2014 (2) TMI 1140 - HC - VAT and Sales Tax

Benefit of Kara Samadhana Scheme - Levy of penalty under Section 12- B(4) - difference between the tax paid in advance and payable by the appellant was more than 15% - appellant could not and did not produce on record any proof of making application for seeking any benefit under Kara Samadhana scheme nor could he produce any proof of the payment on or before the cut-off date i.e., 30.05.2005 under the said scheme. - Held that - It is clear from the facts that the amounts, that were due, were paid by two cheques, with the covering letter dated 25.05.2005 i.e., before the cut-off date fixed under the scheme. It is not the case of the respondents that they did not receive the cheques and the cheques were not encashed. Having regard to the dates of the cheque and the date of covering letter, in our opinion, the Revisional Authority ought to have accepted the claim of the appellant that he made application for the benefit under the scheme. Merely because the application did not find place in the record or the appellant could not and did not produce an acknowledgement of having made the application, on record, would not mean that he did not make the-payment on or before the cut-off date. The record clearly reveals that the payments were made before the cut-off date and the amounts were also realized. In the circumstances, the order passed by the Commissioner deserves to be set-aside being perverse. - Decided in favour of assessee.

Summary

Issues:
Sales-tax appeal under Section 24(1) of the Karnataka Sales Tax Act, 1957 against penalty imposition under Section 12-B(4) - Applicability of Kara Samadhana Scheme - Payment proof submission and acceptance under the scheme.

Analysis:

1. Penalty Imposition and Kara Samadhana Scheme:
The appellant, engaged in works contracts, was penalized under Section 12-B(4) of the Act for a tax discrepancy. The Appellate Authority set aside the penalty based on the appellant's claim of payment under the Kara Samadhana Scheme. However, the Appellate Authority rejected this claim due to the lack of evidence regarding the application for the scheme or payment proof by the cut-off date of 30.05.2005.

2. Revisional Authority's Decision:
The Revisional Authority allowed the revision, acknowledging that the appellant had paid the due amounts before the cut-off date through two cheques. The court noted that the appellant's cheques were received by the Department before the scheme's deadline, and there was no dispute regarding the receipt or encashment of the cheques. The court held that the absence of formal application proof in the record did not negate the fact that the payments were made on time and accepted under the scheme.

3. Judgment and Conclusion:
After reviewing the Revisional Authority's order and evidence, the court found that the appellant's compliance with the scheme's payment requirements before the cut-off date was evident. The court deemed the Commissioner's decision to be flawed and set it aside, emphasizing that the actual payment fulfillment was crucial, irrespective of procedural documentation. The court ruled in favor of the appellant, highlighting the timely payment as the decisive factor, and concluded the judgment without imposing any costs.

In summary, the High Court of Karnataka, in this sales-tax appeal, upheld the appellant's claim under the Kara Samadhana Scheme based on the timely payment of dues, despite the lack of formal application evidence. The court emphasized the importance of actual payment fulfillment over procedural documentation, setting aside the penalty imposed under Section 12-B(4) of the Act.