Taxpayer wins penalty waiver under Vera Samadhan Yojna 2019 after authorities misinterpreted scheme provisions

Gujarat HC allowed petition challenging rejection of amnesty scheme benefits under Vera Samadhan Yojna 2019. Petitioner sought penalty waiver after paying tax and interest before assessment order. Revenue authorities rejected application citing non-deposit of penalty amount as per intimation letter. Court held authorities misinterpreted scheme provisions - since petitioner already paid tax and interest prior to assessment order and scheme announcement, penalty waiver was justified under Clause 4.5. Rejection order and bank account attachment were quashed. Petition allowed.

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Issues Involved:
1. Rejection of benefit under the Vera Samadhan Yojna, 2019 (Amnesty Scheme).
2. Waiver of penalty based on prior payment of tax and interest.
3. Refund of penalty amount paid by the petitioner.
4. Quashing of attachment order on the petitioner's bank accounts.
5. Restoration of the second appeal if the Amnesty Scheme benefit is denied.

Issue-wise Detailed Analysis:

1. Rejection of Benefit under the Amnesty Scheme:
The petitioner challenged the rejection of benefits under the Amnesty Scheme, which was announced by the Government of Gujarat. The petitioner had deposited tax and interest prior to the assessment order and applied for the Amnesty Scheme to waive the penalty. The VAT Department rejected the application on the grounds that the petitioner did not make full payment against the outstanding amount as per the intimation letter. The court observed that the petitioner had already paid the tax and interest before the assessment order and was therefore entitled to the benefit of the Amnesty Scheme, which provides for the waiver of interest and penalty upon payment of tax.

2. Waiver of Penalty Based on Prior Payment of Tax and Interest:
The petitioner argued that since the tax and interest were paid before the assessment order, they were entitled to the waiver of penalty under the Amnesty Scheme. The respondent contended that the petitioner needed to pay 20% of the outstanding demand as per Clause 4.5 of the Amnesty Scheme. The court held that the petitioner was not required to pay any further amount as the assessment order pertained to tax, interest, and penalty, and the petitioner had already paid the tax and interest. The court found that the respondent's interpretation of Clause 4.5 was incorrect and contrary to the object of the Amnesty Scheme.

3. Refund of Penalty Amount Paid by the Petitioner:
The petitioner sought a refund of the penalty amount paid pursuant to the respondent's intimation letter. The court ruled that the petitioner was entitled to the waiver of the penalty under the Amnesty Scheme and directed the respondents to refund the amount recovered from the petitioner with statutory interest.

4. Quashing of Attachment Order on the Petitioner's Bank Accounts:
The petitioner also challenged the attachment order on their bank accounts. The court quashed the attachment order, noting that the petitioner had already applied for the Amnesty Scheme and was entitled to its benefits. The court emphasized that coercive recovery actions should not have been taken during the pendency of the application for waiver of penalty.

5. Restoration of the Second Appeal if the Amnesty Scheme Benefit is Denied:
The petitioner requested the restoration of the second appeal before the Gujarat Value Added Tax Tribunal if the benefit under the Amnesty Scheme was denied. However, since the court ruled in favor of the petitioner regarding the Amnesty Scheme, the alternative prayer for restoration of the second appeal did not survive.

Conclusion:
The court allowed the petitions, quashed the impugned communication dated 11.03.2022, and the attachment order. The respondents were directed to grant the benefit of the Amnesty Scheme to the petitioner and refund the amount recovered with statutory interest within 12 weeks. The court emphasized that the petitioner was entitled to the waiver of penalty under the Amnesty Scheme, having already paid the tax and interest.

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