Tax amnesty scheme arrears cannot be forced into settlement merely because a Revenue appeal is pending.

Under the Kerala Finance Act, 2020 Amnesty Scheme, an assessee could be required to settle only amounts that were legally in arrears, and the Scheme had to be strictly complied with as a complete code. "Arrears of tax" was read in its ordinary sense as overdue or unpaid tax pursuant to an assessment and demand; where an assessee's appeal had succeeded and no demand survived, there was no arrear for that year. Clause (11) permitted an assessee to opt to include a year in which the Government's appeal was pending, but it did not authorise compulsory inclusion. The Revenue could not insist on settlement of the earlier year merely because its appeal was pending.

---

---

Issues: Whether, under the Amnesty Scheme, 2020 introduced by section 10 of the Kerala Finance Act, 2020, an assessee seeking settlement for one assessment year can be compelled to include another assessment year merely because the Revenue's appeal relating to that year is pending.

Analysis: The Scheme was held to be a complete code meant to settle arrears of tax or other amounts due, and its conditions had to be strictly complied with. The expression "arrears of tax" was construed in its ordinary sense as money overdue or unpaid pursuant to an assessment and demand. Where the assessee's appeal had succeeded and no assessment demand survived, there was no arrear for that year. Clause (11) of section 10 was read as enabling an assessee, at its option, to settle even cases where an appeal had been filed by the Government, but not as compelling settlement of such a year. The pending State appeal for the earlier year therefore did not convert that year into arrears for the purposes of mandatory inclusion under the Scheme.

Conclusion: The assessee could avail the Amnesty Scheme for the assessment year 2014-15 without including the assessment year 2012-13, and the Revenue could not insist on inclusion of the latter year merely because its appeal was pending.

Ratio Decidendi: Under a tax amnesty scheme, only amounts that are legally in arrears can be compelled for settlement; a pending appeal by the Revenue does not by itself create arrears or authorise compulsory inclusion of that year, though the assessee may opt to settle it.

---