2017 (1) TMI 400 - HC - VAT and Sales Tax

Court interprets Kerala Sales Tax Act for interest and penalty reduction, directs reassessment.

The court interpreted Section 23B(d) of the Kerala General Sales Tax Act to require a 90% reduction in both the interest on the tax amount and the penalty ... Benefit of amnesty in terms of Section 23B(d) of the Act - manner of computation of amount to be paid in amnesty scheme - whether the amnesty scheme involves payment of 10% of the penalty amount and 10% of the interest on penalty? - interpretation of statute - Held that: - In respect of amnesty scheme available in respect of demands relating to the period 1st April, 2000 to 31st March, 2005, the reduction granted is 90% of the interest on the tax amount and for the amount of penalty and interest thereon - The contention is that the reduction is for 90% of the interest on tax amount and also the entire amount of penalty and interest thereon. If such was the intention of the Legislature, definitely there was no reason to have specifically mentioned it, whereas what the Legislature has done was that after the word tax amount, a comma is inserted and thereafter the words 'and for the amount of penalty and interest thereon' is incorporated, which apparently indicates that the words “reduction of 90%” is on the interest on the tax amount as well as on the amount of penalty and interest thereon. A different view is not possible and therefore I do not think that the petitioner was justified in making such a demand - petition dismissed - decided against petitioner. Issues:1. Interpretation of Section 23B(d) of the Kerala General Sales Tax Act regarding the payment under the amnesty scheme.Detailed Analysis:The petitioner sought a direction for the 1st respondent to receive a specific amount under Section 23B of the Act. The petitioner claimed the benefit of amnesty under Section 23B(d) of the Act, which allows for a reduction of 90% of the interest and the entire penalty amount due. The petitioner challenged the computation method for the amnesty amount, arguing it was illegal and not in line with the statutory provision. The respondent contended that the petitioner's payment did not satisfy the amnesty scheme requirements, citing the principal amount due, 10% of the penalty, and 10% of the interest on the penalty. The Tribunal had also modified the assessment order during the proceedings.The key question before the court was whether the amnesty scheme required payment of 10% of the penalty amount and 10% of the interest on the penalty. Section 23B(d) of the Act provides for a reduction of 90% of the interest on the tax amount and the penalty, as well as the interest on the penalty, for demands between April 1, 2000, and March 31, 2005. The court interpreted the provision to mean that the 90% reduction applies to both the interest on the tax amount and the penalty amount, contrary to the petitioner's argument.Considering the payments made by the petitioner during the proceedings and the revised assessment order passed by the Tribunal, the court directed the Commercial Tax Officer to make a fresh decision in light of the judgment. The writ petition was disposed of accordingly.