Supreme Court stays orders of Kerala, Allahabad High Courts restraining recovery of taxes, dues

The Supreme Court Friday stayed a Kerala High Court order asking authorities not to levy taxes and recover bank dues from people till April 6 in view of the coronavirus pandemic.

A bench, headed by Justice A M Khanwilkar, took note of the submissions of Solicitor General Tushar Mehta, who was appearing for the Centre, that the Kerala High Court order needed to be stayed as there cannot be a blanket order.

Restraint on recovery of taxes will put the government at prejudice due to the closure of financial year on March 31, Mehta said, adding that there is a mechanism for making online payment of taxes.

There is no need at all for the high courts to pass such an order, which effectively stops people from paying taxes, he said.

Mehta contended that even people who would have volunteered to pay the taxes and file returns will stop doing so in wake of the high court orders.

He said they have exceeded their jurisdiction and encroached upon the powers of the government to take policy decisions.

The top court, while issuing notice to the petitioners before the high court, directed the registry to accept the Centre's appeals against the judgment and order(s) passed by the Kerala and Allahabad High Court.

"In the meantime, there shall be ex-parte ad-interim stay of the impugned judgment and order(s) passed in the aforesaid writ petitions and of further proceedings before the High Court(s)..," the bench said.

The top court recorded the submission of the Solicitor General that the government is fully conscious of the prevailing situation due to coronavirus and would itself evolve a proper mechanism to assuage concerns and hardships of everyone.

In its plea, the Centre said: "The order passed by the high courts is in violation of the doctrine of separation of powers in as much as it encroaches upon the functions of the Executive and is opposed to the basic framework of the Constitution of India."

It said the directions of the high courts amount to judicial legislation in as much as the nature of broad directions passed are purely in the realm of a policy decision, which can be taken only by the government of India in consultation with various experts of the relevant fields.

The central government in its plea also said that the high courts have failed to consider that if banks cannot recover loans, the cash problems that occur later would limit their capacity to give further loans and will have far reaching consequences on the economy.

The plea said the high courts failed to consider that there is no legal ground behind deferring all recoveries since many of the taxes are required to be paid online without human contact.

It said that the decision to defer recoveries will lead to severe cash flow and liquidity crisis and consequently government may find it difficult to run development and its basic maintenance activities such as paying salary to its employees.