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The Supreme Court today stayed the orders passed by the High Courts of Kerala and Allahabad on March 19, which effectively deferred the recovery of all taxes till April 6 in view of the Coronavirus outbreak.
On account of the urgency of in the matter, the same was mentioned by Solicitor General Tushar Mehta for the Union of India before the Bench of Justices AM Khanwilkar, Vineet Saran, and Aniruddha Bose.
The Bench agreed to hear the matter and subsequently stayed the orders.
The Court also went ahead to stay all the proceedings in relation to the same pending before the High Courts while also taking on record the Centre's position on the ongoing health emergency in light of the COVID-19 pandemic.
In its statement on the same, the Centre stated that it is conscious of the difficulty faced by the people and would endeavour to evolve a mechanism to alleviate people's hardships in this regard.
Mehta had argued before the Apex Court that there existed a mechanism for making online payment of taxes and there was no need for the High Courts to pass such an order, which effectively stops people from paying taxes.
He argued that the amount collected monthly by the Centre by way of GST is what was used for payment of salaries. Orders of the nature passed by the High Courts would affect the situation, it was argued.
The petition filed by the Centre challenged the orders also on the grounds of violation of the doctrine of separation of powers. It contends that the High Courts exceeded their jurisdiction by passing orders through which recovery of taxes by various authorities stood deferred till April 6.
Anticipating a cascading effect of the High Courts' orders, the Centre further contended that the same may lead to a severe crunch in cash flow and liquidity crisis, and consequently led to stalling of developmental activities. Additionally, it was contended that the orders would affect payment of salaries to crores of government employees.
The order would also, in fact, incentivise people capable of paying taxes to defer doing the same till the date prescribed by the High Courts, should the orders come into force, the Centre submitted. The petition also notes that 90% of taxes normally get paid towards the fag end, when the last date approaches.
It was further argued that the High Courts failed to consider that the payment of taxes is an online process and is not one that requires human contact. The commitment of the government to deal with the Coronavirus outbreak is also not taken account of by the High Courts, it is argued.
Therefore, citing far reaching consequences of the High Courts' orders, the Centre challenged the same before the Supreme Court.
By an interim order passed on March 19, the Allahabad High Court directed state government authorities to defer any proceedings relating to recovery, auction, eviction, and demolition for two weeks, in light of the Coronavirus outbreak.
Specifically, the High Court had issued the following direction:
"a. All the recovery proceedings at the end of the district administration, financial institutions and other administrative bodies/authorities/agencies and otherwise at the end of the instrumentalities of the State shall be deferred for a period of two weeks i.e. till 6.4.2020."
The Centre has challenged the order on this aspect, stating that the High Court could not have issued "broad omnibus directions" to defer recovery proceedings by various tax authorities of Central and state governments as well as by banks till April 6.
[Read the SLP]