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of <h1>Court quashes penalty, grants waiver in reassessment order challenge.</h1> <h3>M/s. RAJAMAHAL INTERNATIONAL PRIVATE LIMITED Versus THE STATE OF KARNATAKA AND THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT)</h3> M/s. RAJAMAHAL INTERNATIONAL PRIVATE LIMITED Versus THE STATE OF KARNATAKA AND THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT) - TMI Issues Involved:1. Applicability of the Karasamadhana Scheme, 2021 for waiver of penalty.2. Interpretation of various clauses of the Karasamadhana Scheme, 2021.3. Legality of the impugned endorsement rejecting the waiver application.4. Compliance with the conditions stipulated in the Karasamadhana Scheme, 2021.Issue-wise Detailed Analysis:1. Applicability of the Karasamadhana Scheme, 2021 for waiver of penalty:The petitioner sought quashing of the impugned endorsement that rejected their application for waiver of penalty under the Karasamadhana Scheme, 2021. The petitioner argued that they were entitled to a complete waiver of 100% of the penalty as per Clause 2 of the Scheme. The reassessment proceedings for the assessment year 2016-17 were completed on 28.04.2021, and the petitioner applied for the waiver on 13.08.2021. The respondents contended that the penalty levied was beyond the ambit of the Scheme.2. Interpretation of various clauses of the Karasamadhana Scheme, 2021:The court analyzed Clauses 1 to 5.2 of the Scheme, which provide for waiver of penalties under different circumstances. Clause 1 relates to penalties under the Karnataka Sales Tax Act and Central Sales Tax Act. Clause 2 pertains to penalties under the KVAT Act and CST Act. Clause 3 deals with specific penalties under the KVAT Act. Clause 4 addresses penalties under various other enactments. Clause 5 stipulates conditions for the waiver, including full payment of arrears of tax by 31.10.2021 and eligibility for waiver if only arrears of penalty and interest exist.3. Legality of the impugned endorsement rejecting the waiver application:The court found that Clause 2 of the Scheme was applicable to the petitioner's case, as the reassessment was completed on 28.04.2021, before the cut-off date of 31.07.2021. The penalty was levied under Section 70(2) R/w Section 39 of the KVAT Act, not under the sections mentioned in Clause 3. Therefore, the petitioner was entitled to a 100% waiver of the penalty. The court held that the impugned endorsement rejecting the waiver application was illegal and arbitrary.4. Compliance with the conditions stipulated in the Karasamadhana Scheme, 2021:The court noted that the petitioner had no arrears of tax, only arrears of penalty, fulfilling the conditions under Clause 5.2 of the Scheme. Since the reassessment was completed before the cut-off date and there were no arrears of tax, the petitioner was entitled to the waiver. The court directed the respondents to allow the petitioner's application and grant the waiver of the penalty.Conclusion:The court allowed the petition, quashing the impugned endorsement and the demand notice. The respondents were directed to grant the waiver of 100% of the penalty imposed on the petitioner in the reassessment order dated 28.04.2021.Order:(i) Petition is allowed.(ii) The impugned endorsement dated 16.08.2021 is quashed.(iii) Respondents are directed to allow the petitioner’s application and grant waiver of 100% of the penalty.(iv) The impugned demand notice dated 28.04.2021 is quashed.
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