Supreme Court Directs Union to Sympathetically Consider MNOLA's Plea for 60-Day Tax Exemption for Seafarers

A Bench led by the Chief Justice disposed of the writ without expressing opinion on merits, directing the Union to take a sympathetic decision on representations within four weeks.

In a significant move for Indian seafarers caught in the crosshairs of pandemic-induced travel disruptions, the Supreme Court on August 21 directed the Union of India to sympathetically consider representations filed by the Merchant Navy Officers and Ladies Association (MNOLA). The association sought a 60-day exemption from the residential threshold under the Income Tax Act for seafarers who remained in India for more than 182 days during the COVID-19 pandemic.

The Dispute: A Circular That Ignored On-Ground Realities

The petition challenged CBDT Circular No.11 of 2020, dated May 8, 2020. MNOLA argued that the authorities had acted arbitrarily by ignoring the fact that global port and airline suspensions since January 2020 had forced seafarers to remain in India beyond the 182-day period. Under the Income Tax Act, exceeding 182 days in a financial year can trigger residential status, exposing seafarers to tax on their global income—a burden they would normally not face.

MNOLA had raised the issue through detailed representations (Annexures P-2 & P-3), but the authorities had not responded. The petition sought a direction to frame a "Compassionate Tax Policy" granting at least 60 days of exemption.

The Court's Intervention: A Nudge Towards Compassion

The bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V. Mohana took note of the representations and, without delving into the merits, issued a clear directive.

"We find that the issue has been raised by the petitioner in the representations (Annexures P-2 & P-3). We, therefore, without expressing any opinion on merits, dispose of this petition with a direction to the respondents to consider that representation(s) sympathetically..."

The Court anchored its directive in a series of precedents that establish the principle of sympathetic consideration in extraordinary circumstances. It specifically referenced Gaurav Baid vs. Union of India , Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal , Gujarat Assembly Election Case , Union of India vs. Azadi Bachao Andolan , and Shri Bhagwati Steel Rolling Mills vs. Commissioner of Central Excise .

What Happens Next?

The Union of India has been directed to take an "appropriate decision" within four weeks. While the Court did not mandate a specific outcome, the language—"sympathetically"—leaves little doubt that the government must consider the humanitarian context of the pandemic.

For thousands of seafarers who remained stranded in India, this order offers a ray of hope. If the Union accedes to MNOLA's request, it would provide a 60-day buffer, effectively excluding the pandemic-induced stay from the residential count and sparing seafarers from an unintended tax burden.

The writ petition, along with all pending applications, stands disposed of. All eyes now turn to the Union's response due within the month.