Bombay High Court
Andreas Stihl Private Ltd vs The Deputy Commissioner Of State Tax And ... on 23 October, 2024
Author: M. S. Sonak
Bench: M. S. Sonak
2024:BHC-AS:42242-DB
Kishor 908-WP.15511.2023.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 15511 OF 2023
Andreas Stihl Private Limited,
A private limited company
having its registered office at:
Plot No.E-2/5 & 2/6, Chakan,
MIDC Industrial Area, Phase III,
Village Kharabwadi, Tal. Khed,
Pune, Maharashtra - 410 501 ...Petitioner
Versus
1. The Joint Commissioner of State Tax,
LTU-2, PUN-VAT-F-602, Pune Division,
Pune Cabin No.418, 4th Floor, GST
Bhavan, Yerwada, Pune - 411 006
2. The Deputy Commissioner of State Tax,
PUN-VAT-E-618, Cabin No.424,
4th Floor, GST Bhavan, Yerwada,
Pune - 411 006
3. State of Maharashtra,
Finance Department,
Mantralaya, Mumbai - 400 021 ...Respondents
__________
Mr. Anay Y. Banhatii a/w Ms. Asmita Gupta and Mr. Siddhant Chhabra
for Petitioner.
Ms. S. D. Vyas, Addl. G. P a/w Ms. Vrishali Raje, AGP for Respondent-
State. __________
CORAM : M. S. SONAK &
JITENDRA JAIN, JJ.
RESERVED ON : 18th OCTOBER 2024
PRONOUNCED ON : 23rd OCTOBER 2024
JUDGMENT (Per Jitendra Jain, J.) :
-
1. Rule. Rule is made returnable forthwith with the consent of
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both the parties and the Petition is taken up for final hearing and
disposal since the pleadings are complete.
2. By this Petition under Article 226 of the Constitution of India,
the Petitioner seeks to challenge review orders all dated 17 th July 2023
for the financial years 2013-2014, 2015-2016 and 2017-2018 passed by
the Joint Commissioner of State Tax, Pune under Section 15 of the
Maharashtra Settlement of Arrears of Taxes, Interest, Penalties or Late
Fees Act, 2022 (Settlement Act) in which invoking provisions of Section
50 of the Maharashtra Value Added Tax Act, 2002 (MVAT Act), refund
amount for financial year 2016-2017 is sought to be adjusted against
the outstanding demand for the financial years 2013-2014, 2015-2016
and 2017-2018 and consequently seeks to review settlement orders
passed under Section 13(1) of the Settlement Act.
Brief facts:-
3. The Petitioner is engaged in the business of manufacturing
and sale of machineries and is registered under the MVAT Act. The
Petitioner is regularly filing its MVAT returns which are subjected to
scrutiny and assessment orders are passed by the Respondents
exercising its powers under the MVAT Act which are also carried in
appeal by the Petitioner.
PROCEEDINGS FOR THE FINANCIAL YEAR 2013-14, 2016-17 & 2017-18:-
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4. For the financial year 2013-2014, on 1st October 2021, an
appeal order came to be passed by the Appellate Authority under the
MVAT Act and pursuant thereto tax amount of Rs.1,01,51,134/- was
payable by the Petitioner.
5. On 12th May 2022, an assessment order for the financial year
2017-2018 was passed by the Respondents under the MVAT Act and a
demand of Rs.30,40,559/- was raised against the Petitioner.
6. Meanwhile, on 15th March 2022, the Settlement Act was
passed for settlement of arrears of tax, interest, penalty 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.
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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. Respondent No.2
acknowledged amount under the Settlement Act having been paid by
the Petitioner and, therefore, passed an order for waiver of interest,
penalty, etc.
PROCEEDINGS FOR THE FINANCIAL YEAR 2015-16:-
10. On 28th September 2022, an order under the MVAT Act for the
financial year 2015-2016 came to be passed whereby sum of
Rs.1,41,86,978/- was determined as payable by the Petitioner. The
Petitioner immediately, thereafter, on 29 th September 2022 filed
settlement application under the Settlement Act for the said financial
year 2015-2016 with Respondent No.2 and arrived at a sum of
Rs.42,69,775/- as the settlement amount payable under the Settlement
Act. The said application was accepted and payment as per the
Settlement Act was made by the Petitioner. On 3 rd October 2022 an
order of settlement under Section 13(1) of the Settlement Act was
passed by the Respondent No.2 acknowledging the payment as per the
Settlement Act and further waiving interest, penalty, etc.
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PROCEEDINGS UNDER SECTION 13(3) OF THE SETTLEMENT ACT:-
11. On 21st March 2023, Respondent No.2 issued show cause
notice under Section 13(3) of the Settlement Act for the financial years
2013-2014, 2015-2016 and 2017-2018 whereby a rectification was
sought of its settlement orders dated 1st August 2022 and 3rd October
2022 for those financial years on the ground that after the settlement
orders were passed it was noticed by Respondent No.2 that the
Petitioner was entitle to a refund for the financial year 2016-2017
amounting to Rs.2,72,08,381/- by virtue of appeal order dated 13 th May
2022 for that year. The said show cause notice further stated that the
said refund for financial year 2016-2017 was available for adjustment
towards pending dues under the MVAT Act and therefore in the
application for settlement, Petitioner should have adjusted refund
against demand for the years 2013-2014, 2015-2016 and 2017-2018 for
arriving at outstanding amount for settlement. In the said show cause
notices provisions of Section 50 of the MVAT Act were invoked.
12. On 24th April 2023, Petitioner filed its reply to the aforesaid
show cause notice issued under Section 13(3) of the Settlement Act and
made detailed submissions inter alia that the proposed rectification is
time barred, without authority of law, without there being any mistake
in the settlement order, etc. and prayer was made to drop the show
cause notice. A personal hearing was also given to the Petitioner on 11 th
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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 15 th 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 financial years 2013-2014, 2015-2016
and 2017-2018 wherein provisions of Section 50 of the MVAT Act were
invoked and the amount outstanding for the financial years 2013-2014,
2015-2016 and 2017-2018, after adjustment of refund for the financial
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year 2016-2017, was arrived at. As per these review orders, no amount
was outstanding for the financial years 2013-2014, 2015-2016 and
2017-2018 for consideration under the Settlement Act. Pursuant to
these orders, a communication was addressed by the Respondent No.2
to the Petitioner referring to the settlement proceedings and the review
orders passed in those proceedings and it was proposed as to why
refund for financial year 2016-2017 should not be adjusted against dues
payable as per the office records.
15. It is on the above backdrop that the Petitioner in the present
proceedings has challenged review orders passed under Section 15 of
the Settlement Act and subsequent communication dated 13 th October
2023 whereby Respondent No.2 has proposed to adjust the refund for
the financial year 2016-2017 against the demand for the financial years
2013-2014, 2015-2016 and 2017-2018.
SUBMISSIONS OF THE PETITIONER:-
16. Mr. Banhatti, learned counsel for the Petitioner submits that
the impugned orders are wholly without jurisdiction inasmuch as
calculation of arrears made in the impugned orders dated 17 th July
2023 is contrary to the provisions of the Settlement Act. There is no
provision in the Settlement Act for calculating arrears of a particular
year by adjustment of refund of the other years. Mr. Banhatti further
submits that looking at the scheme of the Settlement Act and the orders
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passed accepting the settlement application, Petitioners have not
challenged and/or withdrawn appeals for those years and they have lost
a vital remedy which were proposed to be settled under the Settlement
Act. It is his submissions that the Settlement Act is a self-contained
code. He further submits that on the date when the settlement orders
were passed, there was no order under Section 50 of the MVAT Act for
adjustment of refund nor the said order is passed thereafter and
therefore exercise done by the Respondents to recalculate the
arrears/outstanding as per the Settlement Act by invoking provisions of
Section 50 of the MVAT Act is without jurisdiction. Mr. Banhatti,
therefore, submitted that the petition be allowed in terms of prayer
clause (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
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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 Section 13(1) of the said Settlement Act and recalculating the
amount of 'arrears' which were initially accepted by the Respondents
while passing the settlement orders.
20. To answer the said issues following questions needs to be
answered.
(A) Whether authorities under the Settlement Act can abdicate and
exercise powers granted to authorities under the MVAT Act?
(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?
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(C) Whether in the absence of any order under Section 50 of the MVAT
Act for adjustment of refund order, are the authorities under the
Settlement Act justified in invoking review powers under Section
15 of the Settlement Act?
ANALYSIS AND CONCLUSIONS:-
21. Before we dwell upon the reasoning, it is necessary to dissect
the scheme of the Settlement Act and the relevant provisions of the
MVAT Act.
22. The Statement of objects and reasons for enactment of the
Settlement Act is reproduced herein :
"STATEMENT OF OBJECTS AND REASONS
1. With a view to give effect to the proposals contained in the Budget
Speech for the year 2022-2023, the Government considers it expedient
for settlement of arrears under the various Acts administered by the
Goods and Services Tax Department.
2. The Goods and Services Tax Act has come into force with effect
from the 1st July 2017. Prior to the implementation of Goods and
Services Tax in the State, various Tax Laws were in force. Some of the
Tax Laws have been repealed and subsumed in the Goods and Services
Tax. A large number of cases involving outstanding dues and litigations
are pending. In order to unlock the amount involved in the outstanding
dues and reduce the old pending litigations, the Government considers it
expedient to provide for a scheme for settlement of arrears of tax,
interest, penalty or late fee under the Relevant Act, for the specified
period ending on or before the 30th June 2017.
3. In view of the Covid-19 pandemic, small industries, traders and
other dealers have undergone a lot of financial stress. Therefore, the
Government considers it expedient to provide a relief to such dealers.
This scheme mainly targets the class of dealers by providing lump sum
payment option for settlement of dues and closure of old pending
litigations.
4. 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.
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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 order passed under the
Relevant Act raising the demand of tax, interest, penalty or late fee
payable by the Applicant. Section 2(g) defines "disputed tax" to
mean the tax other than the undisputed tax as defined in clause
(q) and clause (q) defines "undisputed tax" to mean tax collected
under the Relevant Act or payable as per the return, etc. Section
2(k) defines "Relevant Act" to mean various Acts specified therein
which includes the MVAT Act. Section 2(2) provides that words
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and expressions used in the Settlement Act but not defined in the
said Act shall have the same meanings as assigned to them under
the Relevant Act.
(b) Section 3 provides for who would be the designated authority for
the purposes of the Settlement Act. The Commissioner of State
Tax shall be the Commissioner for the purpose of the Settlement
Act.
(c) Section 4 provides for who would be eligible for settlement.
(d) Section 6(1) starts with non obstante clause, overriding the
Relevant Act (which in the instant case is MVAT) and it provides
determination of arrears of tax, interest, penalty or late fee for
settlement. Section 6(1)(a) provides that any payment made in
respect of a statutory order shall first be adjusted towards the
amount of undisputed tax and then disputed tax and, thereafter,
towards the interest and the balance amount remaining unjusted
shall then be adjusted towards the penalty and the late fee.
Section 6(1)(b) provides that after adjustment of the amount
specified in clause (a), the amount remaining outstanding as on
the cutoff date shall be considered for the settlement under the
said Act.
(e) Section 8 provides that the "requisite amount" determined under
Section 6 shall be payable towards the settlement of arrears as
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specified in Annexures (A) and (B). The said annexures deals with
one time payment option or installment option and the percentage
of the amount of undisputed tax, disputed tax, interest, penalty
and late fee to be paid towards the settlement.
(f) Section 11 provides for conditions for settlement. The condition
being that the applicant would withdraw the appeal, fully and
unconditionally, pending before any authority and application for
withdrawal of appeal should be filed along with the settlement
application.
(g) Section 12 provides for making of application for settlement of
arrears separately for each financial year before the last date
specified in Section 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
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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 has obtained the
benefit of settlement by suppression of material information or
particulars or by furnishing any incorrect or false information, etc.,
then the settlement order passed would be revoked.
(l) Section 18 provides that no refund of the amount paid under the
Settlement Act shall be granted except, if the order of settlement is
revoked or rejected in which case, the amount paid shall be treated
to have been paid under the Relevant Act.
23. PROVISIONS OF THE MVAT ACT:-
50. Refund of excess payment:-
(1) Subject to the other provisions of this Act and the rules made
thereunder, the Commissioner shall, by order refund to a person
the amount or tax, penalty, interest, security deposit deposited
under Section 16 and fee except when the fee is paid by way of
court fee stamp, if any, paid by such person in excess of the amount
due from him. The refund may be either by deduction of such
excess from the amount of tax, penalty, amount forfeited and
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interest due, if any, in respect of any other period or in any other
case, by cash payment:
Provided that, the Commissioner shall first apply such excess
towards the recovery of any amount due in respect of which a
notice under sub-section (4) of section 32 has been issued, or, as
the case may be, any amount which is due as per any return or
revised return but not paid and shall then refund the balance, if
any.
(2) If a registered dealer has filed any returns, fresh returns or revised
returns in respect of any period contained in any year and any
amount is refundable to the said dealer according to the return,
fresh return or revised return, then subject to rules, the dealer may
adjust such refund against the amount due as per any return, fresh
return or revised return for any period contained in the said year,
filed under this Act or the Central Sales Tax Act, 1956 (74 of 1956)
or the Maharashtra Tax on the Entry of Goods into Local Areas Act,
2002.
RULE 60 OF THE MVAT RULES
60. Grant of Refund:-
(1) Application for refund under section 51 shall be made in Form 501.
(2) When the Commissioner is satisfied that a refund is due, he shall
pass an order in Form 502, showing the amount of refund due and
shall communicate the same to the dealer.
(3) When an order for refund has been made under any rule, the
Commissioner shall, if the applicant desires payment in cash, issue
to him a refund payment order either in Form 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
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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 authorities
under the MVAT Act?
25. Under Section 3 of the Settlement Act, an authority is
designated for implementation of the said Act. The Commissioner of
State Tax is the said authority.
26. The Settlement Act is a separate Act which is enacted for
settlement of outstanding dues under various State Acts, each of which
have separate and distinct authorities under their respective Acts for
their administration. Although the Commissioner of State Tax is a
Commissioner under the MVAT Act, he wears a different hat as a
"designated authority" under the Settlement Act. Though he is one
person but he wears 2 hats. In such a situation, it is well settled that the
powers available under different enactments are not to be intermixed.
Powers under one statute cannot be exercised for dealing with the
matters covered or falling under another statute. In Evergreen
Apartment, Co-operative Housing Society Ltd. Vs. Special Secretary
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(Appeals), Revenue Department1, the Gujarat High Court has held that
an officer of the revenue department occupying different capacity under
different statue would not empower him to exercise powers under one
enactment while proceeding under another enactment.
27. Applying the above, order under Section 50 of the MVAT Act
for adjustment of refund is to be passed under the said MVAT Act by the
authority specified under the said MVAT Act. In the case before us,
there is no order under Section 50 of the MVAT Act for adjustment of
refund of the Financial Year 2016-17 against dues of Financial years
2013-14, 2015-16 and 2017-18. The authorities under the Settlement
Act may also be the authorities under the MVAT Act but while exercising
powers under the Settlement Act, they cannot invoke provisions of
Section 50 of the MVAT and that too in review proceedings under the
Settlement Act. Therefore, on this count itself, impugned orders dated
17th July 2023 are required to be quashed.
28. 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
1 AIR 1992 Guj 118
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the MVAT Act is wholly without the authority of law and 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) 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 any payment is made in
respect of the statutory order, then same would be adjusted towards
undisputed tax, then disputed tax, then interest and balance towards
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penalty and late fee and it is only the balance amount which would be
considered as outstanding for the purposes of the Settlement under the
Act and this amount so arrived will be the basis of computing the
amount payable under the Settlement Act as per Section 8 read with
Annexures (A) and (B). If the legislature intended that any refund due
on the date of making the application or cutoff date for any year is
required to be adjusted against the demand of the year for which the
application under the Settlement Act is made and only the balance
would be considered for the purpose of settlement under the Settlement
Act then nothing prevented them to provide so under the Settlement
Act. Having not provided, the authorities under the Settlement Act
cannot confer upon themselves the powers given under Section 50 of
the MVAT Act for determining the amount payable under the Settlement
Act. Section 6(1)(a) provides for adjustment to be made of payment
made by the Petitioners for the year to which statutory order is
concerned and not refund of another year. Also, Section 6 of the
Settlement Act overrides anything contained in the Relevant Act for the
purpose of adjustment and determination of arrears to be considered for
the settlement under the said Act. Therefore, even on this count, action
of Respondents in invoking provisions of Section 50 of the MVAT Act for
arriving at the settlement amount is contrary to the Settlement Act.
30. It is a settled position in taxation laws that each year is a
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separate year for the purpose of the assessment. This is also codified in
Section 12 of the Settlement Act which provides for separate application
to be made for each financial year. As per the Settlement Act, the
amount payable as per Annexure-A is certain percentage of the
undisputed tax, disputed tax, interest payable, outstanding, penalty, etc.
as per statutory order which is again for each year. Thus, amounts of
undisputed tax, disputed tax, interest, penalty, etc. should be
outstanding amount as per the statutory order to be recovered which
would constitute 'arrears' as defined by Section 2(d) of the Settlement
Act. The scheme of the Settlement Act read with the MVAT Act is that an
application to calculate the undisputed 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.
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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 the impugned action of the
Respondents to recalculate the outstanding arrears for the financial
years 2013-2014, 2015-2016 and 2017-2018 after passing the
settlement order by invoking provisions of Section 15 of the Settlement
Act admittedly without there being an order Section 50 of the MVAT Act
is certainly without jurisdiction.
Issue
(C) Whether in the absence of any order under Section 50 of
the MVAT Act for adjustment of refund order, are the
authorities under the Settlement Act justified in invoking
review powers under Section 15 of the Settlement Act?
32. We may observe that for adjustment of refund of one
particular year against demand of another year proceedings under
Section 50 of the MVAT Act is required to be initiated. In the instant
case, we have not been shown any order passed under Section 50 of the
MVAT Act till today for adjusting the refund for the year 2016-2017
against the outstanding demand for the years 2013-2014, 2015-2016
and 2017-2018. The Respondent No.2 has now, vide order dated 13 th
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October 2023 after the review order was passed, is proposing to adjust
the refund for the financial year 2016-2017. Therefore, admittedly there
were no proceedings pending under Section 50 of the MVAT Act or any
order passed under the said MVAT Act adjusting the refund for the
financial year 2016-2017 against outstanding demand for the years
2013-2014, 2015-2016 and 2017-2018 either on the date of application
made by the Petitioner under the Settlement Act or on the date when
the order of settlement under Section 13 of the said Act was passed or
on the date when the review order dated 17th July 2023 is passed.
33. In our view and on a reading of Section 50 of the MVAT Act, it
provides that there has to be an order granting refund either by cash
payment or by deduction of such refund against the demand for any
other period and such order is required to be passed by the
Commissioner appointed under the said MVAT Act. In the instant case,
there is no such order. Section 50 of the MVAT Act has be read
alongwith Rule 60 of the MVAT Rules. Section 50 of the MVAT Act
provides that the refund may be made either by cash payment or by
adjustment against the dues of other year. The phrase used under
Section 50 while dealing with the mode of grant of refund uses the
phrase 'may' and this has to be read alongwith Rule 60 (3) of the MVAT
Rules which provides that the Commissioner shall, if the applicant
desires payment in cash issue to him a refund payment order in Form
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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. It is important to note that Respondents, after having passed
the Settlement order under Section 13 resorted to provisions of Section
13(3) for rectifying the settlement order on the ground that the
settlement order contains error apparent from the record by not
adjusting the refund as per Section 50 of the MVAT Act while
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calculating outstanding arrears under the Settlement Act. Although
show cause notice was issued proposing to adjust the refund,
Respondents did not pass any order under Section 13(3) of the Act
inspite of the Petitioner replying to the same and making its submissions
during the personal hearing. The only conclusion which can be drawn is
that the Respondents accepted contention of the Petitioner that there
was no error apparent from the record which can be rectified under
Section 13(3) of the Settlement Act. Having failed to do so,
Respondents cannot now make one more attempt by resorting to
provisions of Section 15 of the Settlement Act and passing the orders
which are impugned before us. Unless proceedings initiated under one
section are concluded by passing an order one way or the other, on the
same ground initiation of proceedings under another provision would
be bad-in-law.
35. Section 15 of the Settlement Act provides that any order
passed under the Settlement Act may be reviewed within 12 months
from the date of service of order after noticing error in such order
insofar as it is prejudicial to the interest of revenue. Therefore, first pre-
condition for invoking provisions of Section 15 of the Settlement Act is
that there has to be an 'error' and that 'error' should be in the order
passed under the Settlement Act. The phrase 'error' mans a mistake,
something incorrectly done through ignorance or inadvertence. In our
Kishor 908-WP.15511.2023.docx
view, as observed above, there was no error in the calculation of the
outstanding arrears for the years 2013-2014, 2015-2016 and 2017-2018
at the time when the application was made and the settlement order
was passed. This is so because Settlement Act did not provide for
adjustment of refund of one particular year against the demand of
another year for arriving at the amount payable under the Settlement
Act. Secondly, on the date when the application was made and
settlement order was passed, there was no order under Section 50 of
the MVAT Act justifying adjustment of the refund for the financial year
2016-2017 against the demand 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
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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 Section 50 of the MVAT
Act on the date of application by which the refund for the year 2016-
2017 was adjusted against the demand for the years 2013-2014, 2015-
2016 and 2017-2018. Such an order not being in existence nor any
proceedings being pending on the date of application or on the date of
settlement order, in our view, any review proceedings without any order
being passed under Section 50 of the MVAT Act, Respondents cannot
recalculate the amount payable under the Settlement Act by adjusting
the refund for the year 2016-2017 against demand for the other years.
37. It is also important to note that there is no notice under
Section 32(4) of the MVAT Act as provided in the first proviso to Section
50(1) of the said Act, which would empower the Commissioner under
the MVAT Act to adjust the refund. In our view, the said notice is
required to be issued even if the refund arises out of the appeal order.
Although as observed by us in the instant case, there is no order under
Section 50 of the MVAT Act itself.
38. The contention of the Respondents that in the settlement
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application, Respondents have not disclosed the refund for the year
2016-2017 is misconceived. On a perusal of the application for
settlement there is no such column or row which obliges an applicant to
disclose the refund for some other year. The Form only requires the
details of the outstanding amount for the year for which the application
is made to be disclosed and admittedly there is no dispute that the said
information has been correctly disclosed. If there is no provision in the
application Form to disclose refund of the year other than the year for
which the application is made, in our view, there cannot be any
allegation of mis-declaration or suppression. It is also important to note
that the Respondents have not revoked the settlement order under
Section 17 of the Settlement Act which provides for revocation of
settlement order in case of suppression. The appeal order which
resulted into refund was also marked to the authorities under the MVAT
Act. Therefore, if said authorities had knowledge of refund, one fails to
understand how they can allege suppression. Therefore, the contention
of Respondents is to be rejected on this count also.
39. The Petitioner did raise other grounds including of limitation
which we are not adjudicating.
40. The Petitioner has challenged the very jurisdiction 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
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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 2017-2018 are hereby quashed and set aside and
consequently impugned communication dated 13 th October 2023 is
also quashed and set aside.
Kishor 908-WP.15511.2023.docx
(ii) The Respondents are directed to refund sum of Rs.2,72,08,381/-
being refund for the financial year 2016-2017 alongwith interest as
per the Act and the said refund should be credited to the
Petitioner's account within four weeks from the date of uploading
the present order.
(iii) Petition disposed of. Rule made absolute in above terms.
(JITENDRA JAIN, J.) (M. S. SONAK, J.)
KISHOR by KISHOR
VISHNU
VISHNU KAMBLE
KAMBLE Date:
2024.10.23
11:36:30 +0530
