Tax amnesty settlement cannot be denied on the basis of a pending or proposed State appeal.

Section 31A of the Kerala Value Added Tax Act was treated as a complete statutory settlement mechanism for tax arrears, and the Court held that an application under the Amnesty Scheme could not be rejected merely because the State intended to file, or had filed, an appeal against the first appellate order. A pending or proposed State appeal was not a statutory disqualification, and settlement under the scheme would render such appeal infructuous. The Department also had no authority to refuse the application on that basis or to rely on a circular that created a ground of rejection not found in the statute; the statutory benefit had to be processed and given effect.

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Issues: (i) Whether an application under the Amnesty Scheme in Section 31A of the Kerala Value Added Tax Act, 2003 could be rejected merely because the State intended to file, or had filed, an appeal against the first appellate order; (ii) Whether the Department had power to reject the statutory application on that ground or rely on a circular to do so.

Issue (i): Whether an application under the Amnesty Scheme in Section 31A of the Kerala Value Added Tax Act, 2003 could be rejected merely because the State intended to file, or had filed, an appeal against the first appellate order.

Analysis: Section 31A was treated as a complete settlement mechanism for arrears of tax and allied liabilities. The scheme required the assessing authority to determine the amounts due on the assessee's option and enabled settlement by payment within the stipulated time. The provision expressly contemplated withdrawal of pending proceedings by the assessee and withdrawal of revenue recovery proceedings on settlement. The Court held that a pending or proposed State appeal did not create any statutory disqualification for availing the scheme, and a settlement under the scheme would in any event render such appeal infructuous.

Conclusion: The application could not be rejected merely because the State intended to file or had filed an appeal.

Issue (ii): Whether the Department had power to reject the statutory application on that ground or rely on a circular to do so.

Analysis: The Court held that Section 31A did not confer any power on the Department to reject an application on the basis of a contemplated State appeal. Once the assessee opted for the scheme and complied with the determination made under the provision, the Department was bound to process the settlement. A circular could not travel beyond the statute or create a new ground of rejection not found in the enactment. The scheme itself controlled the field, and any contrary departmental instruction was ineffective to defeat the statutory benefit.

Conclusion: The Department had no authority to reject the application on that basis, and the circular could not sustain the rejection.

Final Conclusion: The statutory amnesty benefit was held available to the assessees, and the refusals based on proposed or pending State appeals were unsustainable.

Ratio Decidendi: Where a tax amnesty provision provides a statutory mode of settlement of arrears and obliges the authority to determine the payable amount on the assessee's option, the application cannot be rejected on a ground not found in the statute, and a departmental circular cannot curtail that statutory entitlement.

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