2013 (10) TMI 1357 - HC - VAT and Sales Tax

Whether the principle of appropriation of payment under section 55C of the Kerala General Sales Tax Act, 1963, apply when amounts are deposited on account pursuant to orders of the appellate authority. Whether the final quantification of the amount (after appropriation) for settlement as per the provisions of the Amnesty Scheme under the Act open to challenge after payment by the assessee under article 226 of the Constitution of India.

Summary

Issues:
1. Appropriation of payment under section 55C of the Kerala General Sales Tax Act, 1963 when amounts are deposited 'on account' pursuant to orders of the appellate authority.
2. Challenge to the final quantification of the amount for settlement under the Amnesty Scheme after payment by the assessee under article 226 of the Constitution of India.

Analysis:

1. Appropriation of Payment:
The petitioner, a cement manufacturing and sales company, was involved in a dispute regarding the appropriation of deposited sums pending appeal. The petitioner argued for the amounts to be appropriated towards the tax component for settlement under the Amnesty Scheme, while the first respondent contended that the deposits could only be appropriated towards interest accrued on the tax under section 55C of the Act. The court analyzed the conditional orders of stay passed by the Deputy Commissioner and the Sales Tax Appellate Tribunal, noting that while one order did not specify the allocation of payment, the other clearly earmarked it towards the disputed tax. The court referred to legal precedents to differentiate between an "open payment" and a deposit "on account," emphasizing the principles of appropriation under section 55C of the Act. The judgment highlighted that the remittance made under specific orders could impact the final settlement amount under the Amnesty Scheme.

2. Challenge to Quantification under Amnesty Scheme:
The court addressed the question of whether the quantification of the settlement amount under the Amnesty Scheme could be challenged post-payment by the petitioner. The petitioner had made payments under protest and in fear of losing benefits due to time constraints. The judgment emphasized that the quantification under the Amnesty Scheme was subject to judicial review under article 226 of the Constitution. The court cited relevant correspondence between the parties and established that the petitioner had the right to challenge the quantification within the framework of the scheme. Legal precedents were referenced to support the petitioner's ability to seek relief through judicial review despite the payments made, ensuring that subsequent judicial pronouncements or departmental orders did not bar such challenges.

In conclusion, the court allowed the petition in part, disallowing appropriation towards tax for one remittance while allowing it for another. The orders quantifying the settlement amount were quashed, directing the first respondent to recompute the amount payable by the petitioner under the Amnesty Scheme. The judgment clarified the rights of the petitioner to challenge the quantification and seek relief within the legal framework, emphasizing the limited nature of the relief sought.