2024 (10) TMI 1176 - HC - VAT / Sales Tax

Settlement authorities cannot import MVAT Act provisions to adjust refunds against outstanding demands under Section 15

Andreas Stihl Private Limited Versus The Joint Commissioner of State Tax, LTU-2, Pune, The Deputy Commissioner of State Tax, Pune and State of Maharashtra.

Bombay HC quashed review orders under Section 15 of the Maharashtra Settlement of Arrears of Taxes Act, 2022, ruling that authorities lacked jurisdiction ... Seeking to challenge review orders 15 of the Maharashtra Settlement of Arrears of Taxes, Interest, Penalties or Late Fees Act, 2022 (Settlement Act) - refund amount for financial year 2016-2017 is sought to be adjusted against the outstanding demand for the financial years 2013-2014, 2015-2016 and 2017-2018 - seeking to review settlement orders passed under Section 13 (1) of the Settlement Act. Whether the Respondents were justified in exercising the review powers under Section 15 of the Settlement Act to review the settlement orders passed under Section 13 (1) of the said Settlement Act and recalculating the amount of ‘arrears’ which were initially accepted by the Respondents while passing the settlement orders? - HELD THAT:- On an analysis of the Settlement Act, it is found to be a self-contained code in itself, inasmuch as, it defines various terms for the purpose of the said Act. It provides for the designated authority for implementation of the said Act. It provides for eligibility for the settlement of the arrears, the amount which is to be considered for the settlement of the Act, the time within which the amount determined for settlement is required to be paid, the conditions to be satisfied for availing the settlement, order to be passed accepting or rejecting the settlement, power of rectification, review and appeal. Consequences of settlement order obtained by suppression and conclusiveness of the proceedings covered by settlement. Whether authorities under the Settlement Act can abdicate and exercise powers granted to authorities under the MVAT Act? - HELD THAT:- It is important to note that the Settlement Act nowhere provides or empowers the authorities under the said Act to import the provisions of the MVAT Act and more particularly provisions of Section 50 of the MVAT Act for determination of the requisite amount to be paid under the Settlement Act. Therefore, the action of the Respondents in passing the review order by importing the provisions of Section 50 of the MVAT Act is wholly without the authority of law and without jurisdiction. If the legislature wanted to empower the authorities under the Settlement Act with the powers conferred under the MVAT Act then nothing prevented them from providing the same under the Settlement Act. The legislature while enacting the Settlement Act in Section 2 (2) provided that the “words and expressions” used in the Settlement Act, but not defined in the said Act shall have the same meanings assigned to them under the Relevant Act. However, the legislature consciously and rightly so did not empower the authorities under the Settlement Act with the powers conferred under the MVAT Act and, therefore, any action of the authorities under the Settlement Act by encroaching upon the powers conferred under the MVAT Act would be without jurisdiction. Whether, on a reading of the Settlement Act, amount for considering for settlement is to be arrived at after adjusting refund of other years against the dues of the years for which application is made under the Settlement Act? - HELD THAT:- There is no provision under Settlement Act which provides for calculation of outstanding arrears of a particular year to be arrived at after adjustment of refund for another year moreso in a case where there is no such adjustment of the refund order on the date of application or on the date of settlement order under Section 13 of the Settlement Act. Therefore the impugned action of the Respondents to recalculate the outstanding arrears for the financial years 2013-2014, 2015-2016 and 2017-2018 after passing the settlement order by invoking provisions of Section 15 of the Settlement Act admittedly without there being an order Section 50 of the MVAT Act is certainly without jurisdiction. Whether in the absence of any order under Section 50 of the MVAT Act for adjustment of refund order, are the authorities under the Settlement Act justified in invoking review powers under Section 15 of the Settlement Act? - HELD THAT:- On conjoint reading of Section 50 and Rule 60, unless an assessee desires for adjustment of refund of one year against demand of another year, the Commissioner cannot, under Section 50 adjust the same on its own volition and even if he proposes to do so he has to do so by giving an opportunity of hearing - In the instant case, admittedly there is neither such desire expressed by the Petitioner nor we have been shown any order under Section 50 which is passed for adjusting the refund of Financial Year 2016-2017 against demand for the years 2013-2014, 2015-2016 and 2017-2018. Therefore, in absence of any order under Section 50 read with Rule 60 of the MVAT Rules, the impugned action of the Respondents to adjust refund by resorting to the provisions of the Settlement Act is wholly without jurisdiction. In the absence of any order under Section 50 of the MVAT Act by the authorities under the said Act, review orders passed by authorities under the Settlement Act conferring power upon itself powers under Section 50 of the MVAT Act is without jurisdiction and also there is no provision under the Settlement Act to adjust such refund for arriving at the amount to be considered for the settlement and, therefore, there cannot be any error in the settlement orders for the authorities to exercise review powers under Section 15 of the Settlement Act. The impugned review orders dated 17th July 2023 passed under Section 15 of the Settlement Act for the years 2013-2014, 2015-2016 and 2017-2018 are hereby quashed and set aside and consequently impugned communication dated 13th October 2023 is also quashed and set aside - Respondents are directed to refund sum of Rs. 2,72,08,381/- being refund for the financial year 2016-2017 alongwith interest as per the Act and the said refund should be credited to the Petitioner’s account within four weeks from the date of uploading the present order. Petition disposed off. Issues Involved:1. Whether authorities under the Settlement Act can exercise powers granted to authorities under the MVAT ActRs.2. Whether the amount for settlement under the Settlement Act should be calculated after adjusting refunds from other yearsRs.3. Whether authorities under the Settlement Act are justified in invoking review powers under Section 15 of the Settlement Act without an order under Section 50 of the MVAT Act for refund adjustmentRs.Issue-wise Detailed Analysis:Issue A: Authority of Settlement Act vs. MVAT Act PowersThe court examined whether the authorities under the Settlement Act can exercise powers granted under the MVAT Act. The Settlement Act designates specific authorities for its implementation, distinct from those under the MVAT Act. The Commissioner of State Tax, while serving as a designated authority under the Settlement Act, cannot intermingle powers from different statutes. The court cited the principle that powers under one statute cannot be used for matters under another statute. In this case, no order under Section 50 of the MVAT Act existed for adjusting refunds against dues for other years. Therefore, the authorities under the Settlement Act lacked jurisdiction to invoke Section 50 of the MVAT Act in review proceedings, rendering the impugned orders void.Issue B: Calculation of Settlement AmountThe court analyzed whether the Settlement Act requires adjustment of refunds from other years in calculating settlement amounts. The Settlement Act provides a self-contained framework for determining arrears and requisite amounts, emphasizing that each financial year is treated separately. The court noted that the Settlement Act does not mandate adjusting refunds from other years against dues for the year under settlement. The legislature did not include provisions for such adjustments, and the authorities under the Settlement Act cannot import powers from the MVAT Act to determine payable amounts. The court concluded that the action of the respondents in invoking Section 50 of the MVAT Act was contrary to the Settlement Act's provisions.Issue C: Justification for Review Powers under Section 15The court considered whether the absence of an order under Section 50 of the MVAT Act justified invoking review powers under Section 15 of the Settlement Act. The court observed that Section 50 requires an order for refund adjustment, which was absent in this case. The review powers under Section 15 necessitate an error in the settlement order, which was not present as the Settlement Act did not provide for refund adjustments from other years. The court emphasized that without an order under Section 50, the respondents' action to adjust refunds was without jurisdiction. The absence of any pending proceedings or orders under Section 50 at the time of application and settlement order further invalidated the review proceedings.Conclusion:The court held that the review orders dated 17th July 2023, passed under Section 15 of the Settlement Act, were without jurisdiction and quashed them. The court directed the respondents to refund the amount of Rs. 2,72,08,381/- for the financial year 2016-2017, with interest, to the petitioner within four weeks. The petition was disposed of, and the rule was made absolute in the terms specified.