2005 (2) TMI 803 - HC - VAT and Sales Tax

Issues Involved:
1. Rejection of the petitioner's application for waiver of tax under the Kara Samadhana Scheme.
2. Applicability of the Kara Samadhana Scheme to the petitioner.
3. Compliance with the conditions and procedures of the Kara Samadhana Scheme.
4. Eligibility criteria for waiver under the Kara Samadhana Scheme.

Detailed Analysis:

1. Rejection of the Petitioner's Application for Waiver of Tax under the Kara Samadhana Scheme:
The petitioner challenged the order passed by the second respondent on January 29, 2004, which rejected the petitioner's application seeking a waiver of tax under the Kara Samadhana Scheme. The petitioner, a company engaged in the manufacture, sale, and export of granite tiles, had filed annual returns declaring nil turnover for the assessment years 1995-96 to 1998-99 under the KTEG Act. The second respondent rejected these returns and assessed the petitioner under section 5(4) of the KTEG Act, leading to the petitioner filing appeals. The appeals for 1995-96 and 1996-97 were dismissed, while those for 1997-98 and 1998-99 were pending.

2. Applicability of the Kara Samadhana Scheme to the Petitioner:
The State Government issued the Kara Samadhana Scheme to reduce arrears and settle disputes on part payment of disputed amounts. The petitioner applied for waiver under this Scheme, but the assessing authority rejected the application, stating that the Scheme did not apply as there was no legal dispute between the department and the petitioner. The petitioner argued that the factory's location within the KIADB area exempted it from tax under the KTEG Act, and thus, there was a legal dispute.

3. Compliance with the Conditions and Procedures of the Kara Samadhana Scheme:
The Scheme required that taxes admitted be paid, and a certain percentage of the disputed tax, interest, and penalties be paid by December 31, 2003. The Scheme also mandated the withdrawal of pending appeals. The petitioner complied with these conditions, withdrawing the appeals and fulfilling other pre-conditions. The court examined whether the petitioner met the Scheme's conditions and found that the petitioner had complied with the conditions for the assessment years 1997-98 and 1998-99.

4. Eligibility Criteria for Waiver under the Kara Samadhana Scheme:
The Scheme's preamble indicated that it aimed to resolve disputes where taxes and penalties were locked in pending appeals. The Government Pleader argued that the petitioner was ineligible because the petitioner did not admit liability on any part of the turnover, which was a prime condition for eligibility. The court, however, found no merit in this argument, stating that the Scheme's language did not require admitting liability on part of the turnover for eligibility. The court clarified that the Scheme covered all areas of dispute except industrial incentives and extended the benefit to pending appeals before October 3, 2003.

Judgment:
The court concluded that the petitioner was not entitled to the Scheme's benefits for the assessment years 1995-96 and 1996-97, as no appeals were pending as of October 3, 2003. However, for the assessment years 1997-98 and 1998-99, where appeals were pending, the petitioner was entitled to the Scheme's benefits. The court quashed the impugned order for these years and directed the respondents to grant the waiver as per the Scheme. The writ petitions were dismissed for the years 1995-96 and 1996-97, with no costs awarded.

← Previous Next →