Saj Food Products Pvt. Ltd vs The State Of Bihar
2023 Latest Caselaw 3695 Patna

         IN THE HIGH COURT OF JUDICATURE AT PATNA
                    Civil Writ Jurisdiction Case No.9278 of 2021
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SAJ Food Products Pvt. Ltd. a registered company having its registered office at Purna Bhaban, 5/1, Acharya Jagdish Chandra Bose Road, Kolkata- 700020 through its authorised representative namely Md. Roshan Afrozuddin Sabir male aged about 36 years son of Md. Sabir Hussain resident of Dr. Siddique Lane, Kanhauli Naka Road, P.S. Town, Musahri, Ramna, Muzaffarpur- 842002.

... ... Petitioner/s Versus

1. The State of Bihar through the Secretary cum Commissioner, Department of State Taxes, New Secretariat, Bailey Road, Patna.

2. The Secretary cum Commissioner, Department of State Taxes, New Secretariat, Bailey Road, Patna.

3. The Joint Commissioner of State Taxes, Special Circle, Patna.

4. The Deputy Commissioner of State Taxes, Special Circle, Patna.

5. The Union of India New Delhi.

... ... Respondent/s ====================================================== Appearance :

     For the Petitioner/s            :    Mr. Gautam Kumar Kejriwal, Advocate
     For the Respondent Nos.1 to 4   :    Mr. Vikash Kumar, SC-11
     For the Respondent No.5         :    Dr. K. N. Singh, ASG
                                          Mr. Anshuman Singh, Sr. SC, CGST & CX

====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE PARTHA SARTHY ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE)

Date : 11-08-2023

The petitioner, an assessee, under the Bihar Value

Added Tax Act, 2005 (for brevity, 'VAT Act'); asserts an

entitlement to refund of excess tax paid and eligibility to settle

tax dues under a scheme formulated by the State, in a later year.

The petitioner is before this Court alleging that the adjustment

of the refund would have satisfied the demand under the Patna High Court CWJC No.9278 of 2021 dt.11-08-2023

settlement scheme.

2. The petitioner is concerned with the Bihar

Settlement of Taxation Disputes (Second) Rules, 2020 (for

brevity, 'the Rules of 2020') under which it applied for

settlement of the disputes pertaining to the financial year 2016-

17. The petitioner also seeks adjustment of the amounts liable to

be refunded in the prior years, coming to Rs.27,02,098/- to be

credited against the amounts required for settlement of the dues

of 2016-17.

3. The petitioner is engaged in the manufacturing and

marketing of bakery items, is registered under the Special

Circle, Patna and sells its products under a brand name. For the

financial year 2014-15, under the Value Added Tax Act, a

demand of Rs.66,37,305/- was raised against the petitioner in

which, on an appeal filed, 35% of the disputed amount coming

to Rs.23,23,057/- was directed to be deposited. The deposit was

made and finally the appeal resulted in a remand to the

Assessing Authority. A fresh order was passed wherein the tax

determined was substantially reduced and the petitioner had an

entitlement to refund. The petitioner hence made an application

for refund of the excess amounts and also sought credit of such

amounts to the dues of the financial year 2016-17. Patna High Court CWJC No.9278 of 2021 dt.11-08-2023

4. The refund application was not processed and on

01.07.2017, the VAT regime came to an end and Goods and

Services Tax regime commenced; but with sufficient authority

in the new enactment to proceed and complete the proceedings

under the earlier enactment, by a sunset clause. On 17.03.2018,

a notice was issued under Section 31 of the VAT Act in relation

to the financial year 2016-17, under the VAT regime, when the

petitioner again demanded the excess amounts paid, to be

adjusted for the said assessment year. On 01.01.2019, the

petitioner filed an application for refund of Rs.27,02,098/- and

while the same was pending, an inspection was conducted and

the petitioner was called upon to explain a dispute raised on

classification of the goods and the correct rate of tax applicable.

An order of assessment was passed on 22.01.2019 discarding

the objection of the petitioner which is produced as Annexure-4;

for the assessment year 2016-17.

5. The petitioner challenged the assessment order in

CWJC No.4007 of 2019 and in the meanwhile, the Bihar

Settlement of Taxation Disputes Ordinance 2020 (for brevity,

'the Ordinance of 2020') and Bihar Settlement of Taxation

Disputes (Second) Rules, 2020 (for brevity 'the Rules of 2020')

produced as Annexure-5 and Annexure-5/A, respectively, were Patna High Court CWJC No.9278 of 2021 dt.11-08-2023

promulgated. The petitioner hence withdrew the writ petition

and availed the opportunity of settlement under the Ordinance

of 2020 read with the Rules of 2020.

6. The petitioner filed an application in Form I dated

28.02.2021 produced as Annexure-7, in response to which a

memo was issued by the 3rd respondent, Assessing Officer, dated

01.03.2021, asking him to remove the defects in the application

(Annexure-8). A written submission was made to the said

memo, online, on 04.03.2021, specifically pointing out that the

expression, 'dispute' as per the Ordinance of 2020 implied the

subject matter of controversy between the petitioner and the

respondent Department. It does not mean each and every

demand raised with respect to a particular dispute; to be treated

as a separate dispute, was the argument. It is the petitioner's

contention that the liability of tax, interest and penalty are

different demands raised under different heads, but they cannot

be understood to mean three separate disputes. The dispute,

according to the petitioner was of classification of goods and the

rate of tax applicable. The contrary stance taken by the

Department as against the classification and rate of tax disclosed

by the petitioner was the dispute raised, to settle which the

petitioner had made an application. Reliance was also placed on Patna High Court CWJC No.9278 of 2021 dt.11-08-2023

Annexure-9 Judgment of this Court in CWJC No.7528 of 2017

titled Mehrotra Engineering Works Private Limited v. The

State of Bihar; decided on 18.08.2017.

7. Sri Gautam Kumar Kejriwal, the learned Advocate

appearing for the petitioner, argued that there were excess

amounts with the Department, which could easily have been

adjusted for the settlement of the tax dues under the scheme, for

the demand in the year 206-17. Even when the application was

filed for settlement under the Ordinance of 2020, the amounts to

be refunded were not repaid and if that were adjusted, a proper

settlement could have been made. Further, it is contended that

the Department could not have raised a defect as against the

application filed by the petitioner since the dispute was one and

the same and it transpired that; tax, interest and penalty was

levied by the Department, which arises from the very same

dispute. The learned counsel seeks consideration of the

settlement by way of refund; even now, when the period of

settlement is over, since the default was on the part of the

Department.

8. Learned Government Advocate Sri Vikash Kumar

relied on the counter affidavit filed. It is stated that the re-

assessment order under the Act for the period 2016-17 was Patna High Court CWJC No.9278 of 2021 dt.11-08-2023

passed on 22.01.2019 under Section 31(1) of the VAT Act based

on the findings and an inspection report dated 03.01.2019. The

total tax assessed came to Rs.33,37,704.15 and the interest

levied was Rs.11,01,442.36. The excess amounts remaining in

the credit of the assessee/petitioner was adjusted and the

demand notice was issued for Rs.17,37,048.51 evidenced at

Annexure-4. Later, a separate order dated 30.01.2019 was

passed under Section 31(2) of the VAT Act imposing a penalty

of Rs.100,13,112.00 for which a separate demand notice was

also issued. Hence the refund due to the petitioner already stood

adjusted in the tax dues of the petitioner for the assessment year

2016-17 as is evident from the assessment order and the demand

made as per Annexure-4 series.

9. The petitioner filed an application dated 28.02.2021

in Form-I for settlement of dispute under the Ordinance of 2020

for a total amount of Rs.144,52,258.51 for the period 2016-17.

The disputed amount of assessed tax, interest and penalty,

shown in the application were respectively Rs.33,37,704.15,

Rs.11,01,442.35, and Rs.100,13,112.00. As per the Ordinance of

2020, 35% of the assessed tax and 10% each of the interest and

penalty were to be paid which came to a total Rs.22,79,652.00.

The petitioner filed a claim for the entire disputed claim in a Patna High Court CWJC No.9278 of 2021 dt.11-08-2023

single Form-I under the provisions of the Ordinance of 2020,

which is alleged to be contrary to Rule 3(2) of the Rules of

2020. The respondent no.3 has issued a deficiency memo which

is produced as Annexure-7 for rectification of deficiency which

the petitioner failed to comply with. There is no scope for any

settlement at this stage is the contention of the learned

Government Advocate.

10. We have looked at the Ordinance of 2020 which

defines "tax" as the amounts of tax payable by an assessee

pursuant to the order of assessment or re-assessment or scrutiny

or any other order made or passed under the law or penalty,

interest and fine that is imposed/payable by the assessee under

any provision of the law. The word "dispute" has been defined

as any proceeding, by way of an appeal, revision, miscellaneous

revision and so on and so forth, in respect of any levy of tax,

interest, fine and penalty. The disputed amount also is stated to

be in relation to a dispute on any tax, interest, fine or penalty

determined and payable by the party. The Ordinance of 2020

was to come into effect on the date notified in the official

gazette by the Commissioner of State Tax and was to remain in

force for a period of six months from the said date.

11. The Rules of 2020, in pursuance of Ordinance of Patna High Court CWJC No.9278 of 2021 dt.11-08-2023

2020, was notified on 21.09.2020 wherein Form-I was

prescribed, as that to be filed, as an application for settlement.

Rule 3(2) required separate applications in Form-I to be

furnished for every dispute along with copy of annual return or

all applicable quarterly returns for the period in dispute.

12. The settlement scheme itself ended on 20.03.2021.

The deficiency memo was issued by the Department on

01.03.2021 within the period provided; but the defect noticed

was not cured. Admittedly, the petitioner applied for settlement

with respect to tax, interest and penalty by one application.

Even if tax and interest could have been applied for settlement,

with one single application, penalty is a distinct dispute which

would have to be sought for settlement separately. An order

imposing tax and penalty are distinct orders which are

appealable by two proceedings and hence are two disputes, even

as per the Ordinance of 2020 and the Rules of 2020.

13. Further Chapter II of the Ordinance of 2020, by

Section 3 provides for 'Settlement of Disputes'. The Table

provided therein categorizes disputes relating to: (i) arrear of tax

for failure to furnish or produce statutory certificates or

declarations, (ii) any other tax & (iii) dispute arising out of

penalty, fine or interest; as three separate disputes, with different Patna High Court CWJC No.9278 of 2021 dt.11-08-2023

percentage of the dues to be paid for settlement. The Table

under the Rules of 2020 also provides for separate authorities

before whom application for settlement have to be filed. Insofar

as the petitioner's case for the year 2016-17, for settlement of

tax, interest and penalty, the dispute falls under Sl. No.1 in the

Table under the Rules of 2020, to be filed before the Head of

Office where the order under dispute is passed. But the

Ordinance of 2020 read with Rule 3(2) of the Rules of 2020,

requires separate applications to be filed, which the petitioner

did not comply with.

14. First and foremost, before the Settlement Scheme

came to be enforced the refund due to the assessee/petitioner

was adjusted in the dues of 2016-17 as is seen from the demand

raised in Annexure-4 series. Modern Hotel v. Commissioner of

Excise (2016) 15 SCC 620 held that the amounts paid up

against the dues of a prior year, for renewal of an abkari license,

was held to be not entitled to be refunded, based on a settlement

of the remaining dues of that prior year, being effected in a

subsequent amnesty (settlement) scheme. Then, the petitioners

application was defective and despite an opportunity given a

proper application was not filed. State of Rajasthan v. Khangar

Singh (2015) 1 SCC 163 declared the High Court to be not Patna High Court CWJC No.9278 of 2021 dt.11-08-2023

entitled to extend the benefit of the scheme beyond its expiry,

when the respondent has not applied within the time provided.

15. In the instant case the refund entitled to the

petitioner/assessee was adjusted to the dues of 2016-17, even

prior to the Settlement Ordinance and the Rules of 2020. The

petitioner applied for the Settlement Scheme with a defective

application. In fact, it was defective for two reasons; one, as the

Department argues, there should have been separate

applications, one for the tax & interest and another for the

penalty imposed. Then, the dues applied for settlement was the

total demand for the year, without the adjustment of the

refunded amounts. The assessee could have applied only for

settlement of the balance arrears pending after the adjustment of

the amounts refunded. Both the decisions of the Hon'ble

Supreme Court, cited in the paragraph above, squarely apply in

the instant case to deny the assessee the relief prayed for.

16. Mehrotra Engineering Works Private Limited

(supra) was a case in which the assesses filed an application

within time under a Settlement Scheme and also deposited the

amounts demanded under the Scheme; but the benefit was

denied for not providing proof of satisfaction of dues and

withdrawal of the cases filed against the demand raised, before Patna High Court CWJC No.9278 of 2021 dt.11-08-2023

the expiry of the Scheme; which was held to be at worst a

technical breach. In the present case the breach is not technical

and possible of correction.

17. We find the assessee/petitioner to have no valid

contentions in the writ petition and the same stands dismissed,

without any order as to costs.

(K. Vinod Chandran, CJ)

(Partha Sarthy, J) Sunil/-

AFR/NAFR                AFR
CAV DATE
Uploading Date          18.08.2023
Transmission Date