2025 (2) TMI 738 - HC - VAT / Sales Tax

Jharkhand Karadhan Adhiniyamon Ki Bakaya Rashi Ka Samadhan Act 2022 (Amnesty Scheme) - Computation method of settlement amount - amount of pre-deposit was first adjusted against the disputed amount and upon remaining balance waiver of 60% and 50% of tax respectively was extended to petitioner - HELD THAT - A perusal of Settlement Scheme would reveal that under Settlement Scheme term admitted tax is defined to mean an amount of tax admitted as being payable as per return filed by an assessee and the term disputed amount means the amount of tax interest or penalty which is determined as payable by an assessee pursuant to an order of assessment/re-assessment/scrutiny or any other order and which is not admitted and for such demand a litigation has been filed by an assessee - Thus under the Scheme amount of admitted tax clearly represents an amount which is admitted by assessee whereas disputed amount means amount of tax interest or penalty which is in dispute pursuant to a litigation filed by an assessee. The difference between disputed tax and admitted tax was the amount in dispute and under the scheme petitioner was entitled for waiver of 60% and 50% respectively but while computing the tax liability Settlement Officer first deducted the amount of pre- deposit from the amount in dispute and thereafter extended the benefit of waiver under the scheme which is clearly travelling beyond the contours of the scheme itself. The petitioner is right in contending that due to incorrect application of Settlement Scheme petitioner is denied its actual benefit which resulted into a loss of Rs. 1, 32, 03, 446/- (Rs. 1, 33, 42, 802-1, 39, 356). However before the appellate authority petitioner filed its revised computation taking into consideration the component of declaration form and claimed as per revised computation an amount of Rs. 1, 18, 02, 056/- as refund. Hence we are of the opinion that petitioner cannot take a different stand than what it has taken in the appellate proceedings and it can only be entitled for refund as per the revised computation submitted before the appellate authority of an amount. Settlement Scheme is a beneficial scheme and Hon ble Supreme Court in its judgment rendered in the case of Government of Kerala and Another v. Mother Superior Adoration Convent 2021 (3) TMI 93 - SUPREME COURT has held that even in tax statutes exemption provisions should be liberally considered in accordance with the object sought to be achieved. In a beneficial legislation literal formalistic interpretation should be eschewed to give full effect to the provisions of the beneficial legislation. Conclusion - Under the Amnesty Scheme the waiver should be applied to the full disputed amount before deducting any pre-deposit. This ensures that taxpayers who have made partial payments are not disadvantaged compared to those who have not paid. The petitioner is entitled to a refund of Rs. 1, 18, 02, 056/- with interest at 6% per annum from the date of deposit until the refund is made. Petition allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the method adopted by the authorities under the 'Jharkhand Karadhan Adhiniyamon Ki Bakaya Rashi Ka Samadhan Act, 2022' (Amnesty Scheme) in computing the settlement amount by first adjusting the pre-deposit against the disputed tax before applying the waiver was correct.
Whether the petitioner is entitled to a refund of the excess amount paid under protest due to the alleged incorrect application of the Amnesty Scheme.
Whether the petitioner is entitled to interest on the excess amount paid.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Method of Computing Settlement Amount

Relevant legal framework and precedents: The Amnesty Scheme provides a waiver of 60% for disputed tax and 50% for amounts related to declaration forms/certificates. The terms 'admitted tax' and 'disputed amount' are defined under the Scheme.
Court's interpretation and reasoning: The Court found that the authorities erred in their methodology by first deducting the pre-deposit from the disputed tax before applying the waiver. This approach was deemed contrary to the intent of the Scheme, which aims to provide relief to taxpayers.
Key evidence and findings: The petitioner had paid Rs. 2.20 crores as a pre-deposit under protest. The authorities calculated the waiver after deducting this amount from the disputed tax, resulting in a higher settlement amount payable by the petitioner.
Application of law to facts: The Court concluded that the correct application of the Scheme should involve applying the waiver to the full disputed amount before considering any pre-deposit.
Treatment of competing arguments: The petitioner argued that the waiver should apply first, while the respondents contended that the pre-deposit should be deducted first. The Court sided with the petitioner, citing similar interpretations in other cases.
Conclusions: The methodology used by the authorities was incorrect, and the petitioner was entitled to a recalculation of the settlement amount.

Issue 2: Entitlement to Refund

Relevant legal framework and precedents: The Amnesty Scheme and its interpretation in similar cases, such as the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
Court's interpretation and reasoning: The Court held that the petitioner was entitled to a refund of the excess amount paid due to the incorrect application of the Scheme.
Key evidence and findings: The petitioner provided a revised computation during the appellate proceedings, claiming a lesser refund amount than initially sought.
Application of law to facts: The Court determined that the petitioner should receive a refund based on the revised computation submitted during the appeals process.
Treatment of competing arguments: The petitioner's revised computation was accepted over the respondents' method of calculation.
Conclusions: The petitioner is entitled to a refund of Rs. 1,18,02,056/-.

Issue 3: Entitlement to Interest

Relevant legal framework and precedents: The Court referenced the general principles of refund and interest in tax matters, emphasizing the need for fairness and adherence to the Scheme's intent.
Court's interpretation and reasoning: The Court found it appropriate to award interest on the refunded amount to compensate for the time value of money.
Key evidence and findings: The petitioner had deposited the excess amount on 28.04.2023 and sought interest from this date until the refund.
Application of law to facts: The Court directed the respondents to pay interest at 6% per annum on the refunded amount from the date of deposit.
Treatment of competing arguments: The Court did not find any compelling arguments from the respondents to deny interest.
Conclusions: The petitioner is entitled to interest on the refund amount.

3. SIGNIFICANT HOLDINGS

The Court established that under the Amnesty Scheme, the waiver should be applied to the full disputed amount before deducting any pre-deposit. This ensures that taxpayers who have made partial payments are not disadvantaged compared to those who have not paid.
The Court emphasized the need for a liberal interpretation of beneficial schemes like the Amnesty Scheme, aligning with the intent to provide relief to taxpayers.
The final determination was that the petitioner is entitled to a refund of Rs. 1,18,02,056/- with interest at 6% per annum from the date of deposit until the refund is made.
The Court's order set aside the appellate authority's decision and directed the respondents to complete the refund process within eight weeks.

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