2010 (3) TMI 1020 - HC - VAT and Sales Tax

Tax arrears - amnesty benefit - whether the learned single judge was justified in directing the appellant to consider grant of amnesty benefit to the respondent for settling the arrears of tax due for the year 1995-96? - Held that - amnesty benefit is provided for settlement of liability on condition that the reduced amount shall be paid by the assessee within the strict time-frame, as provided under sub-clause (4) of section 23B of the KGST Act. Sub-clauses (4) and (7) make it abundantly clear that the essential condition for grant of amnesty is payment of tax strictly within the time-frame provided thereunder and if the assessee has any contest against the settled liability, it is free to pursue the same, after payment under the Amnesty Scheme and claim refund. In this case, the assessee admittedly did not remit the amount due under the Amnesty Scheme within the time provided under the statute, and therefore, benefit was rightly declined. Writ appeal allowed in part, by vacating that part of the direction of the learned single judge to consider grant of amnesty benefit to the respondent-assessee - decided partly in favor of appellant.

Summary

Issues:
Whether the appellant was justified in directing the grant of amnesty benefit to settle tax arrears for the year 1995-96.

Analysis:
The judgment of the Kerala High Court, delivered by Justice C.N. Ramachandran Nair, addressed the issue of granting amnesty benefit to settle tax arrears for a specific year. The appellant, represented by the Special Government Pleader, argued that the respondent had violated the conditions of the grant of amnesty by not paying the arrears of tax as required by the Kerala General Sales Tax Act, 1963. The benefit was withdrawn due to this violation. However, the learned judge allowed the claim because the respondent's application for rectification of assessment was pending at the time of applying for amnesty.

The counsel for the respondent argued that the rectification sought was related to a short credit of tax paid, and if granted, the payment under the Amnesty Scheme would have been made on time. Upon examining the provisions of section 23B of the KGST Act, the Court found that amnesty benefit is subject to the condition that the reduced amount must be paid by the assessee within the specified time-frame. It was noted that if there is a dispute regarding assessment or tax demand, the benefit can be claimed by the assessee through a claim or refund of tax paid under the Amnesty Scheme.

The Court emphasized that payment of tax within the stipulated time is an essential condition for the grant of amnesty. Since the assessee did not remit the amount due under the Amnesty Scheme within the required time frame, the benefit was rightfully declined. The judgment criticized the single judge's decision to extend the benefit based on the pending rectification application, stating that there was no justification for such an extension.

In conclusion, the writ appeal was partially allowed by vacating the direction to consider granting amnesty benefit to the respondent. However, the assessee was permitted to revise the assessment as per the remand by the single judge, within the limits set by the Court. The writ appeal was allowed to this limited extent, as stated in the judgment.