In a writ petition filed by the Garment Exporters Association of Rajasthan challenging the constitutional validity of a new clause under section 43B(h) of the Income tax Act, a Rajasthan High Court bench comprising Justices Pankaj Bhandari and Praveer Bhatnagar has issued notices to the Centre and the Central Board of Direct Taxes (CBDT).
The court has instructed the respondents to provide reasons why a stay should not be granted on the enforcement of this provision, which relates to payments made to micro and small enterprises (MSEs), for the duration of the petition’s pendency. Next hearing in the case is scheduled for Sept 20.
The petitioners contended that the Ac’s section 43B(h) places significant financial burden on businesses, especially those in export sector, as it imposes strict payment timelines for buyers, while export payments often take long to process. Moreover, there is already a penalty in the form of high interest payments on delayed payments and disallowance of such interest in computing income. “Therefore, treating purchase price as income would be highly arbitrary and discretionary,” the petitioner contended. Senior advocate Sanjay Jhanwar represented the petitioner, while additional solicitor general RD Rastogi represented the Centre.
Source: The Times of India
Share this content: