IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF OCTOBER, 2019 BEFORE:
THE HON’BLE MRS. JUSTICE S.SUJATHA WRIT PETITION Nos.8785 – 8788/2019 (T – RES) BETWEEN:
M/s CHARTERED HOUSING (P) LTD., RER BY ITS GENERAL MANAGER - ADMN. & FINANCE SRI LEO LEWIS AGED ABOUT 54 YEARS NO.27, VICTORIA ROAD BENGALURU-560 047 ... PETITIONER [BY SRI K.HEMA KUMAR, ADV.] AND:
1 . THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES ( AUDIT-44) D.V.O.-IV, VTK-2, KORAMANGALA BENGALURU-560 047 NOW RE-DESIGNATED AS THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT-4.4) D.V.O.-IV, VTK -2, KORAMANGALA BENGALURU-560 047 2 . THE COMMISSIONER OF COMMERCIAL TAXES IN KARNATAKA VANIJYA THERIGE KARYALAYA 1ST MAIN ROAD, GANDHINAGAR BENGALURU-560 009 …RESPONDENTS [BY SRI T.K.VEDMURTHY, AGA.] THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ENDORSEMENT ISSUED BY THE R-1 DATED 12.02.2018, PERTAINING TO THE ASSESSMENT PERIODS FROM APRIL, 2005 TO MARCH, 2006, APRIL, 2006 TO MARCH, 2007, APRIL, 2007 TO MARCH, 2008 & APRIL, 2008 TO MARCH, 2009 (ANNEXURE-K).
THESE PETITIONS COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R The petitioner has assailed the endorsement issued by respondent No.1 relating to the assessment periods 2005-06 to 2008-09, whereby the applications filed by the petitioner under Karasamadhana Scheme, 2017 have been dismissed.
2. The petitioner a dealer registered under the provisions of the Karnataka Value Added Tax Act, 2003 (‘KVAT Act’ for short) is engaged in the business of developing land by construction of residential apartments and selling the same to prospective buyers. Being aggrieved by the re-assessment orders passed by respondent No.1, appeals were preferred by the petitioner before the Karnataka Appellate Tribunal pursuant to the directions issued by this Court in W.P.Nos.36888-923/2010 and allied matters disposed of on 17.03.2011 at Annexure – B. During the pendency of the said appeals, the petitioner has opted for the Karasamadhana Scheme, 2017. respondent No.1 has rejected the same. Hence, these writ petitions.
3. Learned counsel for the petitioner placing reliance on the order of the cogent bench of this Court in WS Retail Services Private Limited vs. State of Karnataka and others reported in [2018] 48 GSTR 51 (Karn) confirmed by the Division Bench of this Court in Writ Appeal Nos.72/2018 and allied matters reported in 2018 (92) KGST L.J. 208 would submit that the finding of respondent No.1 is contrary to the law declared by this Court. Inviting the attention of this Court to Clause 2.4 of the Karasamadhana Scheme, 2017, it is contended that no interest/penalty ought to have been computed by respondent No.1 till the date of filing of the applications.
4. Learned Additional Government Advocate, though made an endeavour to justify the order/endorsement impugned, can not dispute the law declared by this Court in WS Retail Services Private Limited, supra.
5. Clause 2.4 of the Karasamadhana Scheme, 2017 reads thus:-
“2.4. If the dealer or person or proprietor, as the case may be, has filed appeal or other applications against the order or proceedings relating to ‘arrears of tax’ and ‘arrears of penalty and interest’ before any Appellate Authority or Court and if disposal of such applications is still pending, then the dealer or person or proprietor, as the case may be, shall withdraw the appeal or other application before availing the benefit of waiver of arrears of penalty and interest under this Scheme. If appeal or other application is withdrawn, the quantum of arrears of tax/penalty and interest for purposes of this Scheme shall be considered as per the order against which appeal or other applications had been filed which are since withdrawn to avail of the benefits of the Karasamadhana Scheme, 2017.”
6. Learned Single Judge in WS Retail Services Private Limited, supra, has observed thus:-
“30. Section 42(6) of the Act contained in only one of the eight enactments covered by the said Scheme, is applicable only where the assessments, payment of tax and other amounts, adjudicated by the assessing authority is happening in a normal course, irrespective of the existence of any special law like the ‘KSS 2017”. The Scheme “KSS 2017” does not envisage any such “adjustment” or adjudication but only talks of “work out the actual arrears of tax and penalty and interest payable by the dealers”. This working out has to be done only as per the impugned assessment orders, which were the subject-matter of appeals, revisions or writ petitions. The Revenue Authorities are not entitled to undertake the fresh adjudication or adjustment process which is not envisaged in the Scheme itself.”
7. This view has been approved by the Division Bench of this Court and it is held as under:-
“30. In this particular case, it is clear that the payments made by the respondents for admitting their appeals under various statutory provisions were under dispute and were not referable to any particular component of tax or penalty or interest and were only ‘colourless deposits’. Accordingly, these remittances cannot be deemed to be paid and offset from unpaid amount for calculation of arrears to be waived. Unlike in the case of Assistant Commissioner v ACC Limited (supra) where the deposits were no longer under dispute by reason of dismissal of appeal having attained finality, in the present case, the deposit amounts were still under dispute as of the cut-off date for calculation of arrears, i.e., 15-3-2017 as specified in Clauses 1.1 and 1.2 of the Scheme. These deposit amounts being under dispute, cannot be deemed to be paid, and hence, cannot be offset from arrears, to give effect to the object of the Scheme and to avoid absurdity. Any payments made under the Scheme and the adjustment of deposit after withdrawal of appeal and after the promulgation of the Scheme, must be by appropriation first towards tax arrears. The explanation through an allegory of three boxes in a puzzle game made in paras 25 and 26 of the impugned order very aptly indicates the sequence of appropriation which is to be resorted to in the manner as discussed above.”
8. In view of the aforesaid, the reasons recorded by respondent No.1 for rejecting the applications filed by the petitioner to avail the benefit of Karasamadhana Scheme, 2017 cannot be held to be sustainable. Hence, the endorsement dated 12.02.2018 at Annexure – K is quashed. The matter is restored to the file of respondent No.1 to re-consider the same in the light of the judgment of this Court in WS Retail Services Private Limited, supra and take a decision in an expedite manner, in any event, not later than two weeks from the date of receipt of certified copy of the order.
With the aforesaid observations and directions, the writ petitions stand disposed of.
Sd/- JUDGE PMR