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TMI Blog2023 (8) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioners had claimed erroneous input tax credit of the purchase tax amount shown in the return, and therefore, such purchase tax was not shown as due in the return. In light of this, it was not actually due and payable, and therefore, the provisions of Sec. 30 could not have been pressed into service. Considering the intention of the amnesty scheme, the interest had to be waived in respect of the tax declared under the scheme, and therefore, the action of the respondents in adjusting the tax paid along with the returns towards the interest is completely contrary to the object, purpose and the terms of the scheme. Even as per the scheme, there is no appeal that would lie against the rejection of a claim thereunder. The Demand Notice dated 30.10.2021 issued by the respondents is quashed and set aside and the action of modifying the assessment order by adjusting the tax paid by the petitioners against interest liability is set aside and the respondents are directed to consider such tax as paid and adjusted against principal tax liability - Petition allowed. - HONOURABLE MR. JUSTICE BIREN VAISHNAV AND HONOURABLE MR. JUSTICE DEVAN M. DESAI Appearance: For The P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein, it was pointed out that the amount of tax paid for the year 2016-17 was Rs. 2,39,55,879/- while the amount of tax which the petitioners had additionally declared as payable under the scheme was Rs. 2,25,53,290/-. On receipt of the application, online intimation letter was received by the petitioners regarding installments to be paid and even as per the intimation letter, the amount of tax payable under the VAT Act for the year 2016-2017 was Rs. 2,25,53,290/-. The petitioners complied with the installments granted without any default. In the interregnum, the petitioners were called for audit assessment under Sec. 34(2) of the VAT Act. The petitioners informed the authorities that they had approached by way of an application under the amnesty scheme. However, while assessing the turnover and tax liability which was exactly in terms of declaration made by the petitioners under the amnesty scheme, the authority while calculating the outstanding tax liability, adjusted the tax paid by the petitioners along with the returns against interest computed on additional tax liability declared under the scheme by the petitioners. 3.4 The petitioners immediately approached the authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he officers are duty bound to respect the object and purpose of the scheme. Mr. Sheth, learned counsel, would rely on a decision in the case of Sky Industries Ltd vs. State of Gujarat , rendered in Special Civil Application No. 246 of 2023 , where even though there was a shortfall of Rs. 2,000/-, the Court opined that such a shortfall could not be recovered. 4.4 Mr. Uchit Sheth, learned counsel, would submit that if the interpretation of the respondent is accepted, it would violate Article 14 of the Constitution of India. The petitioners cannot be worse off because part of the tax amount has been paid along with the returns prior to filing of the application under the amnesty scheme. Because of the payment of tax made prior in point of time, would not make him an assessee so as to give advantage to dealers who did not make payment prior to the scheme. Mr. Uchit Sheth, learned Counsel, would submit that this Court, in the case of Safal Developers Vs. State of Gujarat, in Special Civil Application No. 1338 of 2016, relied on a decision of the Hon ble Supreme Court and held that if adjustment of the tax paid prior to the declaration of the amnesty scheme is not granted, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhan Scheme, the only remission is that of the tax and penalty on the amount disclosed in the scheme. The scheme does not anywhere state that the original amount that was paid as per return filed, will have the benefit of waiver of penalty and interest. As per the return filed, an amount of Rs. 2,54,04,223/- was payable, but only Rs. 2,39,55,879/- was paid. Therefore, an amount of Rs. 14,48,344/- though payable, was not paid. Interest therefore on such amount was to be levied under Sec. 30(5) of the Act. Similarly, a tax liability of Rs. 2,11,04,946/- has been admitted by the petitioners in the return for which the petitioners have availed input tax credit which was not available to the petitioners. 5.4 Ms. Shrunjal Shah, learned AGP, would further submit that it was not a voluntary disclosure under the scheme to the extent of Rs. 2,25,53,292/- which was relevant. What is important is that the amount of tax was not paid within the stipulated time period, and therefore, the amount paid had to be appropriated as per the provisions of Sec. 30(6) of the Act. Reading the provisions of Sec. 30 of the Act, Ms. Shah, learned AGP, would submit that the tax had to be paid within the stipu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities to partially reject the case of the petitioners by adjusting the tax paid with returns against interest imposed on tax declared under the amnesty scheme. This has resulted in creating, as is rightly submitted by the learned counsel for the petitioners, an artificial shortfall of tax payment as a result of such illegal adjustment. 6.4 The amnesty scheme is on record. Reading the objects and the purpose of the scheme, it is evident that the scheme was introduced to reduce the administrative cost by quick recovery of old dues and also give substantial relief to the dealers. Reading the relevant clause of the scheme would further indicate that it was not open for the respondents to reject complete waiver of interest and penalty in case of the applicants who have paid the full amount of tax. In case of the present petitioners, the petitioners paid the full amount of tax, which is evident as declared by them in the application filed under the scheme. Reading the relevant clause of the scheme would indicate as under: (a) The outreach of the scheme was in context of assessment, re-assessment, outstanding dues of assessed tax, reassessed tax or tax which were outstanding as a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove enactments are to be covered. 21. Thus, the object of the amnesty scheme is to bring about expeditious and effective resolution of old disputes and recoveries of old outstanding dues of the Government and reduction of administrative costs. Since such scheme is applicable to all pending cases, the officers acting under the relevant statutes are expected to respect the object of the scheme and to ensure that the assessees get the benefit under the scheme. Therefore, when a bona fide request is made by an assessee to adjourn the hearing of a case with a view to enable him to avail the benefit of the scheme, the concerned officer is duty-bound to respect such request. Therefore, when in the present case, where the matter had not been taken up for hearing for a considerable period of time, when the petitioners requested the second respondent to keep the assessment proceedings in abeyance as they wanted to avail the benefit of the amnesty scheme, the respondent ought to have respected such request and afforded the petitioners sufficient time to avail the benefit of the amnesty scheme, however, on the contrary, the second respondent, in undue haste, has proceeded to pass an ex-p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve disposal of such old cases. By this scheme the Government will get the amounts of old pending recoveries, the business segment will get a huge relief and the administrative cost of the Government will be reduced. Considering this submission a proposal had been made for introducing the amnesty scheme. Under this scheme, the outstanding recoveries under the above enactments are to be covered. 21. Thus, the object of the amnesty scheme is to bring about expeditious and effective resolution of old disputes and recoveries of old outstanding dues of the Government and reduction of administrative costs. Since such scheme is applicable to all pending cases, the officers acting under the relevant statutes are expected to respect the object of the scheme and to ensure that the assessees get the benefit under the scheme. Therefore, when a bona fide request is made by an assessee to adjourn the hearing of a case with a view to enable him to avail the benefit of the scheme, the concerned officer is duty bound to respect such request. Therefore, when in the present case, where the matter had not been taken up for hearing for a considerable period of time, when the petitioners requested t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme shall also be available to those cases where appeal proceedings are pending. However, the dealer who takes the benefit shall be required to withdraw the appeal to the extent of the transactions shown in paragraph 1(B) or shall be required to revise the appeal accordingly. Paragraph 13 provides that where in connection with transactions under paragraph 1(B), tax, interest and penalty has already been paid, then the dealer availing of the benefit of the scheme shall under no circumstances be entitled to refund of the amount so paid. On a conjoint reading of paragraph 10 and paragraph 13 of the scheme, it is evident that the intention is to grant benefit also to those dealers who have paid the tax and interest prior to coming into operation of the scheme. The only condition is that in case where the tax, interest and penalty has already been paid, the dealer shall not be entitled to refund thereof. The provisions of paragraph 7 of the scheme have to be construed in consonance with the provisions of paragraph 10 and 13 thereof, which clearly indicate that all those dealers who have paid the taxes during the period of operation of the scheme and prior thereto are brought within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmora Granite Private Limited. 6.10 Coming to the interpretation in context of Sec. 30(5) and sub-sec (6) thereof, the stand of the respondent is that the intention of Sec. 30 is that the tax is to be paid within the stipulated time frame. The petitioners, cannot take the benefit of wilful mis-statement in the return stating that the tax has been paid through ITC, and not making any rectification. By making such a false statement, according to the respondents, the dealer cannot get away from the liability of interest. Sec. 30(5) and Sec. 30(6) r/w. Sec. 42(7) of the Act, read as under: 30. Periodical payment of tax and interest on non-payment of tax. XXX XXX XXX (5) Where a dealer does not pay the amount tax within the time prescribed for its payment under this section, then there shall be paid by such dealer for the period commencing on the date of expiry of the aforesaid prescribed time and ending on date of payment of the amount of tax, simple interest at the rate of eighteen percent, per annum, on the amount of tax not so paid or on any less amount thereof remaining unpaid during such period. (6) Where a dealer is liable to pay interest under sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of self-assessment must be paid up along with the filing of the return which constitutes self-assessment. I fail to see how the plain words of subsection (2) of Section 7 can be tortured to mean full amount of tax due on the basis of return which ought to have been filed but which has not been filed. Pointing out that the construction pressed by the Revenue leads to a serious anomaly, the learned Judge proceeds to observe: (SCC p. 587, para 7) If this construction were accepted, the tax payable under sub-section (2) of Section 7 would be the full amount of tax due on the basis of a correct and proper return and that would necessarily be the same as the tax assessed by the assessing authority, because what is a correct and proper return would be determinable only with reference to the assessment ultimately made. The assessment when made would show whether the return filed was correct and proper; it would be correct and proper if it accords with the assessment made; if it does not accord with the assessment, then to the extent to which it differs it would obviously have to be regarded as incorrect and improper. The consequence of the construction suggested on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seems, introduced in order to compensate for the loss occasioned to the Revenue due to delay. But then interest was charged on the strength of a statutory provision, may be its objective was to compensate the Revenue for delay in payment of tax. But regardless of the reason which impelled the Legislature to provide for charging interest, the Court must give that meaning to it as is conveyed by the language used and the purpose to be achieved. Therefore, any provision made in a statute for charging or levying interest on delayed payment of tax must be construed as a substantive law and not adjectival law. So construed and applying the normal rule of interpretation of statutes, we find, as pointed out by us earlier and by Bhagwati, J. in the Associated Cement Co. case, that if the Revenue's contention is accepted it leads to conflicts and creates certain anomalies which could never have been intended by the Legislature, 17. Let us look at the question from a slightly different angle. Section 7(1) enjoins on every dealer that he shall furnish prescribed returns for the prescribed period within the prescribed time to the assessing authority. By the proviso the time can be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability to pay interest. That would be asking him to do the near impossible. 6.12 Therefore, what was required to be seen was the actual tax due as per the return actually filed by the dealer and not the return which ought to have been filed. Reading the Section as a whole indicates that the concept of interest on such payments is on the payment of tax due as per returns. In the case of the petitioners, the scrutiny of the actual returns filed indicate that the petitioners had claimed erroneous input tax credit of the purchase tax amount shown in the return, and therefore, such purchase tax was not shown as due in the return. In light of this, it was not actually due and payable, and therefore, the provisions of Sec. 30 could not have been pressed into service. 7. Considering the intention of the amnesty scheme, the interest had to be waived in respect of the tax declared under the scheme, and therefore, the action of the respondents in adjusting the tax paid along with the returns towards the interest is completely contrary to the object, purpose and the terms of the scheme. Even as per the scheme, there is no appeal that would lie against the rejection of a claim there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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