Facts of the Case

Hirise Builders and Developers had suffered orders imposing penalty for the assessment years 2009-10 and 2010-11 under the Kerala Value Added Tax Act. The petitioner’s case was that there had been no assessment of any tax payable for those assessment years.

The petitioner initially applied for the benefit of the 2019 Amnesty Scheme. However, it did not pay the entire amount found due under that scheme and made only certain part payments. Thereafter, the petitioner applied under the 2020 Amnesty Scheme and again under the 2021 Amnesty Scheme. The amounts found payable under the 2020 and 2021 schemes were also not paid.

The petitioner subsequently sought to settle its liability under the 2022 Amnesty Scheme. For this purpose, it sought determination of the actual tax payable for assessment years 2009-10 and 2010-11, contending that no tax amount had earlier been adjudicated. The record also refers to an application dated 30.08.2022 under the 2022 Scheme, an intimation dated 05.09.2022, a representation dated 17.10.2022, and the first respondent’s reply dated 21.10.2022 along with a rectification order dated 30.03.2022.

Issues Involved

The principal issues before the High Court were:

  1. Whether the petitioner was entitled to determination of the tax amount payable for assessment years 2009-10 and 2010-11 for the purpose of applying the 2022 Amnesty Scheme when there had been no adjudication of the tax amount payable.
  2. Whether the amounts previously determined and communicated under the Amnesty Schemes of 2019, 2020 and 2021 prevented reconsideration or fresh determination for the purpose of the 2022 Amnesty Scheme.
  3. Whether the first respondent should be directed to consider the petitioner’s Ext.P4 representation and provide an opportunity of hearing.
  4. Whether fresh proceedings under the 2022 Amnesty Scheme were required if the tax amount determined upon adjudication differed from the amount reflected in the existing Ext.P3 proceedings.

Petitioner’s Arguments

The petitioner submitted that the relevant Amnesty Scheme contemplated waiver of the entire amount of penalty and interest and that the amount payable under the scheme would be the tax payable by the petitioner.

It was argued that there had been no adjudication of the tax payable for assessment years 2009-10 and 2010-11. Therefore, the petitioner sought an opportunity to appear before the first respondent for adjudication and determination of the tax amount payable for those years so that the provisions of the 2022 Amnesty Scheme could be properly applied.

The petitioner’s essential contention was that, in the absence of an adjudicated tax amount, the benefit and computation mechanism under the 2022 Amnesty Scheme could not be correctly applied merely by relying upon earlier figures.

Respondents’ Arguments

The learned Senior Government Pleader strongly opposed the grant of relief.

The respondents contended that the amounts payable by the petitioner had already been properly adjudicated under the Amnesty Schemes of 2019, 2020 and 2021 and had been duly communicated to the petitioner.

It was further argued that:

  • the part payments already made by the petitioner would be adjusted against the arrears;
  • the 2022 Amnesty Scheme could be applied only against the amounts payable as on the relevant date;
  • the petitioner had no genuine grievance; and
  • the proceedings were an attempt to delay payment of amounts legitimately due to the Government.

Court Order / Findings

The Kerala High Court found that there had been no adjudication of the tax amount payable by the petitioner for assessment years 2009-10 and 2010-11. In those circumstances, the Court held that a direction could be issued to the first respondent to determine the amounts payable by the petitioner as tax for those two assessment years for the purpose of applying the 2022 Amnesty Scheme.

The Court also observed that such a direction would not prejudice the respondents because the petitioner had time until 31.12.2022 to make payment under the 2022 Amnesty Scheme.

Accordingly, the High Court disposed of the writ petition with the following directions:

  • The first respondent was directed to consider and pass orders on the petitioner’s Ext.P4 application.
  • The petitioner was to be afforded an opportunity of being heard.
  • If, after considering Ext.P4, the respondent found that the amount payable under the 2022 Scheme, as reflected in Ext.P3 proceedings, differed because of the tax amount so adjudicated, a fresh order/proceedings under the 2022 Amnesty Scheme was to be issued.
  • The petitioner was directed to appear before the first respondent at 11:00 A.M. on 16.11.2022.
  • The issue was to be adjudicated on the same day after granting the petitioner an opportunity of hearing.

The writ petition was disposed of in these terms.

Important Clarification

The judgment does not hold that the petitioner was automatically entitled to waiver or settlement on a self-declared tax figure. Nor does it itself quantify the tax liability.

The material clarification arising from the judgment is that where the tax amount payable for the relevant assessment years had not been adjudicated, the competent authority could be directed to determine that tax amount for the specific purpose of applying the 2022 Amnesty Scheme.

The Court further clarified the procedural consequence of such determination: if the adjudicated amount resulted in a figure different from that already reflected as payable in Ext.P3 proceedings under the 2022 Scheme, the authority was required to issue fresh order/proceedings under the 2022 Amnesty Scheme.

Thus, the decision preserves the authority’s power to determine the actual tax liability while ensuring procedural fairness through consideration of the petitioner’s representation and an opportunity of hearing.

Sections / Legal Provisions Involved

  • Kerala Value Added Tax Act – underlying statutory framework under which penalty orders for assessment years 2009-10 and 2010-11 had been imposed.
  • Amnesty Scheme, 2019 – earlier scheme under which the petitioner applied and made only part payments.
  • Amnesty Scheme, 2020 – subsequent amnesty application; determined amounts were not paid.
  • Amnesty Scheme, 2021 – further amnesty application; determined amounts were not paid.
  • Amnesty Scheme, 2022 – scheme under which the petitioner ultimately sought settlement and determination of the tax component.
  • Circular No. 5/2022 dated 25.03.2022 – identified in the record as Ext.P1.
  • Principles of Natural Justice / Opportunity of Hearing – reflected in the Court’s express direction that the petitioner be heard before adjudication and disposal of Ext.P4.

Link to download the order -

https://mytaxexpert.co.in/uploads/1783319477_1107compressed.pdf 

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