to have been filed within the statutory time limit.

2. The matter has been examined in consultation with the Ministry of Law and the Board are advised that, in such cases, section 10 of the General Clauses Act, 1897 will be applicable. According to this section, where any act or proceeding is directed or allowed to be done or taken in any court or office on a certain day or within a prescribed period, then, if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the court or office is open.

3. In view of the above, it is hereby clarified that where the last day for filing return of income/loss is a day on which the office is closed, the assessee can file the return on the next day afterwards on which the office is open and, in such cases, the return will be considered to have been filed within the specified time limit.

So, the Income Tax Department’s circular itself states that when the last date for filing of return falls on a holiday, the same may be done on the next working day and the filing on such later day shall be treated as if it was done within time.

Also, the Income Tax Department has come out with a recent circular stating that its receipt counters will remain open between 29-Mar and 31-Mar despite 31-Mar being Ugadi or Gudi Padava (F.No.225/138/2014/ITA.II). Similarly, the Service Tax Department too may have come out with a like circular stating that its receipt counters will remain open on 31-Mar which is a public holiday in six States.

Well, Section 10 of the General Clauses Act, 1897 merely says about ‘office’ and not a ‘Government office’. So, where a State declares a certain day as a ‘public holiday’, it also would mandate a wide variety of private establishments to remain closed on that day. For instance, THE KARNATAKA INDUSTRIAL ESTABLISHMENTS (NATIONAL AND FESTIVAL HOLIDAYS) ACT, 1963 which applies to a wide variety of private establishments in the State of Karnataka mandates that all such establishments shall remain closed on seven different festivals in a year that are chosen by the employees from a list of 52 festivals. As Chandramana Ugadi is amongst the popular festivals of Karnataka, most private establishments in Karnataka choose to declare the day of Chandramana Ugadi as a public holiday and would remain closed for that day. Therefore, if a tax payer is a business and is mandated by a State law to close down on a certain public holiday, that tax payer would be excused from filing his return or paying his tax on that day and should do so on the next working day. It is immaterial whether the Government offices are open on a day which is a ‘public holiday’ in a certain State as the Supreme Court has clearly held that Section 10 of the General Clauses Act should be given a liberal interpretation.


On a day that is considered to be a ‘public holiday’ in a State, the expectation amongst the public would be that the Government offices too would remain closed. When a special law would force private establishments to close down on a given public holiday, even if the Government would decide to keep open its own offices on such a ‘public holiday’, there would be no occasion for the mandatorily closed down business to pay its taxes or file returns as its employees who are expected to aid in filing returns or paying taxes would not attend to work on such ‘public holiday’. As such, the advertisements issued by the Service Tax Department and the Income Tax Department declaring 31-Mar-2014 as the last date for payment of taxes or submission of returns are misleading in so far as the States of Karnataka, Tamil Nadu, Andhra Pradesh, Maharashtra, Goa and Jammu and Kashmir are concerned as the last date in these States is a ‘public holiday’ on account of Ugadi or Gudi Paduva and therefore, this last date is legally pushed to the next working day, that is, 01-Apr-2014. Note however that the service tax law is not applicable to the territory of Jammu and Kashmir.

Interestingly, commercial banks that are regulated by the Reserve Bank of India do not physically entertain customers on 01-Apr-2014 as they dedicate this day to close their yearly accounts. Where electronic banking is available to the tax payer on 01-Apr-2014, the fact that the physical bank is closed would be quite immaterial and the tax payer should consider 01-Apr-2014 as the last date in these six States for paying his service tax or income tax or filing his income tax returns.



K.V.DHANANJAY
Advocate
Supreme Court
+91 9902909390
+91 9910577765