Statutory waiver scheme settlement cannot be reopened by later revision that defeats finality and the scheme's object.

After an assessee was admitted to the Karasamadhana Scheme and obtained waiver of interest and penalty on payment of tax arrears, the Karnataka HC held that the revisional authority could not invoke Section 64(1) of the Karnataka Value Added Tax Act, 2003 to reopen the settled assessment. The prior settlement under the statutory waiver scheme was treated as final for scheme purposes, and a later suo motu revision was held to defeat the object of the scheme. The Court characterised such revisional action as arbitrary and unreasonable, making the attempt to unsettle the settlement unsustainable in law.

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Issues: Whether, after an assessee had been admitted to the Karasamadhana Scheme and interest and penalty had been waived under the scheme, the revisional authority could invoke Section 64(1) of the Karnataka Value Added Tax Act, 2003 to unsettle that settlement and revise the assessment.

Analysis: The assessee had paid the tax arrears and obtained waiver of interest and penalty under the scheme. The subsequent suo motu revisional notice and order under Section 64(1) sought to reopen what had already been settled under the scheme. The prior settlement was treated as final for the purposes of the scheme, and invoking revisional power thereafter was held to defeat the object of the scheme and to unsettle settled matters. The revisional action was therefore characterised as arbitrary and unreasonable.

Conclusion: The invocation of revisional power under Section 64(1) after grant of benefit under the Karasamadhana Scheme was not justified and was unsustainable in law.

Ratio Decidendi: Once a tax dispute is settled under a statutory waiver scheme by granting the prescribed benefits, a later suo motu revision cannot be used to reopen that settlement in a manner that defeats the scheme and renders the exercise arbitrary and unreasonable.

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