Supreme Court Dismisses CBDT SLPs against Telangana HC Order Quashing Income Tax Notices issued to Telangana Pollution Control Board [Read Judgement]

The Supreme Court has refused to interfere with the Telangana High Court judgment which granted relief to the Telangana State Pollution Control Board and quashed the Income Tax Department’s action against it, and the Court dismissed the CBDT’s Special Leave Petitions after finding no reason to interfere with the High Court’s decision.

The writ petitions were filed by the Telangana State Pollution Control Board against the Central Board of Direct Taxes and other Income Tax authorities.

Before the High Court, the Pollution Control Board argued that it is a statutory body constituted under environmental laws and performs public functions, and the Income Tax Department could not mechanically treat it as a normal taxable assessee. The Board challenged the communications issued by the department which were requiring it to comply with Income Tax requirements.

The Income Tax Department opposed the writ petitions and argued that statutory status does not automatically grant exemption from income tax, and if the Board claims exemption, it must comply with the Income Tax Act framework.

The Division Bench of Justice M.S. Ramachandra Rao and Justice T. Vinod Kumar examined the nature of the Pollution Control Board and the legal position applicable to statutory authorities. The court observed that the Board performs regulatory public functions under statute and it cannot be treated as an ordinary commercial assessee in a mechanical manner.

The court granted relief to the Board and quashed the impugned actions of the Income Tax Department. Aggrieved by this, the CBDT and Union of India filed special leave petitions before the Supreme Court.

The Bench comprising Justice B.V. Nagarathna and Justice Ujjal Bhuyan heard the Additional Solicitor General for the petitioners and perused the material on record including the impugned High Court judgment.

After hearing the petitioners, the Supreme Court observed that it did not find any reason to interfere with the impugned order. The Court dismissed both Special Leave Petitions and disposed of pending applications.

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