Auction forfeiture credit must be applied against tax liability when computing relief under an amnesty scheme.

Amounts forfeited in auction proceedings initiated solely to recover tax arrears must be treated as realised towards the defaulter's liability. The forfeited auction consideration therefore has to be credited when computing the amount payable under an amnesty scheme, and the application must be processed on that basis.

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Issues: Whether the amount forfeited by the Government from an auction purchaser in revenue recovery proceedings initiated for recovery of tax arrears could be granted as credit to the assessee while computing the amount payable under the amnesty scheme.

Analysis: The auction proceedings were undertaken only for realisation of the petitioner's tax dues. The forfeited amount represented part of the auction consideration paid in relation to the recovery process, and its retention by the Government arose from the purchaser's default in paying the balance bid amount. In these circumstances, the amount realised through the recovery mechanism had to be treated as going towards discharge of the petitioner's liability. The petitioner had also accounted for that amount in the amnesty application, which therefore required consideration as a valid application under the scheme.

Conclusion: The forfeited auction amount had to be credited against the petitioner's liability, and the amnesty application was required to be processed by granting such credit.

Ratio Decidendi: Amounts realised or forfeited in auction proceedings initiated solely for recovery of tax dues must be appropriated towards the defaulter's liability and given due credit while computing relief under an amnesty scheme.

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