Disposed

Polsons Distillery v. State of Kerala

Kerala HC23 Jan 2024WP(C)/1291/2021

Case brief

AI extract

What is this about?

A distiller challenged an amnesty settlement order under the Kerala Finance Act, 2020 amnesty scheme, arguing earlier payments should be credited against arrears for years already settled under the earlier amnesty scheme. The High Court held only liabilities pending on the date of application count, found no error in the order, allowed payment without interest delay, and closed the petition.

What did the court decide?

Writ petition closed; petitioner permitted to remit Rs. 89,93,467/- within thirty days without interest for delay, with credit for amounts paid under interim orders.

Polsons Distillery Vs State of Kerala — GST and Indirect Tax | Kerala HC (2024)

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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 DINESH KUMAR SINGH

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TUESDAY, THE 23RD DAY OF JANUARY 2024 / 3RD MAGHA, 1945
WP(C) NO. 1291 OF 2021

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PETITIONER/S:

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POLSONS DISTILLERY MURINGOOR, CHALAKUDY, REP.BY ITS MANAGING PARTNER - PAUL ANTO PERINCHERY

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BY ADVS.

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K.I.MAYANKUTTY MATHER
SRI.R.JAIKRISHNA
SMT.UTHARA ASOKAN

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RESPONDENT/S:

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1 STATE OF KERALA REP.BY PRINCIPAL SECRETARY, TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM G.P.O. 695 001

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2 THE DEPUTY COMMISSIONER OF STATE TAX SPECIAL CIRCLE, TAX COMPLEX, POOTHOLE P.O., TRICHUR 680 004

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3 JOINT COMMISSIONER (GENERAL) SGST DEPARTMENT, TAX COMPLEX,KARAMANA P.O., THIRUVANANTHAPURAM 695 002

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OTHER PRESENT:

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A. MUHAMED RAFIQ-SPL.GP

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
23.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C) NO. 1291 OF 2021

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JUDGMENT

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Dated this the 23^rd day of January, 2024

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The present writ petition has been filed by the petitioner questioning the orders passed in Ext.P17 under the Amnesty Scheme (‘the Scheme’ for short) of payment of arrears of tax in respect of the tax, penalty and interest due under the Kerala General Sales Tax Act ('the Act' for short). The said Scheme has been promulgated by the Kerala Finance Act, 2020. The purpose of the Scheme is reduction of various of cases as Section 3A of the Kerala Finance Act, 2020 provides that notwithstanding provisions of the Act, rules, judgment, decree or order of any court, tribunal or appellate authority, any assessee who is in arrears of surcharge on any other amount relating to the period up to and including 30.06.2017, may opt for settling the arrears by availing complete reduction of penalty amount, interest etc.

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The relevant clauses of the Scheme are reproduced hereunder:--

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“23B. Reduction of arrears in certain cases.—(1) Notwithstanding anything contained in this 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 this Act or under the Central Sales Tax Act, 1956 (Central Act 74 of 1956),—

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(i) in case of demands relating to the period up to and including 31st March, 2005, may opt for settling the arrears by availing a complete reduction of the penalty amount, interest on the tax amount and on the penalty amount, on payment of,

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(a) fifty per cent of the principal amount of the tax in arrears; or

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(b) forty per cent of the principal amount of the tax in arrears, if the amount is paid in lump sum within thirty days of receipt of intimation of the assessing authority.

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(ii) in case of demands relating to the period from 1st April, 2005 to 31st March, 2020, may opt for settling the arrears on payment of the principal amount of the tax and interest in arrears by availing a complete reduction of the penalty amount: 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 this Act, the demand relating to such penalty shall be settled under this

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section on payment of applicable tax relating to the penalty as determined by the assessing authority.”

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2.On careful consideration of Section 23B, of the Finance Act, 2020 it would be evident that if any demand relating to the period up to 31.03.2005, is pending against an assessee, such an assessee could avail the benefit of the Scheme and if he avails the benefit of the Scheme, there would be reduction of complete penalty amount, interest on tax amount and on penalty amount, subject to payment of 50% principal amount of the tax in arrears; or forty percent of the principal amount of the tax in arrears, if the amount is paid in lump sum within thirty days of receipt of intimation by the assessing authority.

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3.In case of demands relating to the period from 01.04.2005 to 31.03.2020, an assessee could have opted for settling the arrears on payment of principal amount of tax and interest in arrears by complete reduction of the penalty.

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The Section 23B(8) is extracted hereunder:---

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“(8) Notwithstanding anything contained in section 55C, if an assessee who opts to settle his arrears under sub-section (1) has remitted or deposited any amount towards the arrears under this Act after the service of demand notice, such amounts 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.”

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4.Subsection 8 is couched in non obstante clause. If an assessee opts

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to take benefits of the provisions of the Scheme in respect of the arrears which would include tax, interest and penalty and has remitted or deposited

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any amount towards arrears under the Act, after the service of demand notice, such amount remitted by the assessee should be given credit as tax before calculating the arrears to be settled under Section 37B(6) which contemplates that arrears are to be calculated on the date of submission of option of availing the benefit of the Scheme by an assessee.

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5.From reading of subsections 6 and 8, the following ingredients would emerge :

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An assessee should be in arrears of tax, interest, penalty, surcharge on the date of submission of the option, and if the assessee has remitted some amount towards the discharge of the arrears of tax, interest, penalty etc., after service of notice, such amount should be given credit as tax. Thus after the demand notice has been served, the petitioner has paid any amount may be tax, interest, penalty, surcharge etc., the said amount is to be treated as tax amount for the purposes of giving the benefit. However, the proviso qualifies Subsection 8 and if any amount after service of notice is paid towards penalty or interest, it should not given credit as tax.

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6.If an assessee is not in arrears of tax in respect of any assessment year upto 31.03.2020, the amount paid by such an assessee towards discharge of liability upto 31.03.2020 cannot be taken into account for future liabilities of the petitioner under the Scheme.

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7.The petitioner in the present case is a Distillery Manufacturing Indian Made Foreign Liquor for which the petitioner has been issued requisite licence by the competing authorities.

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8.The Assistant Commissioner (assessment) had completed the assessment for the assessment years 1998-1999, 2001-2002 on 31.05.2006 and for the years 2002-2003, 2004-2005 on 31.07.2006 and issued the demand notice for payment of tax and interest as per the assessment orders. The petitioner challenged these assessment orders in appeals. Pending the appeal before the Commissioner, the recovery proceedings for realisation of tax etc were undertaken.

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The petitioner filed writ petition before this court in W.P(C) No.27673/2006. The learned Single Judge dismissed the writ petition on 20.10.2006. Against the said judgment dated 20.10.2006 passed by the single judge, the petitioner filed writ appeal No.1973/2006. Pending the writ appeal, an interim order was passed by the learned Division Bench, directing the appellate authority to consider the appeals expeditioulsy and also provided that till the appeals were decided, the recovery proceedings against the petitioner should not be undertaken, subject to the petitioner remitting 50% of the tax amount exclusive of interest within a period of three weeks from the financial year 1989-1999 onwards. The appeals filed by the petitioner before the appellate authority against the assessment orders were dismissed by the appellate authority. Therefore, the petitioner filed second appeal before the Sales Tax Appellate Tribunal.

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10.While the second appeals were pending before the appellate tribunal, by Finance Act, 2009, an Amnesty Scheme was introduced by the State Government to enable the assessee in arrears of tax to clear the dues

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with a relaxation in the liability to pay interest and penalty, subject to the fulfillment of terms and conditions of the Amnesty Scheme promulgated by the Finance Act, 2008.

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11.In order to take the benefit of the Amnesty Scheme of 2008, the petitioner submitted their application before assessing authority for settlement of arrears of tax dues by the application dated 29.09.2008. The assessing authority calculated a sum of Rs.5,22,76,093/-, the amount payable by the petitioner under the Amnesty Scheme and required the petitioner to pay Rs.1,30,69,024/-, being 25% of the amount assessed under the Amnesty Scheme within a period of 15 days from the date of the order ie., 05.11.2008. The petitioner disputed the figure of Rs.5,22,76,093/- by a reply dated 17.11.2008. The assessing authority reworked the figures and calculated the sum payable under the Scheme at Rs. 4,46,86,793/-. The petitioner was of the opinion that the assessing authority did not give credit to the interest which should have been treated payment towards the tax and therefore the petitioner filed W.P(C) No. 12901/2009, disputing the order dated 09.02.2009 calculating the sum payable by the petitioner as Rs. 4,46,86,793/-. The learned Single Judge passed an interim order on 28.04.2009 provided that in the event of the petitioner depositing a sum of Rs. 2,47,98,006/- in four equal monthly instalments, the remaining arrears assessed under the Scheme would be kept in abeyance. According to the petitioner, the said amount of Rs. 2,47,98,006/- was remitted in four equal monthly instalments as per the interim order dated 28.04.2009.

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WP(C) NO. 1291 OF 2021

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In the meantime, the tribunal had disposed of the second appeals against which the petitioner as well as the State filed tax revisions before this Court. The writ petition No. 12901/2009 as well as the tax revisions were clubbed together and same were disposed of by a common judgment dated 21.12.2009.

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The Division Bench was of the opinion that the writ petition in substance was towards the adjustment of payments, first towards interest and balance towards tax in terms of Section 55C of the Act. So long as validity of Section 55C was not under challenge, it was only the question of adjustment of payment first towards the interest and balance towards the tax and the same was considered in the judgment of S.T Rev. No.89/2009.

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After making the aforesaid observation, the writ petition was disposed of with direction to the assessing authority to adjust payment based on the judgment in the S.T Rev. No.89/2009.

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Aggrieved by the said judgment of the Division Bench, the petitioner filed Special Leave Petition (Civil Appeal No. 8500/2010). The Supreme Court by the judgment dated 28.11.2013, permitted the petitioner to file a review petition in W.P(C) No. 12901/2009 before this Court within period of one month from the date of the order passed by the Supreme Court. The petitioner filed the review petition in pursuance to the liberty granted by the Supreme Court, seeking review of the judgment passed in W.P(C) No. 12901/2009, being Review Petition No. 174/2014. Though the petitioner has filed a memo to withdraw this review petition, however, the

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review petition has not been dismissed as withdrawn, and is still pending on the files of the High Court.

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16.The assessing authority initiated the recovery proceedings for arrears of tax for balance of Rs. 2,47,98,006/-. The petitioner approached this court by filing W.P(C) No. 16278/2014 in which an interim order dated 20.10.2014 was granted and the same got extended from time to time.

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17.In the meantime, as per the direction issued by the tribunal in the second appeal, the original assessment orders were modified by the assessing authority by separate orders dated 06.07.2012 for the assessment year 1989-1999 to 2004-2005. An assessment order for the assessment year 2015-2016 was finalized on 05.03.2020 and as per the assessment order, the total liability of the petitioner was Rs. 77,64,344/- which would include Rs.52,81,867/- as tax and Rs.24,82,477/- as interest.

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18.The Government thereafter had come out with the new Amnesty Scheme as mentioned above on 11.09.2020 by the Kerala Finance Act, 2020. The petitioner in order to take the benefit of the new Scheme, put up an application in Ext.P14. According to the petitioner only Rs. 7,98,253/was the balance amount payable by the petitioner in respect of the financial year 1998-1999 to 2004-2005 and 2015-2016.

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On 21.11.2012, the Assistant Commissioner (assessment), Commercial Taxes Special circle, Thrissur, had issued a certificate which would disclose that the assessee had made payment of Rs. 4,88,54,614/towards the Turn Over Tax and interest for the years 1998-1999, 2004-2005

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and the said chart would also disclose that as on 06.07.2012, no amount was payable in respect of the financial year 1998 -1999 and in respect of the financial year 1999 – 2000, the amount of tax and interest of Rs.3,26,233/- was payable. The petitioner had settled the tax liability including the interest amount for the financial year 2001-2002 under the Scheme of 2009, and in respect of the financial year 2002-2003 , 2003-2004 & 2004-2005, nothing was payable by the petitioner as the petitioner has discharged the said liability. Thus, on the date of filing the application under new scheme of 2020, the liability only in respect of the financial year, 1999 – 2000 for Rs. 3,26,233/- and for liability of tax, interest etc., the assessment year 2015-16 were outstanding against the petitioner. Thus the petitioner’s liability for 1999-2000 and 2015-16 were only the subject matter of the application under the new scheme of 2020.

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20.The petitioner, however, has claimed that the earlier amount remitted by the petitioner in respect of all the assessment years up to 20042005 which would include interest as well should be treated as the amount paid by him under the new scheme. In fact the petitioner wants that the concluded assessments in respect of the earlier assessment years under the old scheme should be reopened. I am of the considered view that this is not the scope of the new scheme.

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21.The learned Counsel for the petitioner however submits that the petitioner had not accepted the settlement under the old scheme. He had filed the writ petition challenging the settlement arrived by the old scheme

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and in pursuance to the liberty granted by the Supreme Court, he had filed the review petition seeking review of the Judgment and Order dated 21.12.2009 and, therefore, the dispute was pending. This situation is taken care of in the new scheme as well.

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22.On the other hand, Mr. Muhammed Rafiq A., learned Special Government Pleader has submitted that once the petitioner has settled liability in compliance of the order passed in the earlier scheme and, the matter has attained finality, the filing of the review would not empower the assessing authority to reopen the assessment in respect of the assessment year for which there was no liability of the assessee pending to be discharged by the assessee. He therefore, submits that the assessing authority has taken the correct view in passing Exhibit P-17 order. If the petitioner is not satisfied with the order passed under Amnesty scheme, the petitioner may go for the normal assessment.

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23.I find substance in the submission of the learned Special Government Pleader, Mr. Muhammed Rafiq A. On the date of the application, only those liabilities can be taken into account which are pending against an assessee. Liabilities which are already settled for the previous assessment years cannot be taken into consideration for applying the Amnesty Scheme of 2020. In view thereof, I find that the assessing authority while passing the impugned order has not committed any error of jurisdiction or law which requires this Court to interfere with the impugned order in Exhibit P-17.

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WP(C) NO. 1291 OF 2021

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24.The petitioner has challenged the said order immediately before this Court, and this Court on 18.01.2021 granted the interim order. As the writ petition has remained pending, I am of the view that the petitioner should not be settled with interest, liability on the sum arrived at by the assessing authority in Exhibit P17 for making the payment with delay. Therefore, the petitioner is permitted to remit the amount of Rs. 89,93,467/within thirty days from today.

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Any amount in pursuance to the interim order should be given credit to the petitioner for making payment of remaining amount as per Exhibit P17 order.

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With aforesaid observations and directions the present writ petition is closed.

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Sd/DINESH KUMAR SINGH JUDGE

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SJ/Svn

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WP(C) NO. 1291 OF 2021

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APPENDIX OF WP(C) 1291/2021

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`PETITIO` `EXHIBIT`	`NER` `P1`	`EXHIBITS` `TRUE COPY OF` `KERALA FINAN`	`THE RELEVANT EXTRACT OF THE` `CE ACT, 2020`
`EXHIBIT`	`P2`	`TRUE COPY OF` `COMMISSIONER` `TRICHUR FOR`	`THE ASSESSMENT ORDER ASSISTANT` `(ASSESSMENT), SPECIAL CIRCLE,` `AY-1998-1999`
`EXHIBIT`	`P2`	`(A)` `TRUE COPY OF` `COMMISSIONER` `TRICHUR FOR`	`THE ASSESSMENT ORDER ASSISTANT` `(ASSESSMENT), SPECIAL CIRCLE,` `AY-199-2000`
`EXHIBIT`	`P2`	`(B)` `TRUE COPY OF` `COMMISSIONER` `TRICHUR FOR`	`THE ASSESSMENT ORDER ASSISTANT` `(ASSESSMENT), SPECIAL CIRCLE,` `AY-2000-2001`
`EXHIBIT`	`P2`	`(C)` `TRUE COPY OF` `COMMISSIONER` `TRICHUR FOR`	`THE ASSESSMENT ORDER ASSISTANT` `(ASSESSMENT), SPECIAL CIRCLE,` `AY-2001-2002`
`EXHIBIT`	`P2`	`(D)` `TRUE COPY OF` `COMMISSIONER` `TRICHUR FOR`	`THE ASSESSMENT ORDER ASSISTANT` `(ASSESSMENT), SPECIAL CIRCLE,` `AY-2002-2003`
`EXHIBIT`	`P2`	`(E)` `TRUE COPY OF` `COMMISSIONER` `TRICHUR FOR`	`THE ASSESSMENT ORDER ASSISTANT` `(ASSESSMENT), SPECIAL CIRCLE,` `AY-2003-2004`
`EXHIBIT`	`P2`	`(F)` `TRUE COPY OF` `COMMISSIONER` `TRICHUR FOR`	`THE ASSESSMENT ORDER ASSISTANT` `(ASSESSMENT), SPECIAL CIRCLE,` `AY-2004-2005`
`EXHIBIT`	`P3`	`TRUE COPY OF` `NO.1973/2006`	`THE JUDGMENT IN W.A.` `BEFORE THIS HON'BLE COURT`
`EXHIBIT`	`P3`	`(A)` `TRUE COPY OF` `ASSISTANT CO` `SPECIAL CIRC`	`THE CERTIFICATE ISSUED BY THE` `MMISSIONER (ASSESSMENT),` `LE, TRICHUR`
`EXHIBIT`	`P4`	`TRUE COPY OF` `SUBMITTED BY` `ENGLISH TRAN`	`THE AMNESTY APPLICATION` `THE PETITIONER ALONG WITH TRUE` `SLATION`
`EXHIBIT`	`P5`	`TRUE COPY OF` `THE ASSISTAN` `SPECIAL CIRC`	`THE COMMUNICATION ISSUED BY` `T COMMISSIONER (ASSESSMENT),` `LE, THRISSUR`
`EXHIBIT`	`P6`	`TRUE COPY OF` `PETITIONERS`	`THE REPLY GIVEN BY THE`
`EXHIBIT`	`P7`	`TRUE COPY OF` `ASSISTANT CO` `SPECIAL CIRC`	`THE COVERING LETTER OF THE` `MMISSIONER (ASSESSMENT),` `LE, THRISSUR`
`EXHIBIT`	`P7`	`(A)` `TRUE COPY OF`	`THE REVISED INTIMATION ISSUED`

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WP(C) NO. 1291 OF 2021

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		`BY THE ASSISTANT` `SPECIAL CIRCLE,`	`COMMISSIONER (ASSESSMENT),` `THRISSUR`
`EXHIBIT`	`P7 (B)`	`TRUE COPY OF THE` `COMMISSIONER (ASS` `THRISSUR`	`ORDER OF THE ASSISTANT` `ESSMENT), SPECIAL CIRCLE,`
`EXHIBIT`	`P8`	`TRUE COPY OF THE` `SUPREME COURT IN`	`JUDGMENT OF THE HON'BLE` `CIVIL APPEAL NO.8500/2010`
`EXHIBIT`	`P9`	`TRUE COPY OF THE` `HON'BLE COURT IN`	`INTERIM ORDER PASSED BY THIS` `W.P.(C).16278/2014`
`EXHIBIT`	`P10`	`TRUE COPY OF THE` `ASSISTANT COMMISS` `CIRCLE, THRISSUR`	`COMMUNICATION OF THE` `IONER (ASSESSMENT), SPECIAL`
`EXHIBIT`	`P10 (A)`	`TRUE COPY OF THE` `ASST. COMMISSIONE` `THIRUVANANTHAPURA`	`COMMUNICATION GIVEN BY THE` `R TO THE JOINT COMMISSIONER,` `M`
`EXHIBIT`	`P11`	`TRUE COPY OF THE` `(AY-1998-1999)`	`MODIFIED ASSESSMENT ORDER`
`EXHIBIT`	`P11 (A)`	`TRUE COPY OF THE` `(AY-199-2000)`	`MODIFIED ASSESSMENT ORDER`
`EXHIBIT`	`P11 (B)`	`TRUE COPY OF THE` `(AY-2000-2001)`	`MODIFIED ASSESSMENT ORDER`
`EXHIBIT`	`P11 (C)`	`TRUE COPY OF THE` `(AY-2001-2002)`	`MODIFIED ASSESSMENT ORDER`
`EXHIBIT`	`P11 (D)`	`TRUE COPY OF THE` `(AY-2002-2003)`	`MODIFIED ASSESSMENT ORDER`
`EXHIBIT`	`P11 (E)`	`TRUE COPY OF THE` `(AY-2003-2004)`	`MODIFIED ASSESSMENT ORDER`
`EXHIBIT`	`P11 (F)`	`TRUE COPY OF THE` `(AY-2004-2005)`	`MODIFIED ASSESSMENT ORDER`
`EXHIBIT`	`P12`	`TRUE COPY OF THE` `ASSISTANT COMMISS` `CIRCLE, THRISSUR`	`CERTIFICATE ISSUED BY THE` `IONER, (ASSESSMENT), SPECIAL`
`EXHIBIT`	`P13`	`TRUE COPY OF THE` `TO THE YEAR 2015-`	`ASSESSMENT ORDER PERTAINING` `2016`
`EXHIBIT`	`P14`	`TRUE COPY OF THE` `THE PETITIONER BE`	`AMNESTY APPLICATION FILED BY` `FORE THE 2ND RESPONDENT`
`EXHIBIT`	`P15`	`TRUE COPY OF THE` `RESPONDENT`	`NOTICE ISSUED BY THE 2ND`
`EXHIBIT`	`P16`	`TRUE COPY OF THE` `PETITIONER TO THE`	`EXPLANATION GIVEN BY THE` `2ND RESPONDENT`
`EXHIBIT`	`P16 (A)`	`TRUE COPY OF THE` `ANNEXED TO EXT. P`	`CALCULATION STATEMENT` `16`
`EXHIBIT`	`P17`	`TRUE COPY OF THE` `THE 2ND RESPONDEN`	`AMNESTY INTIMATION GIVEN BY` `T`

Polsons Distillery v. State of Kerala

Case brief

What is this about?

What did the court decide?

Polsons Distillery v. State of Kerala

Case brief

What is this about?

What did the court decide?

What the court decided

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