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2006 Supreme(Cal) 804
High Court Of Calcutta
Tapan Kumar Dutt, J.
NATIONAL FEDERATION OF TELECOM EMPLOYEES (BSNL) - Appellant
Versus
BHARAT SANCHAR NIGAM LIMITED - Respondent
W. P. 14034 (W) Of 2005
Decided On : 12/19/2006
D.SAHA ROY, J.N.MITRA, KISHORE DUTTA, SUSMITA SHAW
In the absence of a specific law authorizing the imposition of a tax, a delegated authority cannot impose such tax, and the recovery of such tax from employees is illegal.
Headnote:
PAYMENT OF WAGES ACT, 1936 - SECTION 6, 7 - PAYMENT OF WAGES - MODE OF PAYMENT - EMPLOYEES' RIGHT TO RECEIVE WAGES IN CASH - DEDUCTIONS FROM WAGES - BANKING CASH TRANSACTION TAX - IMPOSITION ON EMPLOYEES - LEGALITY - COURT'S ANALYSIS AND CONCLUSION.
Fact of the Case:
Employees of Telecom Factory of West Bengal challenged a memo and subsequent notices issued by the respondent authorities mandating payment of wages through cheques or e-payments to avoid banking cash transaction tax. The petitioners contended that this would result in deductions from their wages and that they had the right to receive wages in cash.
Finding of the Court:
The court held that the impugned notifications issued by the respondent authorities were illegal and quashed them. It held that the respondents had no authority to collect the banking cash transaction tax from their employees in case of payment of wages in cash and could not compel employees to accept wages in cheques.
Issues: 1. Whether the respondent authorities could compel employees to receive wages by cheque or e-payments to avoid banking cash transaction tax? 2. Whether the respondents could deduct the banking cash transaction tax from the wages of employees who opted for cash payment?
Ratio Decidendi: 1. The court relied on Article 265 of the Constitution of India, which states that no tax shall be levied or collected except by authority of law, and held that there was no law authorizing the imposition of such tax on employees. 2. The court also relied on Section 6 of the Payment of Wages Act, 1936, which provides that wages shall be paid in current coin or currency notes or in both unless the employer obtains a written authorization from the employee for making payment of wages either by cheque or by crediting the wages in the bank account. 3. The court held that the respondents' act of attempting to recover the tax from their employees was illegal and that they were bound under the law to make payment of wages in current coin or currency notes or in both unless there was a written authorization by the employee.
Final Decision: The court quashed the impugned notifications issued by the respondent authorities and restrained them from recovering any part of the banking cash transaction tax, if any, from their employees. It also restrained the respondents from compelling their employees to receive wages by way of cheque unless the employee concerned chose to authorize the employer for payment of his wages by cheque or by crediting his wages in the bank account.
( 1 ) HEARD the learned Advocate for the writ petitioners as well as the learned advocate for the respondent-authorities. The facts of the case, very briefly, are as follows:
The writ petitioners represent the employees of the Telecom Factory of West bengal. The petitioners' case is that all the employees and workers attached to the different units of telecom factories of West Bengal have been paid their monthly wages in cash in terms of Payment of Wages Act, 1936. The writ petitioners have challenged a memo dated 11. 05. 2005 issued by the Joint DDJ (CA), Bharat Sanchar Nigam Ltd. to the Chief General Manager, All BSNL circles wherein it has been stated that as per the Finance Bill for 2005-06, proposed in the Parliament, there will be a levy of cash withdrawal tax of 0. 1% for cash withdrawals of Rs. 1 lakh and above on a single day, made by the corporate and business houses. It was further stated in the said memo that cash withdrawal tax can be avoided by resorting to all the payments by cheque/e-payments and ensuring that the cash drawals is less than Rs. 1 lakh on any single day. In the said memo it was stated that it may be ensured that all the payments are made by cheques/e-payments to avoid cash withdrawal tax and cash withdrawal of Rs. 1 lakh and above on a single day is totally avoided. In a letter dated 31. 05. 2005 the respondent No. 1 wrote to the Heads of All BSNL circles (except Jammu and Kashmir ). It was stated inter alia that on or after 1st june, 2005 all staff may be advised to get the bank account opened so that all staff claims can be settled through bank account to avoid the banking cash transaction tax and the salary of the employees will be disbursed through bank account from June, 2005 onwards in supersession of all earlier orders. It was further stated in the said letter that if any payment has to be made in cash, on written request of any employee, which result into withdrawals of an amount more than Rs. 1 lakh in a single day from single bank account, the bank cash transaction tax may be recovered from the beneficiary. In the notice dated 3rd june, 2005 the respondent No. 1 stated inter alia that with effect from 01. 06. 2005 individual cash will be paid restricted to Rs. 5,000/- and that responsibility lies with the individual for taking form for opening salary account with SBI, chowringhee Branch and, as this is a must, all were requested to contact P. O. TF Alipore for such purpose. It appears that by a notice dated 21. 06. 2005 the respondent No. 1 issued the following notice with copies to various authorities:NOTICE re: Option for payment of salary/ wages by cheque or cash. In supersession of earlier payment notices it is notified for information to all concerned that the payment of salary/wages for the month of June' 05 will be disbursed either by cheque or cash with 0. 1% transaction tax as per order No. 1001-05/2005/ca-III/bsnl dt. 31. 5. 05 of BSNL corporate office. Further in consultation with Service Union TF Kolkata it has been decided that payment of BSNLMRS (1st quarter 2005-06) will be disbursed along with salary/wages for the month of June' 05. Staff concerned is to offer written 'option' for cheque/cash payment within 24. 06. 2005 (Friday) positively. Employees are requested to collect the option Form from CSS (RE) for regular staff or Sr. SS (IE) for industrial staff and may be submitted to CSS (RE)/sr. SS (IE) respectively. This is issued with the approval of the competent authority. No. CAO/tf/ap/payment/05-06 dated, June 21, 2005 (N. C. Naskar) chief Accounts Officer telecom Factory, Kolkata-27"
( 2 ) IT appears that by a letter dated 9/6/2005 the respondent No. 1 wrote to the General Manager, Telecom Factory, Alipore, Kolkata inter alia that it is the statutory obligation of the employers to make payment to the workmen under section 6 of the Payment of Wages Act.
( 3 ) THE learned Advocate for the writ petitioners submitted that the respondent authorities,
