2019 (4) TMI 525 - HC - VAT and Sales Tax

Maintainability of Settlement Application - application for settlement in Form-I - Settlement of arrears and issue of certificate of settlement - Held that - While under the substantive provisions of Section 11, no assessing authority, reviewing authority, appellate authority or revisional authority can proceed to decide any assessment, review, appeal or revision under the relevant Act relating to any period in respect of which an application has been made under Section 5 of the Act, the proviso appended thereto says that such authority shall proceed to decide such assessment, review, appeal or revision for such period in accordance with the provisions of the relevant Act, if a certificate of settlement referred to in sub-section(1) of Section 8 is refused to the applicant by an order passed by the designated authority in writing under subsection (2) of Section 8. In other words, if the settlement as applied for under Section 5 of the Act, is refused by an order passed by the designated authority under sub-section (2) of Section 8 of the Act, the appeal or the revision as the case may be has to proceed. It is only when a certificate of settlement is issued under sub-section (1) of Section 8 of the Act, the review, appeal or revision as the case may be, shall be deemed to have been withdrawn by the applicant from the date of making of the application under sub-section (1) of Section 5 and not otherwise. An assessee has a statutory right to file an appeal as the case may be which cannot be taken away or affected except in accordance with the provisions of Section 10 of the Act of 2009 as amended. In other words, it is only when a certificate of settlement is issued under sub-section (1) of Section 8 of the Act, the review, appeal or revision as the case may be, shall be deemed to have been withdrawn by the applicant from the date of making of the application under sub-section (1) of Section 5 and not otherwise. The impugned order is hereby set aside subject to the petitioner depositing a total amount of ₹ 10,00,000/- against the total dues before the first respondent within three weeks from today - petition allowed.

Issues Involved:
1. Eligibility for settlement under the Goa (Recovery of Arrears of Tax through Settlement) Act, 2009.
2. Rejection of settlement application and its implications.
3. Applicability of proviso to Section 11 of the Act of 2009.
4. Restoration of appeal after rejection of settlement.
5. Financial constraints and their impact on the settlement process.

Detailed Analysis:

Issue 1: Eligibility for settlement under the Goa (Recovery of Arrears of Tax through Settlement) Act, 2009
The petitioner was assessed a tax of ?39,41,508/- for the year ending 31.03.2005 under the Goa Tax on Entry of Goods Act, 2000. The petitioner appealed against this assessment, which was dismissed by the Assistant Commissioner of Commercial Taxes. During the pendency of the appeal, the petitioner applied for settlement under the Goa (Recovery of Arrears of Tax through Settlement) Act, 2009. The designated authority issued an intimation requiring the petitioner to pay the amount within 20 days, which the petitioner failed to do, leading to the rejection of the settlement application.

Issue 2: Rejection of settlement application and its implications
The Assistant Commissioner of Commercial Taxes rejected the petitioner's application for settlement on the grounds of non-compliance with the payment intimation. The Administrative Tribunal dismissed the appeal, stating that the matter was settled, which the petitioner contested, arguing that the settlement never occurred due to financial constraints.

Issue 3: Applicability of proviso to Section 11 of the Act of 2009
The court examined whether the rejection of the settlement application falls under Section 8(2) of the Act of 2009. It was determined that both rejections at the threshold and rejections due to non-compliance with payment intimation are covered under Section 8(2). Therefore, the proviso to Section 11 applies, meaning the appeal must be heard on its merits if the settlement is refused.

Issue 4: Restoration of appeal after rejection of settlement
The court found that the rejection of the settlement application under Section 8(2) necessitates the continuation of the appeal. The Administrative Tribunal's dismissal of the appeal on the grounds of wilful default was deemed erroneous. The court ordered the restoration of the appeal, subject to the petitioner depositing ?10,00,000/- towards the dues.

Issue 5: Financial constraints and their impact on the settlement process
The court acknowledged the petitioner's financial constraints as a valid reason for failing to comply with the payment intimation. This financial difficulty was not considered a wilful default, and thus, the appeal should not have been dismissed on these grounds. The court identified an error apparent on the face of the record in the order dated 04.08.2017, which stated that the matter was settled despite the petitioner's failure to deposit the dues.

Conclusion:
The court allowed the writ petitions, set aside the impugned order, and restored the appeals filed before the Administrative Tribunal. The petitioner was required to deposit ?10,00,000/- within three weeks, and the appeals were to be heard on their merits. The rival contentions of the parties on merits were left open, and the petitioner was directed to be present before the Administrative Tribunal on 02.04.2019.

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