2019 (12) TMI 709 - HC - VAT and Sales Tax

Amnesty Scheme - Validity of Government Circular No.3/2019 dated 01/04/2019 - It is the contention of the petitioners that since the provisions of Section 31A of Kerela VAT Act, enable an assessee under the KVAT Act to opt for an Amnesty Scheme for settling their tax, penalty and interest arrears, without any condition - HELD THAT - Section 31A of the KVAT Act, introduced an Amnesty Scheme so as to enable the assesses under the Act to opt for a settlement of outstanding dues of tax, penalty and interest with a view to ending prolonged litigation in respect of the same. The intention behind introduction of the Amnesty Scheme was to benefit both the assessees as also the State, through an expeditious end to pending litigation, and an expedited recovery of moneys to the State exchequer. The statutory provisions governing the Amnesty Scheme do not provide for a situation where the assessee is precluded from opting for the Amnesty Scheme whenever the Revenue chooses to file an appeal against an order that was passed in favour of the assessee, by any of the statutory authorities in the adjudicatory hierarchy. It follows, therefore, that a Circular by the Tax Department of the State cannot go beyond the statutory provisions under the guise of clarifying the scope of the statutory provisions, which are quite unambiguous and do not require any clarification - the Amnesty applications preferred by the petitioners shall be considered by the respondents, without relying on that portion in the Circular that has been struck off through this judgment. Petition disposed off.

Summary

Issues:
Challenge to condition in Government Circular regarding Amnesty Scheme under Kerala Value Added Tax Act.

Analysis:
The petitioners challenged a condition in a Government Circular related to an Amnesty Scheme under the Kerala Value Added Tax Act. The Circular required the withdrawal of all pending cases before any appellate or revisional authority, tribunal, or courts for opting the scheme. The petitioners argued that the Circular's condition contradicted the provisions of Section 31A of the KVAT Act, which allowed an assessee to settle tax arrears without such a condition. The State Tax Officer justified the condition by stating that the amendment to Section 31A only provided an option to settle dues and did not impose a similar condition on the State regarding appeals filed by the State. The Court considered the purpose of the Amnesty Scheme was to expedite the settlement of dues and end prolonged litigation, benefiting both the assessees and the State. The Court noted that the statutory provisions did not restrict an assessee from opting for the scheme if the Revenue filed an appeal. Therefore, the Court held that the Circular could not impose additional conditions beyond the statutory provisions. The Court allowed the writ petitions by striking off the offending sentence from the Circular, ensuring that the petitioners' Amnesty applications would be considered without the invalidated condition.

This judgment clarifies that statutory provisions governing an Amnesty Scheme must be strictly followed without imposing additional conditions through departmental Circulars. The Court emphasized the importance of enabling assesses to settle dues expeditiously and end prolonged litigation, highlighting the legislative intent behind such schemes. By striking off the invalid condition, the Court upheld the rights of the petitioners to avail the Amnesty Scheme without being restricted by the Revenue's decision to file appeals. This decision ensures a fair and consistent application of the law, preventing arbitrary restrictions on assessee's rights to settle tax arrears.