Law:

Section:

JUDGMENT L. Narasimha Reddy, J. - This writ petition is filed with a prayer to declare the action of the Visakhapatnam Port Trust, the second respondent herein, in not refunding the amount that has been collected in the nature of fringe benefit tax (FBT) between 2005 and 2009 from the members of the petitioner-association despite repeated demands, as illegal, arbitrary and contrary to the provisions of the Income-tax Act, 1961 (for short "the Act"), apart from being unconstitutional. Consequential direction for refund of the amount of Rs. 7,40,69,450 with interest at the rate of 14.75 per cent. per annum is sought. 2. The facts, in brief, are that at the Visakhapatnam Port, several ships arrive for loading and unloading purposes. The Visakhapatnam Dock Labour Board (for short "the Board") was constituted with a view to regulate the work force needed for that purpose. The board would supply the required manpower for loading and unloading of the ships. To act as a bridge between the ship owners on the one hand, and the board, on the other hand, the institution of stevedores is introduced. The board grants licences to the concerned individuals or agencies to act as stevedores, and on being so recognised, the stevedores are supplied the work force by the board. Over the period, the board was merged with the Visakhapatnam Port Trust, the second respondent herein. 3. Parliament amended the Act providing for levy of tax on the fringe benefits paid to the employees. The liability to pay the tax, on this account, however, was placed upon the employer. The board felt that it is under obligation to pay the fringe benefit tax in respect of the employees/workers on its rolls. Since the wages for the workers are paid by the stevedores, it was resolved to collect the fringe benefit tax for the concerned employees, from the respective stevedores. The tax is on the fringe benefits paid to each employee. However, a formula was evolved to collect Re. 1 for each metric tonne of the material handled by the stevedore for onward payment of fringe benefit tax, to the Income-tax Department. Between the years 2005 and 2009, a sum of Rs. 7 crores was collected towards fringe benefit tax…

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