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TMI Blog2015 (11) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... The date of submission of application for settlement of arrears was on June 25, 2009 and the amount to be paid as per Amnesty Scheme was intimated on July 3, 2009. Only on July 4, 2009 SLP was filed challenging the order dated March 31, 2009. Mere filing of SLP would not vest the appellant-assessee with any right and it cannot be considered as continuation of revisional proceedings, which is a settled position. - normal rule that payment has to be first adjusted towards interest and then towards principal as provided under section 55C is applicable. - Decided in favour of Revenue. - W. A. No. 1807, W. A. No. 1828 of 2013, W. P. (C) No. 4808 of 2010 - - - Dated:- 3-7-2014 - Dr. MANJULA CHELLUR C. J. AND SHAFFIQUE A. M. J. Bobby John Pulikkaparambil, Government Pleader, for the Departments. Joseph Markose, Senior Advocate and Ramesh Cherian John for the assessee. JUDGEMENT The above two appeals, one is filed by Revenue and another is filed by the assessee. The facts that led to filing of the above appeals are as under:- The assessee is a company engaged in manufacture and sale of cement. For the assessment year 1998-99, provisional assessment was compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt without granting credit for deposits of tax made for the year pursuant to interim orders of the first appellate authority and Appellate Tribunal as well. 2. According to the Department, interim deposit of ₹ 3,80,99,000 had already been adjusted towards interest as on the date of such deposits considering section 55C of the KGST Act. But, according to the assessee, under threat of rejecting the settlement application under amnesty scheme, the assessee remitted the full settlement amount under protest without having set off for the deposits already made during the pendency of litigation. 3. The learned single judge partly allowed the claim and directed appropriation of deposit of ₹ 1,80,99,000 towards tax holding that the same was a deposit made on account but denied appropriation of rupees two crores on the ground that deposit was an open payment in the absence of a specific direction in the interim order of stay. Aggrieved by the opinion of learned single judge (supra), the Revenue filed W.A. No. 1807 of 2013 and the assessee filed W.A. No. 1828 of 2013. 4. According to the assessee, the deposits which were made pursuant to interim direction of two appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the wordings in conditional orders of stay are not at all relevant to decide the controversy whether amount remitted is to be appropriated towards interest or principal amount or other amount. The unequivocal terms of section 55C mandates that any amount paid under 'the Act' is to be appropriated towards interest first. 6. So far as the contention of non obstante clause in section 23B of the KGST Act, according to the Revenue, it was not in statute at the relevant point of time when pre-deposits were made by the assessee. Therefore, none of the provisions under section 23B can affect the mandate under section 55C of the KGST Act. It is further contended that amnesty scheme is applicable only in respect of arrears due at the time of scheme. Therefore, arrears due could be only after appropriation of amounts remitted as per conditional orders of stay at exhibits P3 and P5. In the light of section 55C(1) creating an embargo against adjusting any payments made towards tax when interest is outstanding, the only exception could be sub-section (2) of section 55C which says, amount already appropriated towards tax need not be computed. This clearly indicates that no other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008, a letter came to be filed before the Assistant Commissioner, Commercial Taxes seeking refund of pre-deposit in pursuance of the order of the Kerala State Appellate Tribunal in favour of the assessee. On October 3, 2008, the appeal filed against final assessment order was dismissed. On December 19, 2008, an appeal along with stay petition was filed before the Appellate Tribunal challenging the order of the first appellate authority (final assessment). On February 21, 2009, the Appellate Tribunal granted order of stay so far as final assessment proceedings. On March 31, 2009, revision petition filed by the Department in respect of provisional assessment order was disposed of. 8. When things stood as stated above, on June 25, 2009, an application for settlement of arrears under Amnesty Scheme came to be made and intimation of payment of arrears was sent to the assessee by assessing authority on July 3, 2009. Meanwhile, an SLP came to be filed against the order of this court on July 4, 2009. Another letter dated July 16, 2009 was submitted by the assessee before the Assistant Commissioner (KVAT) contending that the amount pre-deposited by them was not considered for computatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing rates:- (a) In the case of demands relating to the periods up to and including March 31, 1991 a reduction of twenty five per cent for the tax amount, and complete reduction of the interest on the tax amount and for the amount of penalty and interest thereon; (b) In the case of demands relating to the period from April 1, 1991 to March 31, 1996, a complete reduction of the interest on the tax amount, and for the amount of penalty and interest thereon; (c) In the case of demands relating to the period from April 1, 1996 to March 31, 2000, a reduction of ninety five per cent of the interest on the tax amount, and for the amount of penalty and interest thereon; (d) In the case of demands relating to the period from April 1, 2000 to March 31, 2005, a reduction of ninety per cent of the interest on the tax amount, and for the amount of penalty and interest thereon; and (e) In cases where principal amount has already been remitted prior to coming into force of section 55C of the Act, a reduction of ninety per cent of the interest amount. (2) Notwithstanding anything contained in the Kerala Revenue Recovery Act, 1968, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43) may, within a period of thirty days from the date on which the order was served on him, appeal against such order to the Appellate Assistant Commissioner:- (2) to (4)... (5) Notwithstanding that an appeal has been preferred under sub-section (4), the tax or other amounts shall be paid in accordance with the order against which the appeal has been preferred:- Provided that the Appellate Assistant Commissioner may, in his discretion, give such directions as he thinks fit in regard to the payment of the tax before the disposal of the appeal, if the appellant furnishes sufficient security to his satisfaction in such form and in such manner as may be prescribed. 39. Appeal to Appellate Tribunal.-(1) Any person objecting to an Order referred to in the first proviso to sub-section (1) of section 34 or any officer empowered by the Government in this behalf or any other person objecting to an Order passed by the Appellate Assistant Commissioner under sub- section (3) of section 34 and any person objecting to an order passed by the Deputy Commissioner under sub-section (1) of section 35 (xxx) may, within a period of sixty days from the date on which the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be on account and without prejudice subject to the final decision in the revision. 11. They further opined that if litigation is pending, it would mean that the amount determined as income-tax and the amount determined as interest by the assessing authority has not attained finality and is subject to the decision in the pending litigation. 12. The appellant/assessee also places reliance on Full Bench decision of this court in Ideal Trading Company v. Sales Tax Officer [2010] 18 KTR 106 (Ker) [FB] to contend that the deposit made pursuant to an interim order remains as deposit. He also places reliance on Corporation Bank v. Saraswati Abharansala: [2009] 19 VST 84 (SC) to contend that sum paid in excess has to be refunded since the rate has been reduced with retrospective effect. In the case of Commissioner of Income-tax, West Bengal-II v. Hindustan Housing and Land Development Trust Ltd.: [1986] 161 ITR 524 (SC), the apex court held that withdrawal of enhanced land acquisition award amount deposited in court pursuant to interim orders cannot be appropriated and assessed as income as the appropriation will happen only when litigation is finally determined. It is pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mere request to demand for tax... 15. They also referred to Bharat Heavy Electricals Limited v. R.S. Avtar Singh and Company: [2013] 1 SCC 243. The question was whether, in the case of part payment of decretal amount deposited in courts pursuant to its orders, principle of appropriation is applicable. In this case, court had directed payment of rupees one crore as a condition for grant of stay order. Execution of decree was kept in abeyance by further deposit of ₹ 1.95 crores. Judgment debtor raised a contention that by virtue of payment made during the pendency of the matter entire decree amount was satisfied. Both award of arbitrator and rule of court make a clear distinction between award amount and interest payable on award amount. When award amount and interest merged together and became the amount payable under the decree, amount has to be first adjusted towards interest which had become due as on that date and adjustment of balance amount only against principal. Sections 31 and 36 of the Arbitration and Conciliation Act and section 50 of Contract Act were considered. 16. They also placed reliance on: [1999] 96 Comp Cas 1 (SC); AIR 1999 SC 1036 in the case of (In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. It also includes benefit of installments apart from indicating consequences if there is default. Sub-clause (7) is relevant which says, if the amount settled under the Amnesty Scheme has been a subject-matter of appeal or revision, such appeal and revision may be continued and in the event of final orders of such litigation results in reduction of tax payable, the amount so reduced shall be refunded. Similarly, in case tax payable is enhanced, dealer shall pay such enhanced amount with interest thereon, in accordance with provisions of the Act. 19. Then coming to factual situation, Amnesty Scheme came to be announced with effect from April 1, 2008 by introducing section 23B in the KGST Act. By April 12, 2007 on two occasions the appellant-assessee had made two payments, one in pursuance of the appellate order dated September 29, 2006 and another on March 14, 2007 in terms of order of Sales Tax Appellate Tribunal. On August 31, 2007 the final order of Sales Tax Appellate Tribunal in respect of provisional assessment was passed favouring the assessee-appellant granting full relief and setting aside entire demand. The Revenue had filed an application for condonation of delay alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x payable. According to the appellant-assessee, the very liability to pay tax is erroneous as turnover in question involves second sale of cement manufactured and sold to M/s. Cochin Cements Ltd. As on today, final assessment proceedings are also completed and order dated February 16, 2010 went against the appellant-assessee. SLP pertaining to final assessment order also filed and the same was admitted on July 19, 2010. In other words, the appellant-assessee is prosecuting litigation after admission of SLP pertaining to the very payment of tax on the ground that they are not liable to pay the same. If they are successful before the apex court, the amount paid under the Amnesty Scheme as well as two deposits made during pendency of provisional assessment proceedings would be refunded to them. 21. Then coming to the law declared by the High Court of the Karnataka in Mangilal's case: [2002] 257 ITR 31 (Karn) it was similar to the one involved in this case. Under both the schemes, there is non obstante clause which overrides all other provisions under respective Acts. In other words, the benefit provided under section 23B contemplates consideration of the matter independently. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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