The central legal point established is the need for timely decision-making by the Ministry of Finance, Government of India and the CBDT on requests for exemption from tax provisions.

JUDGMENT

(Prayer: Writ Petition under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari calling for the entire records relating to the impugned order passed by the 1st respondent in his proceedings Na.Ka.No.006410/2019-20, Kanakku dated 02.03.2020 and quash the same.)

Common Order:

Since the issue raised in these writ petitions is one and the same, with the consent of learned counsel for both sides, these writ petitions are disposed of by this common order.

2. The petitioners herein are Primary Agricultural Cooperative Credit Societies. They deal with lending loans to the members of the concerned Society for agriculture and allied activities.

3. Sometimes, when the State Government comes forward to give financial benefit or to undertake some welfare measures to larger public, that kind of Schemes are being implemented through these Cooperative Societies. One such welfare scheme that was proposed and implemented by the State Government is giving some freebies during the Pongal festival in the State of Tamil Nadu. When such kind of Pongal benefits by way of cash which was sought to be issued to the beneficiaries who are in lakhs and lakhs throughout the State of Tamil Nadu, such a massive welfare measures naturally have to be undertaken by the State Government through an organized system, which must have the capacity to act throughout the State.

4. That is the reason why the Government, when wanted to implement the Pongal welfare scheme, decided to implement the Scheme through these Primary Agricultural Cooperative Credit Societies spread across the State. According to the Scheme, the bulk allotment for the district concerned, would be made to the District Central Cooperative Bank concerned and from the Central Cooperative Bank concerned, the Primary Agricultural Cooperative Credit Society (In short -the Primary Society-) would draw the money in bulk and would distribute the money to the beneficiaries. For the purpose of distributing the money when the Primary Societies withdraw money from the Central Cooperative Bank of the district concerned, that was considered to be the income of the Society, where the Central Cooperative Bank was liable to deduct tax at source as per Section 194N of the Income Tax Act, 1961.

5. The said provision was brought to the Statute Book by virtue of the amendment made through Finance Act No.2 of 2019 with effect from 01.09.2019.

6. As per Section 194N, a banking company or a post office responsible for paying any sum, aggregate of sums, as the case may be, in cash, in excess of one crore rupees during the previous year, to any person (herein referred to as the recipient) from one or more accounts maintained by the recipient with it, shall, at the time of payment of such sum, deduct an amount equal to two percent of sum exceeding one crore rupees, as income-tax. Therefore, it became obligatory on the part of those banking companies to make a deduction of tax at source at 2% of any payment in cash exceeding Rupees One Crore during the previous year to any person, from one or more accounts maintained by the recipient and that should be paid to the credit of the bank concerned as an assessee.

7. In fact, this ceiling of Rupees One Crore had been amended to Rupees Three Crores, in case of Cooperative Banks with effect from 01.04.2023.

8. Be that as it may. During the relevant point of time when these writ petitions were filed, pursuant to Section 194N of the Act, the respective Central Cooperative Banks had issued a circular to the Primary Societies coming under the purview of such District Central Cooperative Banks to strictly adhere to the provisions of Section 194N. Felt aggrieved over the said circular, as these Primary Societies were only acting as Facilitators to pass on the welfare scheme being implemented by the State Government, they have chosen to challenge the circulars issued by the respective District Central Cooperative Banks. That is how a batch of writ petiti