2018 (10) TMI 516 - HC - VAT and Sales Tax

Adjustments insofar as the payments made by the assessee pending litigation as also the tax paid by PGHHCL for the sale to the assessee - sale of products under the brand name Procter and Gamble - KGST Act - amnesty scheme granted for all the years starting from 1998-99 to 2003-04 - whether the respondent-Procter and Gamble Home Products Limited (PGHPL) is liable to tax under Section 5(2) of the Kerala General Sales Tax Act, 1963 for the sale of products under the brand name Procter and Gamble ? Held that - The revisional authority is said to have set aside the penalty order from which no appeal was filed by the State. Hence, on verification, if the stated facts of the penalty and deposit made are true, the amounts remaining with the State has to be necessarily given adjustment of, when satisfying the amounts under the amnesty scheme. The further claim is with respect to 20% of the demand paid as per stay orders in the years 2002-03 and 2003-04 which comes to a total of ₹ 1,56,08,625/-. If such deposit is made, necessarily the same would also have to be given credit and deducted from the total amounts due in the amnesty scheme. It is made clear that in none of these amounts, there can be a claim now raised of appropriation to interest. The penalty having been set aside and the order of assessment in the years 2002-03 & 2003-04, also having been set aside by the Tribunal, there could have been no appropriation effected. The assessee s dues under the amnesty scheme arose only for reason of their voluntary shouldering of the responsibility under Section 5(2). Exts.P4 and P7 shall be modified accordingly - by making the modification, there shall not be any denial of the amnesty scheme only on the amnesty scheme having now expired on 30.6.2018. The modification made shall be applying the amnesty scheme as it existed prior to its expiry. The said directions are issued only in the context of the facts arising in this case, where the assessee had voluntarily accepted the amnesty scheme within the time and orders were also issued by the AO. The writ petition is ordered accordingly. Petition disposed off.

Summary

Issues:
1. Liability of Procter and Gamble Home Products Limited (PGHPL) under Section 5(2) of the Kerala General Sales Tax Act, 1963.
2. Application of amnesty scheme and adjustments to tax dues.
3. Set-off not being permitted for amounts paid in compliance with interim orders.
4. Consideration of adjustments for tax paid by the manufacturer.
5. Applicability of amnesty scheme to the years 1998-99 to 2003-04.
6. Modification of amnesty orders based on adjustments claimed by the assessee.

Issue 1: Liability of PGHPL under Section 5(2) of KGST Act
The revisions by the State challenge the orders of the Kerala Sales Tax Appellate Tribunal regarding the liability of PGHPL for tax under Section 5(2) of the KGST Act for selling products under the brand name 'Procter and Gamble'. The Tribunal found that the sale from the manufacturer to PGHPL falls under Section 5(2), exempting the sale to the ultimate consumer from tax. The revisions are allowed based on a Supreme Court judgment, setting aside the Tribunal's orders in favor of the revenue.

Issue 2: Application of Amnesty Scheme and Adjustments
The assessee applied under an amnesty scheme and withdrew appeals before the Tribunal. The Court granted amnesty for the years 1998-99 to 2003-04. The assessee sought adjustments for amounts paid by the manufacturer as tax, penalties imposed, and deposits made under stay orders. The Court directed adjustments to be made in the amnesty orders, ensuring compliance with the scheme.

Issue 3: Set-off Not Permitted for Compliance with Interim Orders
The assessee was aggrieved by the Department's refusal to consider set-offs for amounts paid in compliance with interim orders. The Court directed the Department to consider such set-offs and make necessary adjustments in the tax dues under the amnesty scheme.

Issue 4: Consideration of Adjustments for Tax Paid by the Manufacturer
The Court considered adjustments for tax paid by the manufacturer to be deducted from the total amounts due under the amnesty scheme, subject to proper proof being produced before the Assessing Officer.

Issue 5: Applicability of Amnesty Scheme to Specific Years
The amnesty scheme was granted for the years 1998-99 to 2003-04, with specific orders issued for each year. The Court clarified the adjustments and modifications to be made in the amnesty orders based on the payments made by the assessee and the manufacturer.

Issue 6: Modification of Amnesty Orders
The Court ordered modifications to the amnesty orders to include adjustments claimed by the assessee, such as tax paid by the manufacturer and penalties imposed. The modifications were to be made within a specified timeframe, ensuring compliance with the amnesty scheme.

In conclusion, the judgment addresses the liability of PGHPL under the KGST Act, application of the amnesty scheme, consideration of adjustments, and modifications to the orders to accommodate the payments made by the assessee and the manufacturer.