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TMI Blog2024 (10) TMI 1176X X X X Extracts X X X X X X X X Extracts X X X X ..... various terms for the purpose of the said Act. It provides for the designated authority for implementation of the said Act. It provides for eligibility for the settlement of the arrears, the amount which is to be considered for the settlement of the Act, the time within which the amount determined for settlement is required to be paid, the conditions to be satisfied for availing the settlement, order to be passed accepting or rejecting the settlement, power of rectification, review and appeal. Consequences of settlement order obtained by suppression and conclusiveness of the proceedings covered by settlement. Whether authorities under the Settlement Act can abdicate and exercise powers granted to authorities under the MVAT Act? - HELD THAT:- It is important to note that the Settlement Act nowhere provides or empowers the authorities under the said Act to import the provisions of the MVAT Act and more particularly provisions of Section 50 of the MVAT Act for determination of the requisite amount to be paid under the Settlement Act. Therefore, the action of the Respondents in passing the review order by importing the provisions of Section 50 of the MVAT Act is wholly without the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 50 which is passed for adjusting the refund of Financial Year 2016-2017 against demand for the years 2013-2014, 2015-2016 and 2017-2018. Therefore, in absence of any order under Section 50 read with Rule 60 of the MVAT Rules, the impugned action of the Respondents to adjust refund by resorting to the provisions of the Settlement Act is wholly without jurisdiction. In the absence of any order under Section 50 of the MVAT Act by the authorities under the said Act, review orders passed by authorities under the Settlement Act conferring power upon itself powers under Section 50 of the MVAT Act is without jurisdiction and also there is no provision under the Settlement Act to adjust such refund for arriving at the amount to be considered for the settlement and, therefore, there cannot be any error in the settlement orders for the authorities to exercise review powers under Section 15 of the Settlement Act. The impugned review orders dated 17th July 2023 passed under Section 15 of the Settlement Act for the years 2013-2014, 2015-2016 and 2017-2018 are hereby quashed and set aside and consequently impugned communication dated 13th October 2023 is also quashed and set aside - Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or late fee which were levied, payable or imposed under various Acts administered by the Respondent State. 7. On 12th May 2022, an appeal order under the MVAT Act came to be passed for the financial year 2016-2017, pursuant to which sum of Rs. 2,72,08,381/- was determined as refundable to the Petitioner. The copies of the said appeal order was marked to all the Respondents. 8. On 28th July 2022, Petitioner filed an application under the Settlement Act for the financial years 2013-2014 and 2017-2018 and as per the said application forms generated on the portal of the Respondents under the Settlement Act, a sum of Rs. 26,61,347/- and Rs. 9,31,526/- were payable as per the said Settlement Act. These applications were acknowledged by the Respondents under the Settlement Act on 28th July 2022 itself. 9. On 1st August 2022, Respondent No. 2 passed an order of settlement under Section 13 (1) of the Settlement Act for the financial years 2013-2014 and 2017-2018 and arrived at the same figure of the settlement amount which were calculated by the Petitioner in its application i.e. Rs. 26,61,347/- for the financial year 2013-2014 and Rs. 9,31,526/- for the financial year 2017-2018. Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice. A personal hearing was also given to the Petitioner on 11 th May 2023 in connection with proceedings under Section 13 (3) of the Settlement Act but no order came to be passed in those proceedings till today. IMPUGNED REVIEW PROCEEDINGS UNDER SECTION 15 OF THE SETTLEMENT ACT:- 13. On 17th May 2023, Respondent No.1 issued a show cause notice under Section 15, for review of the orders passed under Section 13 (1) of the Settlement Act for the financial years 2013-2014, 2015-2016 and 2017-2018, was issued proposing to adjust refund of the financial year 2016-2017 against demand for these 3 years and recompute the settlement amount. On 15th June 2023, the Petitioner filed its reply to the aforesaid show cause notice and challenged the very review proceedings. The Petitioner, inter alia, submitted that there is no error in the determination of the amounts payable under the Settlement Act. The Petitioner after detailed written submissions prayed for dropping of the review proceedings. Personal hearing was also given to the Petitioner in the course of the review proceedings. 14. On 28th August 2023 three orders dated 17th July 2023 were served on the Petitioner for the financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) and (b) by quashing the impugned orders and directing Respondents to refund Rs. 2,72,08,381/- being refund for the financial year 2016-2017. SUBMISSIONS OF THE RESPONDENTS:- 17. Ms. Vyas, learned Additional GP has strongly opposed the petition and submitted that the Petitioner has not disclosed in the application that they were eligible for refund for the financial year 2016-2017 and therefore the calculation made in the settlement application and accepted by Respondents in the settlement order contains an error which empower them to review the order under Section 15 of the Settlement Act. The learned Additional GP has relied upon the Affidavit-in-Reply filed by one Mr. Rajendra and affirmed on 26th March 2024. It is her submission that the petition is devoid of merits and is required to be dismissed. 18. We have heard learned counsel for the Petitioner and the Respondents and have also perused documents annexed to the petition and reply of the Respondents. ISSUES:- 19. The short issue which arises for our consideration is whether the Respondents were justified in exercising the review powers under Section 15 of the Settlement Act to review the settlement orders passed under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For other classes of dealers, the scheme safeguards the revenue in respect of un-disputed tax with an incentive towards the partial waiver of disputed tax, interest, penalty or the late fee. For bigger dealers who are facing financial crunch, option to pay the amount by instalments has been provided. 5. The Bill seeks to achieve the above objectives. ANALYSIS OF THE SETTLEMENT ACT:- (a) Section 2 of the Settlement Act defines certain terms for the purposes of this Act. Section 2 (d) defines arrears to mean outstanding amount of tax, interest, penalty or late fee payable by an assessee as per any statutory order under the Relevant Act or admitted in the return or revised return and which has not been paid or determined and recommended to be payable by the auditor as per Section 61 of the Value Added Tax Act, 2005. Relevant Act would include MVAT. Section 2 (l) defines the term requisite amount to mean amount required to be paid under the Settlement Act towards undisputed tax and disputed tax, interest, penalty and late fee as determined under Sections 8 and 9 of the said Act and as specified in Annexures A and B appended thereto. Section 2 (o) defines statutory order to mean any ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 10. Along with the application, the applicant is required to pay the requisite amount. (h) Section 13 of the Settlement Act provides for order of settlement to be passed by the designated authority on satisfaction that the applicant has paid the requisite amount determined in accordance with Sections 8 and 9 and on passing such settlement order, applicant shall be discharged of his liability to the extent of the amount of waiver specified in the order of settlement. If the application is not in accordance with the provisions of the Settlement Act then the designated authority may reject the application after giving an opportunity of being heard to the applicant. Section 13 (3) empowers the designated authority to rectify any error apparent from the record. (i) Section 15 of the Settlement Act confers power of review on the Commissioner after noticing any error in the settlement order, if it is prejudicial to the interest of revenue. (j) Section 16 provides for bar on reopening of the settled cases, subject to the power of review, rectification or revocation. (k) Section 17 of the Settlement Act provides that, notwithstanding anything contained in Section 16, if the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 503 or, in form, 504. If the dealer desires adjustment of refund, against tax payable in respect of any subsequent period contained in the year to which the refund relates under this Act, the Central Sales Tax Act, 1956, or the Maharashtra Tax on Entry of Goods into Local Areas Act, 2003, the Commissioner shall issue a Refund Adjustment Order in Form 506. 24. On an analysis of the Settlement Act, in our view, it is a self-contained code in itself, inasmuch as, it defines various terms for the purpose of the said Act. It provides for the designated authority for implementation of the said Act. It provides for eligibility for the settlement of the arrears, the amount which is to be considered for the settlement of the Act, the time within which the amount determined for settlement is required to be paid, the conditions to be satisfied for availing the settlement, order to be passed accepting or rejecting the settlement, power of rectification, review and appeal. Consequences of settlement order obtained by suppression and conclusiveness of the proceedings covered by settlement. Issue A (A) Whether authorities under the Settlement Act can abdicate and exercise powers granted to autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without jurisdiction. If the legislature wanted to empower the authorities under the Settlement Act with the powers conferred under the MVAT Act then nothing prevented them from providing the same under the Settlement Act. The legislature while enacting the Settlement Act in Section 2 (2) provided that the words and expressions used in the Settlement Act, but not defined in the said Act shall have the same meanings assigned to them under the Relevant Act. However, the legislature consciously and rightly so did not empower the authorities under the Settlement Act with the powers conferred under the MVAT Act and, therefore, any action of the authorities under the Settlement Act by encroaching upon the powers conferred under the MVAT Act would be without jurisdiction. Issue B (B) Whether, on a reading of the Settlement Act, amount for considering for settlement is to be arrived at after adjusting refund of other years against the dues of the years for which application is made under the Settlement Act? 29. The requisite amount to be paid under the Settlement Act can be found in Sections 6 and 8 read with Annexures (A) and (B) of the Settlement Act. Section 6 (1) (a) provides that if a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputed tax, disputed tax, interest, penalty, etc. for each year is to be made for which an applicant proposes to apply for the Settlement. Therefore, as per the Settlement Act one has to calculate the outstanding arrears for each year on the date of application. Admittedly in the instant case, there is no dispute that the amount outstanding on the date when the Petitioner made application and also on the date when settlement orders under Section 13 were made, the outstanding arrears as per the statutory orders for the financial years 2013-2014, 2015-2016 and 2017-2018 were Rs. 1,01,51,134/-, 1,41,86,978/- and 30,40,559/- respectively. On that date there was no proceedings pending or any order passed under Section 50 of the MVAT Act to adjust refund for the year 2016-2017 against these demands. 31. In our view, there is no provision under Settlement Act which provides for calculation of outstanding arrears of a particular year to be arrived at after adjustment of refund for another year moreso in a case where there is no such adjustment of the refund order on the date of application or on the date of settlement order under Section 13 of the Settlement Act. In our view, therefore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner shall, if the applicant desires payment in cash issue to him a refund payment order in Form 503 or 504 but if the dealer desires adjustment of refund against tax payable in respect of any subsequent period contained in the year to which the refund relates, the Commissioner shall issue a refund order in Form 506. Therefore, on conjoint reading of Section 50 and Rule 60, in our view, unless an assessee desires for adjustment of refund of one year against demand of another year, the Commissioner cannot, under Section 50 adjust the same on its own volition and even if he proposes to do so he has to do so by giving an opportunity of hearing. In the instant case before us, admittedly there is neither such desire expressed by the Petitioner nor we have been shown any order under Section 50 which is passed for adjusting the refund of Financial Year 2016-2017 against demand for the years 2013-2014, 2015-2016 and 2017-2018. Therefore, in our view in absence of any order under Section 50 read with Rule 60 of the MVAT Rules, the impugned action of the Respondents to adjust refund by resorting to the provisions of the Settlement Act is wholly without jurisdiction. OTHERS :- 34. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and for the years 2013-2014, 2015-2016 and 2017-2018 and because there was no order, the question of ignoring such non-existing order also does not arise and consequently no power of review can be exercised in the absence of any such error . Admittedly, till today there is no order passed under Section 50 of the MVAT Act by the authority under the said MVAT Act for adjustment of the refund. By exercising the powers under Section 15 of the Settlement Act and by relying on Section 50 of the MVAT Act in the said review proceedings, refund of amount cannot be adjusted against the demand of the other years for which the settlement application is made and settlement order is passed. This is not empowered under the Settlement Act. 36. The calculation of arrears and the amount payable under the Settlement Act has to be strictly in accordance with the scheme of the said Act and if on the day when the application was made and the order of settlement was passed, there was no order adjusting the refund then we fail to understand how can there be an error in the settlement order. For an error in the settlement order, in the facts of our case, there should have been any existence of order under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Respondents to pass an order under Section 15 of the Settlement Act and as observed above by us the orders passed under Section 15 of the Settlement Act dated 17 July 2023 are wholly without jurisdiction and therefore we are exercising our discretionary powers under Article 226 of the Constitution of India by interfering in these proceedings. The Respondents in their reply has also not raised the issue of alternate remedy. 41. To conclude: In the absence of any order under Section 50 of the MVAT Act by the authorities under the said Act, review orders passed by authorities under the Settlement Act conferring power upon itself powers under Section 50 of the MVAT Act is without jurisdiction and also there is no provision under the Settlement Act to adjust such refund for arriving at the amount to be considered for the settlement and, therefore, there cannot be any error in the settlement orders for the authorities to exercise review powers under Section 15 of the Settlement Act. 42. In view of above, we pass the following order:- ORDER:- (i) The impugned review orders dated 17th July 2023 passed under Section 15 of the Settlement Act for the years 2013-2014, 2015-2016 and 2017-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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