Dismissed

Ms.Hillwood Furniture (P) Ltd. v. the Asst.Commissioner

Kerala HC8 Mar 2012WP(C)/4101/2009

Case brief

AI extract

What is this about?

In a group of writ petitions concerning the Kerala General Sales Tax Act, the High Court examined the scope of Section 23 B's Amnesty Scheme. The court held that the scheme is a 'package' intended to settle all arrears (tax, interest, penalty) together, allowing separation would frustrate the legislative intent. Consequently, the petitions were dismissed.

What did the court decide?

The writ petitions were dismissed, and interference was declined, directing that the respondents act on the pending applications in due course.

Ms.Hillwood Furniture (P) Ltd. Vs the Asst.Commissioner — GST and Indirect Tax | Kerala HC (2012)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON

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THURSDAY, THE 8TH DAY OF MARCH 2012/18TH PHALGUNA 1933

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WP(C).No. 4101 of 2009 (L)

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PETITIONER :

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MS. HILL WOOD FURNITHURE PVT. LIMITED, FEROKE, CALICUT, BY SHAREEF, MANAGING DIRECTOR.

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BY ADVS.SRI.P.RAGHUNATH SRI.PREMJIT NAGENDRAN

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RESPONDENT(S):

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1. THE ASSISTANT COMMISSIONER,

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COMMERCIAL TAXES, SPECIAL CIRCLE-II, KOZHIKODE.

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2. COMMISSIONER OF COM. TAXES,

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TRIVANDRUM.

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R1 & R2 BY SR. GOVT. PLEADER SRI. S. SUDHEESH KUMAR

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08/03/2012 ALONG WITH WP(C) NO. 4116/2009 & CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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...2/-

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WP(C).No. 4101 of 2009 (L)

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APPENDIX

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PETITIONER'S EXHIBITS :

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EXT.P1	: PHOTOCOPY OF APPLICATION DT. 29.9.08 FILED U/S 23 B (3) OF KGST ACT.
EXT.P2	: PHOTOCOPY OF INTIMATION DT. 7.11.08 ISSUED BY THE FIRST RESPONDENT.
EXT.P3	: PHOTOCOPY OF LETTER DT. 21.11.08.
EXT.P4	: PHOTOCOPY OF CHEQUE NO. 023570 DT. 21.11.2008.
EXT.P5	PHOTOCOPY OF LETTER DT. 29.12.08 RETURNING THE CHEQUE.
EXT.P6	PHOTOCOPY OF LETTER DT. 31.12.2008 SENT BY THE PETITIONER TO THE FIRST RESPONDENT.
EXT.P7	PHOTOCOPY OF LETTER DT. 23.01.09 RETURNING THE CHEQUE FOR THE SECOND INSTALMENT BY THE SECOND RESPONDENT.
EXT.P8	PHOTOCOPY OF LETTER DT. 28.1.09 RETURNING THE CHEQUE FOR THE THIRD INSTALMENT BY THE SECOND RESPONDENT.

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RESPONDENT'S EXHIBITS :

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EXT.R1 (a) : COPY OF THE CIRCULAR NO. 40/2008 DATED 6.10.2008.

//TRUE COPY//

P.A. TO JUDGE

P.R.RAMACHANDRA MENON,J.

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========= = = = = = = = = W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 ===== = = = = == = = = = = Dated this the 8th day of March, 2012

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J U D G M E N T

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The basic issue under challenge in all these writ petitions is one and the same, that is, with regard to the scope of Section 23B of the Kerala General Sales Tax Act whereby, a Scheme is provided to settle the entire arrears of an assessee by availing the benefit declared under the Amnesty Scheme notified by the Government. Though there is some factual difference, detailed examination of the same may not be necessary, as the question considered is only a legal point and hence considered together. Discussion to the above limited extent, is with reference to the parties and the exhibits as produced in W.P.(C)No.4101/2009, unless separately mentioned.

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There was some dispute with regard to the assessment and penalty was sought to be imposed in

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 2

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respect of the offences alleged by the Department. With regard to the penalty for the year 2003-04, the same was quantified as Rs.89,53,784/-(Rupees eighty nine lakhs fifty three thousand seven hundred and eighty four only). Pursuant to notification of the Scheme, the petitioner sought to have the liability settled and filed Ext.P1 application dated 29-9-2008 showing the penalty amount as aforesaid also mentioning the pendency of the dispute before this Court in Writ Appeal No.2483/2007. The said application was considered and the proposal to have the benefit of Amnesty Scheme was accepted and in tune with the terms of the Scheme, the total liability to be discharged under the Scheme including interest of Rs. 1,34,307/-(Rupees one lakh thirty four thousand three hundred and seven only) was fixed as Rs.10,29,685/- (Rupees ten lakh twenty nine thousand six hundred and eighty five only). The initial payment to the tune of 25% Rs.2,57,421/- (Rupees two lakh fifty seven thousand four hundred and twenty one only) as prescribed was required to be remitted as specified, with instruction to have the balance amount satisfied by way of instalments as

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 3

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stated therein. In conformity with Ext.P2 intimation, the petitioner effected the payment as borne by Ext.P3. But when the second instalment was sought to be remitted, the same was declined to be accepted as per Ext.P5 reply dated 29-12-2008, pointing out that Ext.P2 sanction given earlier was revised and a revised intimation dated 15-12-2008 was issued from the office, whereby the petitioner was alerted that the settlement of liability for the year 2003-04 could be considered and acted upon only on completion of the assessment for the year 2003-04. The cheque forwarded in respect of the second instalment was returned accordingly. Though the petitioner approached the concerned respondent by filing Exts.P6 and P7 seeking for extending the benefit as originally granted vide Ext.P2, the same, according to the petitioner fell only in the deaf ears, which led to the writ petition.

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Almost similar are the contentions and sequence as given in the other writ petitions particularly in W.P(C) Nos. 5271 and 4116 of 2009, and the assessment in all these three writ petitions are still pending. In W.P(C) No.2004/2010, the

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 4

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assessment has been finalised after filing the above writ petition. The learned Counsel for the petitioner submits that the revised assessment has been completed, but the issue with regard to the scope and intent of section 23 B still remains, more so, when the application preferred for settling the liability in respect of 'penalty' was originally accepted; which was subsequently withdrawn, referring to the pendency of the assessment proceedings.

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Heard the learned Government Pleader appearing for the respondents as well.

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The case of the petitioners is that the statute does not contemplate or support the case as now put forth by the respondents, to hold that settlement of the liability can only be in respect of the 'assessment and penalty' taken together. In other words, the contention is that the assessee is at liberty to settle the liability in respect of the 'assessment' and 'penalty' separately and no statutory bar is prescribed to the contrary. The learned Counsel for the petitioner also submits that the reference made to the revised order dated 15-12-2008 mentioned as item No.3 in Ext.P5 dated

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 5

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29-12-2008 produced in W.P(C) No.4101/2009 is not

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correct , in so far as the petitioner has been never given to understand as to any such revised intimation and no copy has ever been produced though a counter affidavit has been filed by the respondents. It is also contended that the reliance sought to be placed by the respondents on the Circular No. 40/2008 dated 6-10-2008 produced as Ext.R1(a) cannot support the stand of the respondents, as it is only a departmental communication; which cannot improve or water down the stipulations under the statute

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The learned Government Pleader appearing for the respondents submits with reference to the materials on record, that the idea and understanding of the petitioners is quite wrong and misconceived. Section 23 B itself is categoric, which suggests the settlement of arrears in respect of all arrears and there cannot be any segregation or partition of settlement; one in respect of 'tax', another one in respect of 'penalty', and yet another one in the 'interest' or some other dues. As contented in the counter affidavit, the Scheme itself is only a 'package', which is intended to

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 6

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bring about finality to the disputes once and for all, as pointed out in paragraph 5 of the counter affidavit . It is also asserted that a revised order was passed, referred to as item No.3 in Ext.P5 and that the petitioners are not entitled to capitalize a mistake, if at all there. The concerned Officer has accepted the application granting permission to have the matter settled, as specified in Ext.P2, also making it clear in paragraph 5, that the application preferred by the petitioner, by virtue of the revised intimation, is kept pending till completion of the assessment for the year 2003-04.

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During the course of hearing, it is brought to the notice of this Court that the assessment proceedings are pending also because of the pendency of the challenge raised from the part of the petitioners and others concerned in Writ Appeal No. 2483/2007, which is concerned with the 'penalty'. When the petitioner have separate proceedings seeking for a direction to see that the assessment proceedings are not finalised till the issue with regard to the penalty is finalised by the Division Bench in Writ Appeal

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 7

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No. 2483/2007; it is no more open to them to attribute delay

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or lapses on the part of the respondents in this regard.

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After hearing both the sides this Court finds that the assessment could not be finalised by the department in view of the interception made by this Court and also because of the pendency of the issue with regard to the 'penalty' before the Division Bench. This being the position, the principle of 'Actus Curiae Neminem Gravabit (the act of Court shall prejudice no Man) is attracted and as such, the blame cannot be shifted to the shoulders of the Department, as the petitioners themselves are contributory to the same.

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Yet another aspect to be noted is that, nothing has

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been mentioned in the relevant column, pertaining to the 'tax' , by the petitioner in Ext.P1 and the entries given are only in respect of 'penalty'. The explanation offered by the petitioners is that, no arrears are there in respect of the tax liability and the arrear is only in respect of penalty . The fact remains that the concerned authority was given to understand as to the arrears which admittedly stood confined to the 'penalty' alone, which was mistakenly

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 8

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considered and the liability under the Amnesty Scheme was fixed, granting sanction as per Ext.P2, which was subsequently revised as per the revised intimation dated 15-12-2008, referred to in Ext.P5. Though there is a case for the petitioners that the said order has not been served to the petitioners, the factual position asserted in the counter affidavit has not been sought to be rebutted by filing any reply affidavit, by the petitioners.

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Yet another contention is there for the petitioners that, the R1(a) Circular cannot improve the case of the respondents. The learned Government Pleader submits that the Circular has been issued by the Commissioner in exercise of the power vested with him, while the impugned orders have been passed by the authority subordinate to him and hence there is nothing wrong on the part of the concerned officers in having issued the orders/ proceedings concerned. Ext.R1(a) Circular speaks about the clarification given, that the settlement of arrears is available to 'all outstanding arrears' under the KGST Act including penalty under Section 45A. Section 23 B, which is the basic

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010

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provision, reads as follows.

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Section 23 B.

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“Reduction of interest in certain cases:

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1 Notwithstanding anything contained in this Act, or in any judgment, decree or order of any Court or Tribunal, an asessee, who is in arrears to pay tax or any other amount due under this Act upto the period ending on 31^st March 2003 may opt for settling the arrears, by availing a reduction of interest, by paying the amount as shown below.

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i) outstanding tax amount along with 30 percent of interest already due on the date of payment, if paid on or before 29^th February ,2004

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ii) outstanding tax amount with 40 percent of interest already due on the date of payment if paid on or before 31^st March, 2004

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Provided that the reduction in interest granted under this section shall be applicable to cases in which revenue recovery proceedings has already been initiated and where the amount is settled under this section, the assessing authority shall withdraw the revenue recovery proceedings against such assessee

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Provided further that the assessing authority shall have the power to collect the tax advised for revenue recovery.

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A dealer who opt for payment of the arrears under this section shall make an application to the assessing authority in writing on or before the 15^th February, 2004

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on receipt of an application under sub-section 2) the assessing authority shall intimate the quantum of tax or other amount due under this Act and the interest payable under Subsection 3) of section 23 as on date of payment after allowing the reduction of interest under sub-section (1)”

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where any second appeal or revision filed by the Government is pending against any order or proceedings giving rise to any demand and an assessee has opted to avail himself of the benefit under this section in respect of such demand, such appeal or revision may be continued as if the dealer had not opted for the benefit under this section

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11. While speaking of the opportunity given to the

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parties to settle the arrears, how it is to be worked out, is specified in clauses (a) to (e) of Subsection 1. The rates and

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 10

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extent of benefits are given by separate slabs and all these provisions separately refer to the tax element, interest, as well as penalty. Reading the provisions as a whole, it has to be held that the idea behind bringing out the legislation was, with intent to see that the disputes between the parties were settled once and for all . In other words, if the proposition made by the petitioners is to be accepted, the very purpose of the enactment and Scheme formulated by the Government will stand frustrated . This Court finds it difficult to accept the said proposition and it is rejected accordingly.

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With regard to the extent of the relief obtainable to the petitioners, it is stated by the respondents in the counter affidavit that the applications preferred by the petitioner are kept pending, to be acted upon, subject to finalisation of the assessment. It is made clear that the commitment made by the respondents in the counter affidavit as above shall be given effect to, in the due course .

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The learned Government Pleader submits the petitioners have not effected the payment as per the Amnesty Scheme and hence they may not be entitled to

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 11

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have the benefit; though a statement has been made as to the pendency of the applications as given in Paragraph 5 in the counter affidavit. The learned Counsel for the petitioners submits that the petitioners had already filed an application before this Court for provisional acceptance of the amount under the Amnesty Scheme; pursuant to which, an order was passed enabling the petitioners to satisfy the amount and that the payments have been effected as above. It is declared that if payments have been effected in terms of the Scheme, expiry of the Scheme shall not be a bar for considering the cases of the petitioners.

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Subject to the above observation, interference is declined and the writ petitions are dismissed.

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P.R.RAMACHANDRA MENON . JUDGE

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smm

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 12

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W.P.(C) Nos. 4101,4116, 5271 of 2009 & 2004 of 2010 13

Ms.Hillwood Furniture (P) Ltd. v. the Asst.Commissioner

Case brief

What is this about?

What did the court decide?

Ms.Hillwood Furniture (P) Ltd. v. the Asst.Commissioner

Case brief

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