2011 (6) TMI 516 - HC - VAT and Sales Tax

Demand of tax and interest - assessee a dealer in paper remitted tax at four per cent on paper sold during the year 2001-02. However rate of tax on paper was increased during the financial year from four per cent to eight per cent. Since returns filed and tax paid was at four per cent as against eight per cent payable the assessee was in arrears of substantial amount of tax - assessee made an application for settlement of liability under the Amnesty Scheme under section 23B(2) of the KGST Act Held that - there is no revocation of amnesty order by the officer and so much so it binds the officer. However since we have found that regular assessment is permissible under the statute even after settlement of liability based on returns filed and pending assessment the assessment itself has the effect of neutralising or reversing the amnesty benefit granted by the officer assessing officer had not computed the liability at the time of granting amnesty benefit but just accepted the offer made by the petitioner based on returns filed sales tax revision is therefore dismissed as devoid of merit

Summary

Issues:
1. Interpretation of section 23B of the KGST Act regarding reduction of interest in certain cases.
2. Whether settlement under the Amnesty Scheme before assessment precludes further tax demands.
3. Validity of assessment and demand of tax after settlement under section 23B.
4. Impact of pending assessment on the benefit granted under the Amnesty Scheme.

Analysis:
1. The judgment revolves around the interpretation of section 23B of the KGST Act, focusing on the reduction of interest in specific cases. The section allows for settling arrears by paying a designated amount, subject to certain conditions and timelines. The court analyzed the scope of this provision in the context of the case at hand, emphasizing the importance of the statutory framework in determining tax liabilities.

2. The key issue addressed was whether settling liability under the Amnesty Scheme before assessment would prevent subsequent tax demands. The court examined the sequence of events, highlighting that the application for settlement was made while assessment was pending. The petitioner argued that once tax due under the returns is settled under the Amnesty Scheme, no further demand should be raised. However, the Government Pleader contended that settlement under the scheme is conditional and subject to assessment outcomes.

3. The validity of the assessment and demand of tax post-settlement under section 23B was a critical aspect of the judgment. The court scrutinized the assessment process, noting that the assessing officer credited payments towards interest first and then demanded the balance tax and interest. The petitioner challenged the demand, citing the settlement under the Amnesty Scheme as a basis for cancellation. The court delved into the statutory provisions to determine the legality of the assessment and the authority of the assessing officer.

4. The impact of pending assessment on the benefit granted under the Amnesty Scheme was thoroughly examined. The court highlighted that settlement under the scheme is contingent upon the final assessment results. If the assessed tax or interest exceeds the amounts offered during settlement, the benefit is forfeited. The court emphasized that the statutory scheme allows for regular assessments even after settlement, ensuring that liabilities are accurately determined. Ultimately, the judgment dismissed the sales tax revision, affirming the legality of the assessment and the reversal of the Amnesty benefit due to the increased tax liability post-assessment.