2016 (9) TMI 1190 - HC - Income Tax

Refund of excess amount paid under Kar Vivad Samadhan Scheme Rules, 1998 - Held that - Under normal circumstances, the respondent would be justified in stating that no refund is payable on any amount paid pursuant to the declaration made under Section 88, in the light of the statutory embargo under Section 93. However, the facts of the present case are different and amount has been paid based on interim direction. The further fact which has to be taken note of is that the petitioner succeeded in the earlier petitions, which were allowed by order dated 23.02.2001 and the said order was implemented by giving effect to the stay order and the Department passed consequential order on 21.09.2001, wherein it has been stated that there is a reduction in the demand of ₹ 2,97,627/-. That apart, the case also having been settled under the KVSS, the petitioner is entitled for refund of the excess amount paid as per the actual amount payable as per the revised demand pursuant to the order passed in the earlier Writ Petitions. Accordingly, the Writ Petition is allowed and the impugned order is set aside and the respondent is directed to refund the excess amount paid by the petitioner, viz., ₹ 76,292/-. However, the plea for interest stands rejected.

Summary

Issues:
1. Refund of excess amount paid under the Kar Vivad Samadhan Scheme Rules, 1998.
2. Interpretation of the provisions of Section 93 of the Finance Act, 1998 regarding refund of tax paid.
3. Effect of interim orders issued by the Court on the final settlement of tax arrears.

Analysis:
1. The petitioner sought a refund of ?76,292/- representing the difference between the amount paid as per court direction and the revised amount payable under the Kar Vivad Samadhan Scheme Rules, 1998. The petitioner's declaration under section 89 of the Finance Act, 1998 was initially disputed by the respondent, leading to a discrepancy in the amount payable by the petitioner.

2. The respondent contended that no refund of tax paid pursuant to the declaration under Section 88 was permissible as per Section 93 of the Finance Act, 1998. However, the Court noted that the amount paid by the petitioner was in compliance with the interim direction issued by the Court in earlier Writ Petitions, not under Section 88. The Court emphasized that the purpose of granting interim orders would be defeated if such payments were not subject to final order compliance.

3. Despite the general statutory embargo under Section 93, the Court held that the petitioner, having succeeded in the earlier petitions, was entitled to a refund of the excess amount paid. The Court considered the settlement under the Kar Vivad Samadhan Scheme, the reduction in demand, and the actual amount payable as per the revised demand post the earlier Writ Petitions. Consequently, the Court set aside the impugned order and directed the respondent to refund the excess amount of ?76,292/- to the petitioner within four weeks, rejecting the plea for interest.

This detailed analysis highlights the key legal arguments, statutory provisions, and the Court's reasoning leading to the judgment in favor of the petitioner for the refund of the excess amount paid under the Kar Vivad Samadhan Scheme Rules, 1998.