Held entitled to 100% waiver of penalty under State-wide scheme for reassessments completed before deadline; quashed rejection orders and directed authorities to grant relief.
Impugned endorsements quashed; directions issued to respondents to allow waiver applications and grant 100% penalty waiver.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 11TH DAY OF AUGUST, 2022
BEFORE
THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION No.10115 OF 2022 (T-RES)
BETWEEN:
SPIEGEL ENTERPRISES PRIVATE LIMITED, NO.3, RADHA, 11TH MAIN, BEGUR ROAD, HONGASANDRA, BENGALURU-560068. REP. BY ITS DIRECTOR, MR.LESLIE D'SOUZA. …PETITIONER
(BY SRI. SANDEEP HUILGOL, ADVOCATE)
AND:
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4TH FLOOR, ROOM NO.403, VTK – 2, NEAR NATIONAL GAMES VILLAGE COMPLEX KORAMANGALA, BENGALURU – 560 047.
…RESPONDENTS
(BY SRI. HEMA KUMAR, AGA)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ENDORSEMENT DATED 29.12.2021 ISSUED BY RESPONDENT NO.3 FOR THE ASSESSMENT YEAR 2015-16 ANNEXURE–B AND ETC.
THIS W.P. COMING ON FOR ORDERS , THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
In this petition, the petitioner seeks quashing of the impugned endorsement at Annexure-A dated 28.12.2021 bearing No. ACCT (Audit)-4.11/T. /2021-22 passed by respondent No.2 for the assessment year 2016-17 and for a direction to the respondents to allow the petitioner's application for waiver of penalty as provided under the Karasamadhana Scheme, 2021 (for short, "the said Scheme") in terms of the State Government Order dated 29.03.2021 and for other reliefs.
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contentions urged in the petition and referring to the documents produced by the petitioner, learned Senior counsel for the petitioner submits that on 18.10.2019, re-assessment proceedings in relation to the petitioner for the assessment years 2015-16 and 2016-17 were taken up by the respondents under Section 39 of the Karnataka Value Added Tax Act, 2003 (for short "the KVAT Act"). On 24.09.2020 and 27.04.2021, a proposition notice was issued by the 3rd respondent and 2nd respondent to the petitioner proposing to levy penalty in a sum of Rs.57,91,55,607/and Rs.54,63,94,578/- respectively under Section 70(2) (a) R/w Section 39 of the KVAT Act for the assessment year 2015-16 and 2016-17. The petitioner having submitted their objections to the said proposition notice, respondent No.2 and 3 proceeded to pass a reassessment order dated 24.09.2020 and 27.04.2021 under Section 70(2) R/w Section 39 of the KVAT Act and issued a demand notice to the petitioner pursuant to the same.
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Meanwhile, the aforesaid scheme having come into force with effect from 29.03.2021, petitioner submitted an application dated 28.12.2021 in AnnexureIA seeking waiver of the aforesaid penalty by invoking the benefit provided in favour of the petitioner under the said Scheme. It is the grievance of the petitioner that despite the petitioner being entitled to complete waiver of 100% of penalty as contemplated in Clause-2 of the said Scheme, respondents No.2 and 3 have erroneously and incorrectly rejected the said applications/claims of the petitioner for waiver on the erroneous and incorrect premise/ground that the said scheme was not applicable and the penalty levied upon the petitioner was beyond the ambit of the said scheme. Aggrieved by the impugned endorsements dated 28.12.2021 and 29.12.2021 respectively, the petitioner is before this Court by way of the present petition.
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impugned endorsement and submit that the
respondents had correctly rejected the claim of the petitioner. It is therefore submitted that there is no merit in the petition and that the same is liable to be dismissed.
the rival submissions and perused the material on record.
"1. It grants waiver of 100% of arrears of penalty and interest payable by a dealer under the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the KST Act) and Central Sales Tax Act, 1956 (hereinafter referred to as the CST Act) relating to the assessments/re-assessments/rectification orders already completed and as the case may be, to be completed on or before 31.07.2021 under the KST regime.
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2. It grants waiver of 100% of arrears of penalty and interest payable by a dealer under the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as the KVAT Act) and CST Act relating to the assessments/reassessments/rectification orders already completed and to be completed on or before 31.07.2021 .
3. It grants waiver of
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submit copy of the audited statement of accounts.
4. It grants waiver of 100% of arrears of penalty and interest payable by a dealer or person or proprietor as the case may be relating to the assessment or reassessment already concluded and to be concluded upto 31.07.2021 under the following Acts also, namely.-
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5. Conditions: Grant of waiver of penalty and interest is subject to the following conditions:
5.1 Any dealer or person or proprietor as the case may be, who makes full payment of arrears of tax on or before 31.10.2021 shall be granted waiver of 100% of arrears of penalty and interest payable. However, any penalty levied by the Registering Authority under section 10-A of the CST Act shall not be eligible for benefit of waiver under this Scheme.
5.2 Where the dealer has no arrears of tax but has arrears of penalty and interest only, relating to the assessments or re-assessments already completed and to be completed, as the case may be, on or before 31.07.2021 , such arrears of penalty and interest shall be eligible for waiver."
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each of the four categories is independent and distinct from one another/each other and there is no overlapping among any of the categories, which contemplate completely different and separate situations and in relation to the enactments mentioned in the said clauses; a plain and literal reading of the said provisions is sufficient to show that applicability of any one of the clauses would necessarily exclude applicability of the other three clauses, which would have no application in a situation where one of the clauses is applicable in a given fact situation.
(8.2) Clause No.2 grants waiver of 100% of arrears of penalty and interest payable under the KVAT Act and CST Act relating to assessments/re-
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assessments/ rectification orders already completed prior to 29.03.2021 (when the scheme came into force) and to be completed on or before 31.07.2021.
(8.3) Clause No.3 grants waiver of the following penalties under the KVAT Act viz.,
a) Penalty under Section 72(1)(a) or 72(1)(b). b) Penalty under Section 74(4) c) Penalty under Section 72(3-B)
(8.4) Clause No.4 deals with waiver of 100% of arrears of penalty and interest under various enactments provided therein viz., Karnataka Tax on Entry of Goods, 1979 etc., relating to assessments/reassessments of the orders already completed prior to 29.03.2021 (when the scheme came into force) and to be completed on or before 31.07.2021.
(8.5) Clause No.5 stipulates that the grant of
waiver of penalty and interest would be subject to certain conditions; for the present purpose, Clause No.5.1 and 5.2 would be relevant; while Clause No.5.1 permits grant of waiver of 100% of arrears of penalty and interest only in favour of a person, who makes full
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payment of arrears of tax on or before 31.10.2021, it is clarified in the said clause that any penalty levied under Section 10-A of the CST Act shall not be eligible for the benefit of waiver under the scheme. So also, Clause 5.2 provides that if a person does not have any arrears of tax but only arrears of penalty and interest relating to assessments/re-assessments already completed as on 29.03.2021 (when the scheme came into force) and to be completed on or before 31.07.2021, such arrears of penalty and interest shall be eligible for waiver.
(a) All the four clauses i.e., Clauses 1, 2, 3 and 4 of the Scheme are independent, separate, different, distinct and stand alone clauses/provisions, which are mutually separate and exclusive of each other dealing with and being applicable to different and separate categories, situations and statutory
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provisions; there is no overlapping among each other/one another between the applicability of each of the four clauses; in other words, each of the four clauses operate in their own exclusive spheres and applicability of any one of the Clauses would necessarily exclude the applicability of the other three Clauses.
(b) All arrears of penalty and interest under various enactments viz., Karnataka Sale Tax Act, KVAT Act etc., shall be waived in relation to assessments/ reassessments/rectification orders already completed as on 29.03.2021 (when the scheme came into force) or to be completed on or before 31.07.2021, which is the cut off date for applicability of Clauses 1, 2 and 4 of the scheme.
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provisions; this waiver of penalty for breach/default of the aforesaid specific provisions of the KVAT Act is clearly in addition to the waiver granted of arrears of penalty and interest payable by a dealer under the KVAT Act as contemplated in Clause No.2 of the said Scheme; to put it differently, in addition to the 100% waiver of arrears of penalty and interest under the KVAT Act as provided under Clause No.2 of the Scheme, Clause No.3 also permits/grants waiver of specific and distinct penalties levied under the provisions of the KVAT Act enumerated in the said clause No.3, which forms a completely distinct, separate, different, stand alone and independent category, which is mutually exclusive from the category of cases enumerated in Clause No.2.
d) Clause No.5.1 makes the grant of waiver of penalty and interest subject to the condition that for the purpose of claiming the benefit of waiver, a person/dealer/proprietor should have
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paid the entire/full arrears of tax on or before 31.10.2021; by way of an exception, it is made clear that penalty levied under Section 10-A of the CST Act would not be entitled to the benefit of waiver under the Scheme.
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Scheme that would be applicable to the facts of the instant case and in the light of the undisputed fact that the reassessment was completed on 24.09.2020 smf 28.04.2021 as can be seen from the reassessment orders, which is clearly much prior to 31.07.2021, the cut off date under the scheme, the petitioner would be entitled to the benefit of 100% waiver of penalty sought to be levied upon him under Section 70(2) R/w Section 39 of the KVAT Act as per the reassessment orders dated 24.09.2020 and 27.04.2021. It is also relevant to state that so long as the penalty sought to be levied upon the petitioner is under Section 70(2) R/w Section 39 of the KVAT Act and not under Section 72 (1)(a), 72(1)(b), 74(4) or 72(3-B) of the KVAT Act, Clause No.3 of the Scheme is clearly not applicable to the facts of the instant case qua the petitioner and the reassessment orders dated 24.09.2020 and 27.04.2021, which were passed prior to the cut off date dated 31.07.2021 as stipulated in the scheme, which is clearly applicable to the petitioner, who would be entitled to the benefit of the scheme in the facts of the instant case.
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Still Tech Engineer (W.A.No.6503/2017 Disposed
of on 02.03.2018) relied upon by the respondents is concerned, the said decision rendered under the Karasamadhana Scheme of 2017, which contained different provisions is inapplicable to the case on hand and even this contention of the respondents cannot be accepted.
14. In the result, I pass the following:
ORDER
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Rs.54,63,94,578/- imposed upon the petitioner in the reassessment order dated 27.04.2021.
Sd/- JUDGE
JS/-
3 issues framed by the court
Whether the petitioner is entitled to 100% waiver of penalty under the Karasamadhana Scheme, 2021 for reassessment orders completed prior to the cut-off date.
Whether the penalty levied under Section 70(2) of the KVAT Act falls within the ambit of the Karasamadhana Scheme, 2021.
Whether the impugned endorsements rejecting the waiver application are legal, arbitrary, and contrary to the Scheme.
Colour shows how this judgement treated each authority
State of Karnataka & others Vs. Still Tech EngineerDistinguished¶89
State of Karnataka & others Vs. Still Tech Engineer (W.A.No.6503/2017 Disposed of on 02.03.2018)
2 provisions across 2 enactments
SPIEGEL ENTERPRISES PRIVATE LIMITED
THE STATE OF KARNATAKA
THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT)
THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT)
S.R. Krishna Kumar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
