Waiver scheme interpretation: eligibility turns on the operative text, and relief applies only to pending appeals.

The Karnataka High Court held that the Kara Samadhana Scheme could not be read to require a dealer to admit liability on part of the turnover, because that condition did not appear in the operative provisions and could not be added from the preamble. The Court also held that the Scheme applied only to taxes, interest and penalty involved in appeals pending on the stipulated date. Accordingly, waiver was unavailable for assessment years 1995-96 and 1996-97, when no appeal was pending, but was available for 1997-98 and 1998-99, where appeals were pending and the Scheme's conditions were otherwise met.

---

---

Issues: (i) Whether the Kara Samadhana Scheme required the dealer to admit liability on some part of the turnover as a condition for waiver of tax, interest and penalty. (ii) Whether the assessee was entitled to waiver under the Scheme for assessment years in respect of which no appeal was pending on the relevant date, and for assessment years in which appeals were pending.

Issue (i): Whether the Kara Samadhana Scheme required the dealer to admit liability on some part of the turnover as a condition for waiver of tax, interest and penalty.

Analysis: The Scheme was framed to settle disputes arising from pending appeals by permitting waiver on compliance with specified monetary and procedural conditions. Its operative portion did not state that eligibility depended on admission of tax liability on part of the turnover. The preamble, relied upon to suggest such a condition, only explained that in many cases tax admitted in returns had also been disputed in appeal. The language of the Scheme was clear and unambiguous, and the preamble could not be used to add a condition not found in the enacting part.

Conclusion: The Scheme did not require admission of liability on part of the turnover, and the objection based on that ground was unsustainable.

Issue (ii): Whether the assessee was entitled to waiver under the Scheme for assessment years in respect of which no appeal was pending on the relevant date, and for assessment years in which appeals were pending.

Analysis: The Scheme applied only to taxes, penalties and interest involved in pending appeals filed on or before the stipulated date. For the assessment years 1995-96 and 1996-97, the appeals had already been dismissed long before the Scheme came into force and therefore were not pending. For the assessment years 1997-98 and 1998-99, the appeals were pending on the relevant date, and there was no finding of non-compliance with the Scheme's conditions and procedure.

Conclusion: The assessee was not entitled to waiver for assessment years 1995-96 and 1996-97, but was entitled to the benefit of the Scheme for assessment years 1997-98 and 1998-99.

Final Conclusion: The challenge succeeded only to the extent that the waiver scheme had to be applied for the years covered by pending appeals, while the claim failed for the years in which no appeal subsisted on the relevant date.

Ratio Decidendi: Where the language of a waiver scheme is clear, eligibility must be determined from its operative provisions, and the preamble cannot be used to impose an additional condition not expressed in the scheme; moreover, the scheme applies only to matters covered by pending appeals within its stipulated date conditions.

---