2023 (6) TMI 140 - HC - VAT and Sales Tax

Rejection of application of the complainant seeking for benefits under Karasamadhana Scheme - rejection only on the ground of the assessee not being eligible for refund of any amount that may become excess as a result of adjustment of amount or the penalty or interest paid by him at the time of filing the appeal - Circular No. 1/2018-19 dated 13.08.2018 - HELD THAT - The Endorsement records the facts including filing of the appeal and in the conclusion it is observed that the Assessee has withdrawn its petition from the KAT and subsequently, filed an application under Karasamadhana Scheme and that there was recovery of arrears of Rs. 43,23,703/-. It is further observed that only after full recovery of arrears, the assessee has withdrawn the petition to obtain benefit under Karasamadhana Scheme and filed application requesting for refund of interest amount. The Authority in the impugned endorsement has rejected the application referring to the Circular No. 1/2018-19 dated 13.08.2018. It must be noticed that there is some ambiguity in the Endorsement and if the Endorsement is construed as having rejected the application only on the ground of Clause 2.4, which in substance has been referred to by placing reliance on the Circular dated 13.08.2018 at the concluding part of the impugned endorsement, there is no clarity as regards satisfaction of Clause 2.4 insofar as Clause 2.4 refers to the amount paid at the time of filing the appeal. In this case, the peculiar facts are that the petitioner has paid 30% of the amount due on 17.01.2013. If that were to be so, the question that requires adjudication by the Authority is whether a subsequent recovery from the banker of the petitioner after the appeal was taken on record and payment was made is an amount that could be taken note of. Learned counsel for the petitioner has specifically raised a contention that Clause 2.4 refers only to the amount paid at the time of filing the appeal and accordingly, the subsequent recovery cannot be an amount deemed to have been paid by the petitioner and accordingly, recovery of 70% of the demand from the petitioner's banker, ought not to be taken note of, while invoking Clause 2.4 is also an aspect that is required to be considered by the Authority. In light of the same, the matter requires reconsideration at the hands of the Authority after hearing the petitioner. Petition allowed by way of remand.

Summary

Issues:
The judgment involves a challenge to the rejection of an application for benefits under the Karasamadhana Scheme based on the Circular of the Commissioner of Commercial Taxes. The key issues include the eligibility for refund, the interpretation of Scheme provisions, and the impact of subsequent recovery of arrears on the application.

Eligibility for Refund:
The petitioner filed an appeal under the Karnataka Value Added Tax Act and sought benefits under the Karasamadhana Scheme. The appeal was dismissed, and the petitioner opted for relief under the Scheme, aiming for a refund of Rs. 26,25,948. However, the application was rejected by the Authority citing the Circular prohibiting refund of excess amounts adjusted from penalty or interest paid during appeal filing.

Interpretation of Scheme Provisions:
The petitioner argued that the rejection was improper as the amount paid during appeal filing was Rs. 17,14,807, which should be the basis for assessing eligibility under the Scheme. The petitioner contended that subsequent recovery from the banker should not be considered for adjustment under Clause 2.4 of the Scheme, which specifically refers to payment at the time of appeal filing.

Impact of Subsequent Recovery on Application:
The Authority's rejection was based on the Circular and the full recovery of arrears before the petitioner withdrew the appeal to apply for the Scheme benefits. The judgment highlighted the ambiguity in the rejection, emphasizing the need for clarity on whether subsequent recoveries should be factored into the assessment of eligibility for refund under the Scheme.

Conclusion:
The High Court set aside the impugned endorsement, directing the Authority to reconsider the application in light of the discussions in the judgment. The Court emphasized that all contentions should be kept open, and the Authority should pass fresh orders after proper consideration of the Scheme provisions and the specific circumstances of the case.