2018 (3) TMI 1102 - HC - VAT and Sales Tax

Kara Samadhana Scheme of 2017 - Penalty - Held that - the intention of the Revenue is to extend the benefit in respect of all kinds of penalties. Therefore, in our view, the expression all kinds of penalties must be construed to include penalty imposed for delayed filing also. Therefore, it must be held as penalty till the date of filing . Filing of return must be held as a process related to assessment. On this premise also, penalty imposed for delayed filing of returns must also be eligible for consideration under the Scheme. Therefore, any other interpretation would be incongruous. Appeal dismissed - decided against appellant.

Summary

Issues:
Challenge to order directing acceptance of application under 'Kara Samadhana Scheme of 2017' - Interpretation of Scheme applicability to penalty for delayed filing of returns.

Analysis:
The writ appeal challenged the order directing the assessing authority to accept the petitioner's application under the 'Kara Samadhana Scheme of 2017'. The petitioner, a registered dealer under the Karnataka Value Added Tax Act and Central Sales Tax Act, filed monthly returns for March 2015 belatedly, leading to penalty proceedings initiated by the assessing officer. The penalty imposed was contested by the petitioner, citing unavoidable circumstances for the delay. The assessing officer, however, imposed a penalty of ?2,77,080 and denied the petitioner the benefit of the Scheme. This denial prompted the petitioner to file a writ petition, which the Hon'ble Single Judge ruled in favor of, directing the assessing authority to accept the application.

The main argument in the appeal was whether the penalty for delayed filing of returns falls under the purview of the 'Kara Samadhana Scheme of 2017'. The Revenue contended that the Scheme applies only to penalties related to assessment or re-assessment, not for delayed submission of returns. Conversely, the respondent argued that filing returns initiates the assessment process, making penalties for delayed filing part of the assessment. The Scheme's clause 1.2 defined 'arrears of penalty and interest' broadly, encompassing penalties accrued until the date of application filing. The court interpreted this to include penalties for delayed filing, as the intention was to cover all penalty types. Additionally, the court reasoned that filing returns is integral to the assessment process, making penalties for delayed filing eligible for consideration under the Scheme.

Ultimately, the court found no error in the Hon'ble Single Judge's order, dismissing the appeal. Consequently, the pending interlocutory applications were disposed of, with no costs awarded. The judgment emphasized the inclusive interpretation of the Scheme to cover penalties for delayed filing within the ambit of 'arrears of penalty and interest', aligning with the assessment process's integral nature.