2024 (7) TMI 464 - HC - VAT and Sales Tax

Benefit of Amnesty Scheme for waiver of penalty - Benefits under Vera Samadhan Yojana, 2019 - release of bank attachment - refund of the amount wrongly recovered pursuant to the intimation letter - HELD THAT - The benefit of the Amnesty Scheme is available for waiver of interest and penalty. However, the Scheme also provides that no refund would be issued qua interest or penalty which is already deposited by the applicant. Therefore, the petitioner is not entitled to the refund of interest but so far as the penalty is concerned, the petitioner was entitled for the waiver thereof. The respondent authorities however invoking the Clause 4.5 by misinterpreting the object of the Scheme to give waiver of interest and if the amount of tax is deposited by the assessee. According to the respondent-authority, only the outstanding amount is to be seen which pertains to the penalty and therefore as per Clause 4.5 of the Amnesty Scheme, the petitioner was directed to deposit 20% of the penalty. The petitioner however, intimated the respondent-authority that as the petitioner has already paid tax and interest before assessment order was passed, the petitioner is not liable to deposit any amount of the penalty as required by the intimation letter. However, the respondent-authority rejected the application of the petitioner for the benefit of the Amnesty Scheme as the petitioner did not deposit the amount as required by the intimation letter. The respondents have committed error while rejecting the application under Amnesty Scheme as the petitioner has already paid amount of tax and interest prior to passing of the order of assessment and prior to the announcement of the Scheme. Therefore, reliance placed by the respondent authority on Clause 4.5 of read with Clause 8 of the Scheme would not be applicable as the petitioner is entitled to the waiver of interest and penalty under the Scheme on having paid the entire amount of tax considering the fact that the petitioner had challenged the assessment order comprising of tax, interest and penalty. The petitioner is therefore entitled to the waiver of the penalty as per the provisions of the Scheme accordingly. As the petitioner is not entitled to the Amnesty Scheme alternative prayer with regard to restoration of the second appeal before the Tribunal would not survive. The impugned Assessment Orders and notices issued by respondent No. 3 are hereby quashed and set aside - petition allowed.

Issues Involved:
1. Entitlement to benefits under Vera Samadhan Yojana 2019.
2. Requirement for payment of penalty under the Amnesty Scheme.
3. Validity of bank account attachment by the respondent authorities.
4. Restoration of appeals withdrawn to avail Amnesty Scheme benefits.
5. Refund of amounts wrongly recovered under the Amnesty Scheme.

Detailed Analysis:

1. Entitlement to Benefits under Vera Samadhan Yojana 2019:
The petitioner, a proprietorship firm, applied for benefits under the Vera Samadhan Yojana 2019 after having paid the tax and interest prior to the assessment order. The scheme provides waiver of interest and penalty if the tax amount is paid. The petitioner received an intimation letter stating that no amount was payable, yet the respondent demanded payment of the unpaid penalty amount. The court held that the petitioner is entitled to the benefits of the Amnesty Scheme as they had already paid the tax and interest, and the scheme's object is to waive interest and penalty upon payment of tax.

2. Requirement for Payment of Penalty under the Amnesty Scheme:
The respondent authorities misinterpreted Clause 4.5 of the Amnesty Scheme, which pertains to cases where the assessment order pertains to interest or penalty or both, requiring payment of 20% of the outstanding demand. The court noted that the petitioner had already paid the tax and interest, and the demand was raised only for the penalty. The court ruled that the petitioner was not required to pay any further amount as the assessment order included tax, interest, and penalty, and the petitioner had already complied with the tax and interest payment requirements.

3. Validity of Bank Account Attachment by the Respondent Authorities:
The respondent authorities attached the petitioner’s bank accounts without prior intimation, causing business disruptions. The court found this action improper, especially since the petitioner had applied for the Amnesty Scheme and no final decision had been communicated. The court ordered the release of the bank attachments and deemed the respondent's actions contrary to the scheme's provisions.

4. Restoration of Appeals Withdrawn to Avail Amnesty Scheme Benefits:
The petitioner sought restoration of appeals withdrawn to avail the Amnesty Scheme benefits if the scheme's application was rejected. The court held that since the petitioner was entitled to the scheme's benefits, the alternative prayer for restoration of appeals did not survive. The court emphasized that the petitioner should not be penalized for following the scheme's procedures.

5. Refund of Amounts Wrongly Recovered under the Amnesty Scheme:
The court directed the respondents to refund the amounts recovered from the petitioner pursuant to the recovery proceedings, with statutory interest, within 12 weeks. This decision was based on the finding that the petitioner was entitled to the waiver of penalty under the scheme and had already paid the required tax and interest.

Conclusion:
The court allowed the petitions, quashed the impugned assessment orders and notices, and directed the respondent authorities to grant the benefits of the Amnesty Scheme to the petitioner. The respondents were also instructed to refund the amounts recovered with statutory interest, thereby upholding the petitioner’s entitlement to the scheme’s benefits and addressing the improper actions of the respondent authorities.

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