TaxTMI 
TaxTMI 
2018 (9) TMI 300
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....Ltd., M/s. Sri Annapoorneswari Bar and Restaurant, M/s. Sri Nanjundeswara Bar and Restaurant, M/s. Universal Digital Connect Ltd., M/s.Fakhri Sons, W.A.No.72/2018 in W.P.No.33176/2017, W.A.No.387/2018 in W.P.No.32658/2017, W.A.Nos.388-399/2018 in W.P.Nos.32659-32670/2017, W.A.Nos.400-402/2018 in W.P.Nos.33470-33472/2017, W.A.No.403/2018 in W.P.No.35892/2017, W.A.Nos.404/2018 & 405-415/2018 in W.P.Nos.25349/2017 & 31438-31448/2017, W.A.Nos.416/2018 & 417-427/2018 in W.P.Nos.25350/2017 & 30508-30518/2017, W.A.Nos.428/2018 & 429-439/2018 in W.P.Nos.25351/2017 & 30526-30536/2017, W.A.Nos.440/2018 & 441-451/2018 in W.P.Nos.25352/2017 & 34098-34108/2017, W.A.No.452/2018 in W.P.No.32127/2017, W.A.Nos.453/2018 & 454-464/2018 in W.P.Nos.25353/2017 & 30711-30721/2017, W.A.Nos.465/2018 & 466-476/2018 in W.P.Nos.25354/2017 & 30318-30328/2017, W.A.No.477/2018 in W.P.No.30001/2017, W.A.No.478/2018 in W.P.No.28370/2017, W.A.No.479/2018 in W.P.No.26333/2017, W.A.No.480/2018 in W.P.No.38574/2017, W.P.No.44681/2017, W.A.No.482/2018 in W.P.No.45976/2017, W.A.No.483/2018 in W.P.No.45978/2017, W.A.No.484/2018 in W.P.No.46691/2017, W.A.No.485/2018 in W.P.No.47080/2017, JUDGMENT S. Sunil D....
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....rking out as regards to "the actual arrears of tax, penalty and interest payable," call upon the assessee to comply with preconditions/stipulations and rectify the discrepancies, if any, in order to avail benefit under the Scheme. Power was conferred to reject applications by a speaking order in the event eligibility was not made out in terms of the Government Order. 4. In all cases, which are the subject matter of the present litigation, the State had rejected, as per the orders impugned before the learned Single Judge, applications of the assessees submitted as per Clause-3.1 of the Scheme on the ground that computation of arrears of tax, interest and penalty by the assessees, by first adjusting the deposits made during the pendency of appeals against the tax due and then towards the balance of tax and 10% of interest and penalty and, thereupon seeking waiver of 90% interest and penalty had been incorrect as regards determination of 'arrears of tax' or "arrears of interest and penalty" as contemplated under the Scheme. The State had contended that the amount in deposit during the pendency of appeals was to be adjusted first against the head of 'interest' and not under the head....
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.... 25353/2017 & 30711-30721/2017 Nokia India Pvt. Ltd., KVAT 465/2018 & 466-476/2018 25354/2017 & 30318-30328/2017 Nokia India Pvt. Ltd., KVAT 477/2018 30001/2017 M/s. GE T & D India Limited CST 478/2018 28370/2017 M/s. GE T & D India Limited CST 479/2018 26333/2017 M/s. Castrol India Ltd. KTEG 480/2018 38574/2017 M/s. Saras Precision Tools Pvt. Ltd., CST 481/2018 44681/2017 M/s. AB Mauri India Pvt. Ltd., CST 482/2018 45976/2017 M/s. Sri. Annapurneswari Bar and Restaurant KVAT 483/2018 45978/2017 M/s. Sri. Nanjundeswara Bar and Restaurant KVAT 484/2018 46691/2017 M/s. Universal Digital Connect Ltd. KVAT 485/2018 47080/2017 M/s. Fakhri Sons KVAT 9. The Clauses of the Scheme that are required to be considered as being relevant to the present controversy are as under:- "1.1 "Arrears of tax" means tax assessed / reassessed as per the provisions of the KST and CST Acts relating to all the assessment years upto 31/03/2005 and tax assessed / reassessed as per the provisions of the KVAT Act and CST Acts relating to the tax periods for all the years commencing....
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....ation, then the concerned Assessing Authority / Recovery Officer / Prescribed Authority shall inform the dealer or person or proprietor within 15 days from the date of filing of Application about the discrepancies. 3.3. After receipt of information from the Assessing Authority / Recovery Officer / Prescribed Authority, the dealer or person or proprietor, as the case may be, at his option, may pay the balance amount of tax as in Clause 2.1 and 'arrears of penalty and interest' as in Clause 2.2 / 2.3 so as to avail of the benefits of this Scheme. All payments should be made on or before 31/05/2017. The dealer or person or proprietor, as the case may be shall file a declaration in support of withdrawal of Appeal or other Application as per Annexure-II along with Application for waiver of 'arrears of penalty and interest'. Such declaration shall be filed separately under relevant Act for each year relating to 'arrears of penalty and interest'. 3.4 If the dealer or person or proprietor, as the case may be, fails to do so, the Authority / Officer shall pass a speaking order rejecting the Application. 3.5 On satisfaction that the applicant-dealer or person or proprietor, as the c....
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....) Clause 3.4 states that if the assessee failed to comply with requisite deposit as referred to above and to rectify the discrepancies pointed out, the Prescribed Authority could reject the applications. 10. The provisions of the KVAT Act that require consideration in the present controversy are as under:- "42. Payment and recovery of tax, penalties, interest and [other amounts, issuance of clearance certificates] 6) Where the amount paid falls short of the aggregate of the tax or any other amount due and interest payable, the amount so paid shall first be adjusted towards interest payable and the balance, if any, shall be adjusted towards the tax or any other amount due. 62. Appeals (4) (a) No appeal against an order of assessment shall be entertained by the Appellate Authority unless it is accompanied by satisfactory proof of the payment of tax and other amount not disputed in the appeal. (b) The tax or other amount shall be paid in accordance with the order or proceedings against which an appeal has been preferred. (c) (i) The Appellate Authority may, in its discretion, stay payment of seventy per cent of tax and other amount, if the appellant ma....
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.... of Income Tax and Others reported in ILR 2003 KAR 2066 which held that specific appropriation provisions under the Income Tax Act, 1961 and general law as regards appropriation of payments would be inapplicable to payments made pending adjudication and covered by the 'Kar Vivad Samadhan Scheme, 1998.' The relevant portion of the said decision is extracted below:- "14. The above clarifications issued by the Central Government, binding on the respondents, are a complete answer to the contentions raised by the Department. Any payment made towards tax arrears after the date of assessment and before the date of declaration filed under the KVS Scheme, will therefore have to be taken as part payment towards tax in regard to declarations validly falling under the KVS Scheme. The normal rule that payments will first be adjusted towards interest and then towards principal (income Tax)(sic), based on the Explanations to Section 140A(1) of the IT Act and general law, will be inapplicable to matters covered by the KVS Scheme. The learned single judge has lost sight of the above aspects and has wrongly proceeded as if the Explanation to Section 140A(1) of the IT Act is applicable to the KVS ....
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....ble under the Scheme. A definite percentage and calculations have been given on the basis of which the amount has to be calculated under the Scheme, 1998, irrespective of the provisions of the Income-tax Act. Nowhere under the Scheme, 1998, is it stated that the assessment which have already been made and where the amount paid under Section 140A has been adjusted, then readjustment has to be done. The provisions of Section 140A by its Explanation would have no force, had there been any specific provision under the Kar Vivad Samadhan Scheme, 1998. Since the KVS Scheme does not contemplate adjustment of the amount paid under Section 140A towards tax, the arguments raised by learned counsel for the petitioner cannot be accepted. Question No. 4 of the clarification dated September 3, 1998, also does not help the petitioner's case, because, it refers to the payments which are made after the tax arrears are computed and thereafter any part payment is made. The clarification given by the Government dated January 18, 1999, has only used the words "the Scheme is different from Section 140A." This also does not help the petitioner, for, it is nowhere stated in this clarification that the....
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.... is not the intention. As noticed above, if the appellant had succeeded in the revision petition, his liability towards interest would have been deleted/reduced and obviously the sum of Rs. 60,000.00 that has been paid by him towards tax arrears would have been adjusted either against the tax or would have been refunded. Therefore, the explanation to sub-section (1) of Section 140A of the IT Act applies only where the liability has attained finality. This is clarified by the Department itself. The Government of India, Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, issued certain clarifications by circular No.F 149/145/98/DPL, dated 3.9.1998, under Section 96 of the Finance (No.2) Act, 1998. The said Section 96 enables the Central Government to issue from time to time, such orders, instructions and directions to the authorities as it may deem fit, for the proper administration of the KVS Scheme and the authorities concerned with execution of the scheme are required to observe and follow such orders and instructions....." (emphasis supplied) 16. The Court in the case of Mangilal S. Jain has clarified and rightly held that the appropriation under Exp....
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....om the said submission, it was pointed out that the latter class of beneficiaries would avail full benefit of 90% waiver of penalty and interest under Clause 2.1 of the Scheme, while the former, would although no doubt avail benefit but to a lesser extent or none at all owing to their earlier payments being adjusted towards interest first as per the State's method of appropriation as put forward. 21. It was contended by the respondents that their remittances were under specific heads and not towards interest and hence question of appropriation was never contemplated, and further impressed upon the arbitrary classification and resultant discrimination as compared to assessees who had not even filed appeals or actively pursued the disputes to its logical end. 22. The learned Single Judge has placed reliance on the following judgments in coming to the conclusion that the payments made were colourless deposits:- Nestle India Limited v. Asstt. Commissioner of C.Ex., Mysore-II reported in 2003 (154) E.L.T. 567 (Kar.). Relevant portions of para-6 are extracted hereinbelow:- "6...........In the case of Suvidhe Limited v. Union of India reported in 1996 (82) E.L.T. 177 (Bom), th....
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....er Sections 62 and 63 of the KVAT Act makes these appropriable, and that both the terms could not be referred interchangeably. It was further argued that Section 42, which provides for appropriation uses the term 'payments' and hence, payments made under Sections 62 and 63 could be appropriated immediately on remittance without further recourse. 24. It is necessary to note that the mere fact that Sections 62 and 63 of the KVAT Act do not use the term 'deposit' cannot be reason enough to hold payments made pending appeal under these sections as not being pre-deposits. In the case of Vatech Wabag Limited v. Deputy Commissioner of Sales Tax, Midnapur Charge and Others reported in [2017] 100 VST 1 (Cal), the Calcutta High Court when faced with challenge to the constitutionality of Section 84(1) of the West Bengal Value Added Tax Act, 2003 which is analogous to Section 63 of the KVAT Act in mandating payment of entire undisputed amount and fifteen per cent of amount under dispute prior to filing of appeal, the Court noted that the word "payment" is capable of different meanings in the context that it is used. The Court noticed that the word "payment" can mean payment of a pre-deposit....
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....such clause, as in effect, if the word "payment" is allowed to govern clause (b) then, the State is requiring an exaction from an assessee rather than asking the assessee to make a deposit or a pre- deposit. With respect, I am not in a position to accept such contention on behalf of the petitioners. No doubt the word "payment" governs both clauses (a) and (b) of the second proviso. However, the word "payment" is capable of different meanings in the context that it is used. The word "payment" can mean payment of a deposit or a pre-deposit in the context of clause (b) and the payment of a tax in the context of clause (a). Viewed from such perspective, there is no violence to the user of the words in the second proviso to Section 84(1) of the Act of 2003. It can be contended that, the words in the second proviso are clear and that, clause (b) does not speak of a deposit or a pre-deposit for a person or the Court to read the word "payment" while regulating clause (b) as a payment of a deposit. This contention assumes that, the Section 84 requires a payment of tax of 15 per cent of the tax in dispute to prefer an appeal. That assumption, with the greatest of respect, is not available in....
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.... that the filing of the Special Leave Petition against the order of dismissal of the revisional proceedings was immaterial in so far as the Special Leave Petition would not be construed as a continuation of the revisional proceedings. The relevant paragraphs of the said decision are extracted hereinbelow:- "19. Then coming to factual situation, Amnesty Scheme came to be announced with effect from 01.04.2008 by introducing Section 23B in the KGST Act. By 12.04.2007 on two occasions the appellant- assessee had made two payments, one in pursuance of the appellate order dated 29.09.2006 and another on 14.03.2007 in terms of order of Sales Tax Appellate Tribunal. On 31.08.2007 final order of Sales Tax Appellate Tribunal in respect of provisional assessment was passed favouring assessee appellant granting full relief and setting aside entire demand. The Revenue had filed an application for condonation of delay along with revision. On 31.03.2009 such revision was allowed. By virtue of this order, benefit given by the Tribunal was set aside and the appellant-assessee was under an obligation to pay tax and other amounts demanded by the Department. Much later, on 25.06.2009 assessee filed....
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....ission of application for settlement of arrears was on 25.06.2009 and the amount to be paid as per Amnesty Scheme was intimated on 03.07.2009. Only on 04.07.2009 SLP was filed challenging the order dated 31.03.2009. Mere filing of SLP would not vest appellant assessee with any right and it cannot be considered as continuation of revisional proceedings, which is a settled position. In the light of the above observations, we are of the opinion, the normal rule that payment has to be first adjusted towards interest and then towards principal as provided under section 55C is applicable. Hence, W.A. No. 1828/2013 filed by appellant assessee is dismissed and W.A. No. 1807/2013 filed by revenue is allowed." (emphasis supplied) 26. It is clear that in view of the discussion supra, the payments made which are referred to by any nomen-clature being made while preferring an appeal or as a prerequisite to consider the application for stay being statutorily mandated cannot be the subject matter of appropriation till the adjudication process has reached a finality and such deposits could only be regarded as 'colourless deposits.' The finding of the learned Single Judge as regards the pa....