2021 (4) TMI 822 - HC - VAT and Sales Tax

Amnesty Scheme - appeal filed by the Revenue, relating to one assessment year and pending consideration before Tribunal - to be included for settlement, if the assessee does not opt for that to be settled under the scheme or not - HELD THAT - The scope, purport and intent of the Scheme is to settle the entire arrears of tax. It is intended to effectuate recovery of the entire amount of tax in arrears by giving certain reductions or waivers. The conditions stipulated for availing the benefit under the Scheme have to be strictly complied with. It is a complete code in itself and is exhaustive of the matters dealt with. A few of the highlights of the Scheme propounded by the Government in 2020 are hundred percent waiver of interest and penalties, 60% waiver of the balance tax arrears if the outstanding dues are paid in a lump sum and 50% waiver of the balance tax arrears, if outstanding dues are paid in instalments. The Scheme is applicable for all pending tax arrears, including cases remaining in appeal. Taxpayers, who had failed to settle arrears under the previous Amnesty Scheme, are also given the option to take the benefit under the Scheme and any amount paid under the earlier Amnesty Scheme is also stipulated to be given due credit. The assessee is entitled to get the benefit of the Amnesty Scheme for the year 2014-15 without reference to the pending appeal filed by the State for the year 2012-13 - the appellant is eligible to opt for the Amnesty Scheme, 2020 for settling arrears of the assessment year 2014-15 without including the amount that may fall in arrears for the year 2012-13. Appeal allowed.

Summary

Issues:
- Interpretation of the Amnesty Scheme 2020 introduced by the Kerala Finance Act, 2020.
- Whether an appeal filed by the State and pending consideration can be included for settlement under the Scheme without the assessee's consent.

Analysis:

Issue 1: Interpretation of the Amnesty Scheme 2020
The Amnesty Scheme 2020 introduced by the Kerala Finance Act, 2020 aims to settle arrears of tax or other amounts due under the Kerala Value Added Tax Act, 2003 and the Central Sales Tax Act, 1956. The Scheme provides for reductions and waivers to facilitate the settlement of entire arrears of tax. It offers benefits such as a hundred percent waiver of interest and penalties, along with reductions in the balance tax arrears if dues are paid in lump sum or installments. The Scheme is comprehensive, covering all pending tax arrears, including cases under appeal. Assessees who failed to settle arrears under previous Amnesty Schemes are also allowed to opt for this Scheme, with credit given for amounts paid earlier.

Issue 2: Inclusion of Pending Appeal in Settlement
The core issue in the case was whether an appeal filed by the State and pending consideration could be forced into settlement under the Amnesty Scheme without the assessee's consent. The court analyzed the language of the Scheme, particularly section 10(1) of the Act, which refers to "arrears of tax or any other amount due." The court highlighted that the term "arrears" generally refers to amounts overdue or unpaid, which are determined through assessment orders. The court emphasized that tax only falls into arrears after an assessment order and demand are made. Therefore, in the absence of a finalized assessment order determining tax as due, no amount can be considered in arrears.

The court further examined the provisions of the Scheme, noting that clauses 4 and 6 of section 10 refer to settling "all arrears" and calculating arrears as of the date of submission of the option. The court concluded that the words "arrears of tax" in section 10(1) of the Act do not encompass amounts subject to pending appeals, unless the assessee voluntarily opts to settle them. The court rejected the argument that section 10(11) mandates settlement of appeals filed by the State, clarifying that it merely provides an option for the assessee to settle such cases. The court emphasized that the option cannot be construed as a mandate or compulsion, ensuring that the State is not prejudiced by the decision.

In the final judgment, the court set aside the decision of the Single Judge and declared that the appellant is eligible to opt for the Amnesty Scheme for settling arrears of the assessment year 2014-15 without including the amount potentially falling in arrears for the year 2012-13. The court emphasized that the appeal for the year 2012-13 is an independent issue, and its consideration on merits will not be affected by the appellant's claim under the Amnesty Scheme for the year 2014-15.