Kerala High Court
M/S.Coastal Tiles And Sanitaries vs The State Tax Officer on 24 March, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
WEDNESDAY, THE 24TH DAY OF MARCH 2021 / 3RD CHAITHRA, 1943
WA.No.1684 OF 2020
AGAINST THE JUDGMENT IN WP(C) 21480/2020(H) OF HIGH COURT
OF KERALA
APPELLANT/PETITIONER:
M/S.COASTAL TILES AND SANITARIES
DOOR NO.6/560/1,MANA LANE,
KOORKKANCHERY,
THRISSUR-680007,
REPRESENTED BY ITS MANAGING PARTNER
P.M.ABDU HAJEE.
BY ADVS.
SRI.SANTHOSH P.ABRAHAM
SMT.S.K.DEVI
RESPONDENTS/RESPONDENTS:
1 THE STATE TAX OFFICER
KERALA STATE GOODS AND SERVICE TAX DEPARTMENT,
1ST CIRCLE, STATE TAX COMPLEX,
THRISSUR-680004.
2 THE COMMISSIONER,
KERALA STATE GOODS AND SERVICE TAX DEPARTMENT,
TAX TOWER,KARAMANA,
THIRUVANANTHAPURAM-695002.
3 STATE OF KERALA,
REPRESENTED BY THE FINANCE SECRETARY,
SECRETARIAT,
THIRUVANANTHAPURAM-695001.
W.A. No.1684/20 -:2:-
4 THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL,
COMMERCIAL TAX COMPLEX, M.G.ROAD,
ERNAKULAM-682015.
BY MOHAMMED RAFIQ, SR.GOVT PLEADER
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON
24.03.2021, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
W.A. No.1684/20 -:3:-
"C.R."
JUDGMENT
Dated this the 24th day of March, 2021
Bechu Kurian Thomas, J.
The Amnesty Scheme 2020 (for short 'the Scheme') introduced by
the Kerala Finance Act, 2020 (for short 'the Act') contemplates clearing of
the arrears in its entirety for all assessment years. The issue that arises for
consideration is whether under the said scheme, can an appeal filed by
the Revenue, relating to one assessment year and pending consideration
before Tribunal be included for settlement, if the assessee does not opt for
that to be settled.
2. Appellant opted for the benefit of the Scheme for the assessment
year 2014-15. Though appellant expressed its willingness to settle the
entire arrears, as contemplated under the Scheme, for the assessment
year 2014-15, the 1st respondent directed the appellant to settle the
alleged arrears in respect of the assessment year 2012-13 also. Appellant
expressed its disinterestedness to settle the alleged arrears for the
assessment year 2012-13. The reason for the disinclination of the
appellant to settle the alleged arrears for 2012-13 was due to the absence
of any arrears for the year 2012-13. According to the appellant, all that
remains for the assessment year 2012-13, is an appeal filed by the State,
which is pending consideration.
3. Contending that the appeal filed by the State before the Appellate
Tribunal does not constitute any 'arrears of tax' to be settled, the assessee
approached this Court under Article 226. The learned Single Judge
disposed of the writ petition by denying the main relief and after finding
that the Scheme has to be read holistically and should not be rendered
illusory to the rights conferred under the statute. It was further held that
since an appeal filed by the State was pending consideration relating to
the year 2012-13, the said year must also be included for settlement under
the Scheme. Liberty was granted to the appellant to include the said
assessment year also in the Scheme.
4. Aggrieved by the judgment of the learned Single Judge, this
appeal is preferred. Appellant insists that since the first appeal preferred
by it against the assessment order for the year 2012-13 was allowed,
there are no arrears of tax other than for the year 2014-15. It is also
contended that, though, against the order of the first Appellate Authority
the State has preferred an appeal and the same is pending consideration,
no tax for the assessment year 2012-13 can be included for settlement
under the Scheme terming an amount as arrears of tax.
5. We have heard Adv.Santhosh P. Abraham on behalf of the
appellant as well as Adv.Mohammed Rafiq, learned Senior Government
Pleader on behalf of the respondents.
6. The Scheme introduced through section 10 of the Kerala Finance
Act, 2020 is intended as a beneficial scheme for settlement of arrears of
tax or other amounts due under the Kerala Value Added Tax Act, 2003 and
under the Central Sales Tax Act, 1956. For easier reference section 10 of
the Kerala Finance Act, 2020 dealing with the Scheme is extracted as
below:
"10. Special provision for Reduction of arrears in certain cases.-(1)
Notwithstanding anything contained in sub-section (1) of section 174
of the Kerala State Goods and Services Tax Act, 2017 (20 of 2017)
and in the Kerala Value Added Tax Act, 2003 (hereinafter referred to
as the former Act) or rules made thereunder or in any judgment,
decree or order of any court, tribunal or appellate authority, any
assessee who is in arrears of tax or any other amount due under the
former Act or under the Central Sales Tax Act, 1956 (Central Act 74 of
1956) relating to the period up to and including 30 th June, 2017, may
opt for settling the arrears on payment of, -
(i) fifty per cent of the principal amount of the tax in arrears; or
(ii) forty per cent of the principal amount of the tax in arrears, if
the amount is paid in lump sum within 30 days of receipt of
intimation of the assessing authority referred to in sub-section
(7) :
Provided that in case where the evidence, details and records
pertaining to the penalty levied is not utilized or not liable to be utilized
for any best judgment assessment under the former Act, the demand
relating to such penalty shall be settled under this section on payment
of applicable tax relating to the penalty as determined by the
assessing authority.
Explanation.- Arrears for the purpose of this section shall
include the tax remaining unpaid as on the date of option, under
clause (a) of sub-section (1) of section 74 of the former Act pursuant to
the payment of compounding fee mentioned therein.
(2) Notwithstanding anything contained in the Kerala Revenue
Recovery Act, 1968, (15 of 1968) reduction of arrears under sub-
section (1) shall be applicable to those cases in which revenue
recovery proceedings have been initiated and the assessing
authorities shall have the power to collect such amounts on settlement
under sub-section (1) and where the amount is settled under sub-
section (1) the assessing authorities shall withdraw the revenue
recovery proceedings against such assessee which will then be
binding on the revenue authorities and such assessee shall not be
liable for payment of any collection charges.
(3) The assessee shall withdraw all the cases pending before any
appellate or revisional authority, tribunal or courts for opting for settling
the arrears under this section and shall file a declaration to this effect
along with the option mentioned under sub-section (5).
(4) All arrears including tax, interest and penalties pertaining to an
assessee shall be settled together under this section.
(5) An assessee who intends to opt for payment of arrears under sub-
section (1) shall submit an option to the assessing authority on or
before 30th November, 2020:
Provided that with respect to demands generated after 30th
November, 2020, the option may be filed within thirty days, on receipt
of the assessment order and in such cases the final payment of tax
and other amounts due as per this section shall be completed on or
before 31st March, 2021.
(6) The arrears for the purpose of settlement under this section shall
be calculated as on the date of submission of option.
(7) On receipt of the option under sub-section (5), the assessing
authority shall determine the amount of tax and other amounts due
from the assessee under sub-section (1) and shall intimate the same
to the assessee, and thereupon the assessee shall remit the amount
in installments or lump sum, as the case may be, on or before 31 st
March, 2021:
Provided that the first installment thereof, for those who opt for
payment as specified in clause (i) of sub-section (1) shall not be less
than twenty percent of the amount determined therein and such
amount shall be paid within thirty days of receipt of the said intimation
and the balance amount to be paid in installments, subject to a
maximum of four installments.
(8) Notwithstanding anything contained in section 91 of the former Act,
if an assessee who opts to settle his arrears under sub-section (1) has
remitted or deposited any amount relating to the arrears after the
service of demand notice, including the tax paid under clause (a) of
sub-section (1) of section 74, of the former Act such amount shall be
given credit as tax before reckoning the arrears to be settled under
sub-section (6) and the assessee shall furnish the proof of payments
made in this regard:
Provided that any amount paid towards penalty or its interest
shall not be given credit.
(9) Notwithstanding anything contained in this Act, or in any judgment,
decree or order of any court, tribunal or appellate authority, there shall
not be any refund or any adjustment subsequently for the amount
settled under this scheme, under any circumstances.
(10) The form and manner of submission of option, intimation and
payment, shall be as may be specified by the commissioner.
(11) Cases involved in Appeals filed by an officer empowered by the
Government under sections 60 and 62 of the former Act and pending
final orders can also be opted to be settled under this scheme,
reckoning the demand in the original assessment order.
(12) Assessees who have opted to settle their arrears under section
31A or section 31B of the former Act during previous years, but had
failed to make payments may also opt to settle their cases under this
section, and the amounts, if any, paid earlier shall be given credit as
tax before reckoning the arrears to be settled under sub-section (6)
and the assessee shall furnish the proof of payments made in this
regard, however that no refunds shall be allowed.
(13) The provisions of the Kerala Value Added Tax Act, 2003 (30 of
2004) and the rules made thereunder, including those relating to
definitions, authorities, power to rectification of error, powers of
revision suo-motu shall, as far as may be, mutatis mutandis, apply, in
relation to the settlement of arrears under this section.
(14) The arrears to be settled under this section shall not include any
amount of tax retained by any assessee under garnishee orders of
competent court or any amount of tax deducted by the awarder
under section 10 and retained by him."
7. A perusal of the above provisions will reveal that the scope,
purport and intent of the Scheme is to settle the entire arrears of tax. It is
intended to effectuate recovery of the entire amount of tax in arrears by
giving certain reductions or waivers. The conditions stipulated for availing
the benefit under the Scheme have to be strictly complied with. It is a
complete code in itself and is exhaustive of the matters dealt with. A few
of the highlights of the Scheme propounded by the Government in 2020
are hundred percent waiver of interest and penalties, 60% waiver of the
balance tax arrears if the outstanding dues are paid in a lump sum and
50% waiver of the balance tax arrears, if outstanding dues are paid in
instalments. The Scheme is applicable for all pending tax arrears,
including cases remaining in appeal. Taxpayers, who had failed to settle
arrears under the previous Amnesty Scheme, are also given the option to
take the benefit under the Scheme and any amount paid under the earlier
Amnesty Scheme is also stipulated to be given due credit.
8. When benefits are claimed under schemes of amnesty, the
assessees are bound to comply strictly with the conditions and there is no
scope for any equitable consideration. Reliance for the above proposition
can be placed upon the decisions in Hemalatha Gargya v.
Commissioner of Income Tax, A.P. and Another [(2003) 9 SCC 510]
and Union of India and Others v. Nitdip Textile Processors Private
Limited and Another [(2012) 1 SCC 226].
9. A reading of section 10(1) of the Act indicates that the option for
settlement under the Scheme is in respect of the "arrears of tax or any
other amount due". Neither the word 'arrears of tax' nor 'amount due' have
been defined. In the absence of any specific definition given to the words
'arrears of tax', one has to go by the general concept of these words.
Arrears can generally be described as amounts overdue or remaining
unpaid. 'Arrears' means that which remains unpaid though due or as
money owed but not yet paid. (See Law Lexicon by P.Ramanatha Aiyar,
4th Edition) The Oxford Advanced Learner's Dictionary explains the term
'arrears' as money that is owed and has not been paid at the right time.
10. In cases where dispute arises whether tax is in arrears or not,
the same can be determined only through assessment orders. Tax falls in
arrears only after an assessment order and consequent demand is made.
When the assessment order is set aside in appeal and consequential
orders have not been passed by the assessing officers determining tax as
due, no amount of tax can be said to be in arrears.
11. In the absence of any alleged amount coming within the scope
of the words "arrears of tax', as per the scheme, the authorities cannot
compel settlement of the same, unless such settlement is at the volition of
the assessee himself. Sub-clause (4) and (6) of section 10 of the Act also
refers to "all arrears" in contradistinction to the word "tax that may fall in
arrears". Viewed in the above light, we are of the firm opinion that the
words "arrears of tax" in section 10(1) of the Kerala Finance Act, 2020 will
not include any amount which is subject to an appeal filed by the State
and pending consideration.
12. We cannot agree with the contention of the learned Government
Pleader that section 10(11) of the Act would cover instances where
appeals are preferred by the State and the said sub-clause when read
along with section 10(4) conveys that all arrears are liable to be settled
together, including those involved in appeals filed by the State. It can be
easily discerned from section 10(11) that the said provision only gives
an option to the assessee to settle even the appeals, if any, preferred by
the Government. The said clause is in the nature of an option given to the
assessee to settle those cases also. The said provision cannot be
construed as a mandate to the assessee to settle such cases also. The
option to the assessee cannot be elevated to the status of a mandate or a
compulsion. The State is also not put to any prejudice on account of the
above view we have taken. If the appeal of the State is later allowed, the
assessee will be bound and liable for the entire amount determined.
13. Having considered the issue in the above perspective, we are of
the view that the assessee is entitled to get the benefit of the Amnesty
Scheme for the year 2014-15 without reference to the pending appeal filed
by the State for the year 2012-13.
14. In the above circumstances, we set aside the judgment of the
learned Single Judge and declare that the appellant is eligible to opt for
the Amnesty Scheme, 2020 for settling arrears of the assessment year
2014-15 without including the amount that may fall in arrears for the year
2012-13. Needless to mention, the appeal for the year 2012-13 is a totally
independent issue and the consideration of the said appeal on merits shall
not be affected, under any circumstances whatsoever, on account of the
appellant claiming the benefit of the Amnesty Scheme for the year 2014-
15.
This writ appeal is allowed as above.
Sd/-
S.V.BHATTI
JUDGE
Sd/-
BECHU KURIAN THOMAS
JUDGE
vps
/True Copy/ PS to Judge
