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2024 DIGILAW 1254 (GUJ)

Navkar Enterprise v. State Of Gujarat

2024-06-14

BHARGAV D.KARIA, NIRAL R.MEHTA

body2024
JUDGMENT : BHARGAV D. KARIA, J. 1. Heard learned advocate Mr. Uchit Sheth, learned Assistant Government Pleader Mr. Raj Tanna and Ms. Shrunjal Shah for the respondent-State. 2. By these petitions under Article 226 of the Constitution of India, the petitioner has challenged the order rejecting the benefit of Amnesty Scheme under the Vera Samadhan Yojna, 2019 [for short ‘the Amnesty Scheme’] and further prayed for directions to the respondents to grant waiver of the penalty under the Amnesty Scheme on the basis of payment of tax and interest prior to passing of the assessment order. The petitioner has further prayed for refund of the amount paid by the petitioner towards penalty pursuant to the directions by the respondents along with statutory interest on such refund. The petitioner has also prayed for quashing and setting aside the attachment order on the bank accounts of the petitioner. The petitioner, in the alternative, has prayed for restoration of the second appeal filed by the petitioner on merits if it is held that the petitioner is not entitled to the benefit of the Amnesty Scheme as the petitioner has challenged the order of penalty in the second appeal before the Gujarat Value Added Tax Tribunal (Tribunal)which was withdrawn to avail the benefit of the Amnesty Scheme. 3. Rule returnable forthwith. Learned Assistant Government Pleader Mr. Raj Tanna waives service of notice of rule for the respondents. 4. Having regard to the controversy in the narrow compass, with the consent of the learned advocates for the parties, the matters were taken up for hearing. 5. The brief facts are as under: 5.1 The petitioner, a proprietorship concern, is engaged in the business of resale of waste paper and was duly registered under the provisions of the Gujarat Value Added Tax Act,2003 [for short ‘VAT Act’]. The petitioner was regularly filing returns and paying tax under the VAT Act. Search proceedings were conducted by the Enforcement Division of the VAT department on 07.02.2017 and the petitioner was made to pay tax with interest without passing any assessment order on the ground of possible disallowance of input tax credit. 5.2 The assessment notices were issued to the petitioner for the Assessment Years 2013-14, 2014-15 and 2015-16. Search proceedings were conducted by the Enforcement Division of the VAT department on 07.02.2017 and the petitioner was made to pay tax with interest without passing any assessment order on the ground of possible disallowance of input tax credit. 5.2 The assessment notices were issued to the petitioner for the Assessment Years 2013-14, 2014-15 and 2015-16. Special Civil Application No. Assessment year Date of assessment order Amount levied for payment of tax and interest and penalty 1705/2023 2014-15 27.01.2020 37,36,749/- 1706/2023 2017-18 27.01.2020 3,65,663/- 1776/2023 2015-16 26.01.2020 15,72,496/- 5.3 In the assessment proceedings, the Assessing Authority confirmed the demand of tax with interest and penalty on the basis of disallowance of input tax credit on the ground of retrospective cancellation of registration certificate of some selling dealers from whom the petitioner had purchased the goods by assessment order dated 10.05.2017 for all the three assessment years. The petitioner, however, had already paid the tax and interest before passing of the assessment order. 5.4 The petitioner filed First Appeal challenging the assessment order. The First Appellate Authority by order dated 02.08.2019 partly allowed the appeals confirming the assessed tax and interest and reducing the amount of penalty imposed from 150% to 50%. 5.5 The petitioner filed Second Appeal for challenging the before the Tribunal challenging the imposition of tax, interest and penalty. The Tribunal admitted Second Appeal on 22.10.2019 and stay was granted till final disposal of the appeal. During the pendency of the Second Appeal before the Tribunal, the Government of Gujarat announced Amnesty Scheme on 06.12.2019 and thereafter the Resolution No. GST-10209-19-1006 was issued and the scheme was named as “Vera Samadhan Yojna, 2019”. The Amnesty Scheme provided that upon deposit of tax, a liability of interest, penalty was to be waived. The petitioner therefore, withdrew the appeal pending before the Tribunal which was allowed by the Tribunal on 06.01.2020. 5.6 As the petitioner had already deposited tax with interest before passing of the assessment order and application for seeking benefit of the Amnesty Scheme was filed on 20.01.2020, the petitioner also intimated about filing of the application under the Amnesty Scheme to the Jurisdictional Assessing Officer. The VAT Department issued the intimation regarding amount payable under the Amnesty Scheme. 5.6 As the petitioner had already deposited tax with interest before passing of the assessment order and application for seeking benefit of the Amnesty Scheme was filed on 20.01.2020, the petitioner also intimated about filing of the application under the Amnesty Scheme to the Jurisdictional Assessing Officer. The VAT Department issued the intimation regarding amount payable under the Amnesty Scheme. Since the petitioner believed that the amount of tax with interest had already been paid prior to passing of assessment order, no further payment was made which was also orally conveyed to the Jurisdictional Assessing Officer. However, the petitioner was orally intimated by the Jurisdictional Officer that petitioner will have to pay amount as mentioned in the intimation letter even though the petitioner had already paid tax with interest. 5.7 The petitioner thereafter deposited amount as mentioned in the intimation letter based upon the oral discussion with the Jurisdictional Officer on 03.03.2022. 5.8 It is the case of the petitioner that the petitioner was intimated by letter dated 21.06.2022 that its bank account had been detached by the VAT Department for outstanding dues of the Years 2013-14 to 2015-16. The petitioner however could not find any order disposing of the application filed under the Amnesty Scheme. 5.9 Since the petitioner was facing recovery, the petitioner filed an application dated 20.10.2022 for restoration of appeals before the Tribunal and also addressed a letter to the Jurisdictional Officer requesting for copy of the order disposing of the application under the Amnesty Scheme. The petitioner was provided with the impugned letter dated 11.03.2022 rejecting the application filed under the Amnesty Scheme on the ground that the petitioner did not make full payment against the outstanding amount intimated before the Tribunal during hearing of the restoration application. The Tribunal however, refused to restore Second Appeal of the petitioner and rejected the restoration application vide order dated 12.12.2022. 5.10 Being aggrieved, the petitioner has filed these petitions challenging letter of rejection dated 11.03.2022 before this Court. 6. Learned advocate Mr. Uchit Sheth for the petitioner submitted that the petitioner has already deposited the tax and interest prior to passing of the assessment order which is also recorded therein and therefore, the petitioner is entitled to the benefit of Amnesty Scheme which clearly provides that waiver of interest and penalty if amount of tax is paid. 6. Learned advocate Mr. Uchit Sheth for the petitioner submitted that the petitioner has already deposited the tax and interest prior to passing of the assessment order which is also recorded therein and therefore, the petitioner is entitled to the benefit of Amnesty Scheme which clearly provides that waiver of interest and penalty if amount of tax is paid. 6.1 It was further submitted that the petitioner was not granted any opportunity of hearing before rejection of application under the Amnesty Scheme. 6.2 It was submitted that the amount sought to be demanded in the intimation letter issued by the respondent-Authority is based upon erroneous understanding that the assessment order in respect of which, the amnesty was sought was only with respect to penalty. 6.3 It was submitted that the assessment order was relating to tax, interest as well as penalty and not only with respect to penalty and as the petitioner had already paid the tax and interest, the demand was raised qua levy of penalty only and therefore, it cannot be said that the assessment order was not for tax, interest and penalty. 6.4 It was therefore, submitted that the petitioner was not required to pay 20% amount of the outstanding dues as per Clause 4.5 of the Amnesty Scheme. 6.5 Learned advocate Mr. Sheth, in the alternative, submitted that the Tribunal ought not to have refused to restore the appeals in view of the fact that the application of the Amnesty Scheme was rejected by the respondent-authority. It was therefore submitted that if it is held that the petitioner is not entitled to the benefit of Amnesty Scheme, then the petitioner is required to be permitted to pursue the remedy available under the provisions of the VAT Act by restoration of the second appeal which was withdrawn by the petitioner to avail the benefit of the Amnesty Scheme. 6.6 It was further submitted that the amount the petitioner was made to deposit pursuant to the intimation letter issued under the Amnesty Scheme is also contrary to the Scheme as the petitioner was eligible to the benefit of the Amnesty Scheme without any further requirement of deposit of any amount as what was challenged in appeal was not mere penalty order which would require pre-deposit of penalty. The petitioner is therefore, entitled to the refund of the amount wrongly recovered pursuant to the intimation letter. The petitioner is therefore, entitled to the refund of the amount wrongly recovered pursuant to the intimation letter. 6.7 It was also submitted by learned advocate Mr. Sheth that attachment of the bank account of the petitioner is also liable to be quashed as the petitioner has already filed an application for Amnesty Scheme and without any intimation of disposal of such application, the respondent-authorities could not have made coercive recovery against the petitioner during pendency of the issue with regard to waiver of penalty. 6.8 In support of his submissions, learned advocate Mr. Sheth referred and relied upon the following decisions: Sunflowers Developers vs. State of Gujarat reported in 2019 SCC Online Guj 6611; Safal Developers v/s. State of Gujarat in Special Civil Application No. 1338 of 2016 decided on 22/27.04.2016; Sky Industries Ltd vs. State of Gujarat in Special Civil Application No. 246 of 2023 decided on 07.06.2023; Varmora Granito Pvt. Ltd vs. State of Gujarat in Special Civil Application No. 4650 of 2023 decided on 06.07.2023. 7. On the other hand, learned AGP Mr. Raj Tanna submitted that the petitioner is not entitled to the benefit of Amnesty Scheme without depositing the amount as stated in the intimation letter. 7.1 It was submitted that as per Clause No. 45 of the Amnesty Scheme, where the assessment order pertains to the interest or penalty or both, a total of 20% of the demand value is required to be paid to avail the benefit of the Amnesty Scheme. It was therefore, submitted that the contention raised on behalf of the petitioner that as the petitioner has already paid the tax and interest prior to passing of the assessment order, no further amount is required to be paid by the petitioner is not acceptable because ultimately, the demand raised in the assessment order pertains only to penalty as the petitioner has already paid the tax and interest. 7.2 It was submitted that time limit prescribed under Clause 8 of the Amnesty Scheme provides that the first instalment i.e. 10% of the amount payable shall be paid before 15th March,2020 and the remainder shall be paid in 11 installments which was increased from time and again and the last date of payment in order to claim the benefit under the Scheme was 31.08.2021. It was submitted that however, the petitioner did not pay the amount as per the intimation letter issued under the Amnesty Scheme and therefore, by the impugned letter dated 11.03.2022 the petitioner was intimated that the benefit under the Amnesty Scheme cannot be granted as the petitioner did not make full payment against the outstanding amount intimated by the department. 7.3 It was therefore submitted that on perusal of the intimation letter placed on record by the petitioner, the petitioner was called upon to make payment as per the Amnesty Scheme which was admittedly not paid by the petitioner and accordingly, the petitioner was denied the benefit of the Amnesty Scheme. 7.4 It was submitted that the time limit as prescribed under Clause 8 of the Amnesty Scheme was extended upto 31.08.2021. However, the petitioner failed to make payment in time and therefore, the petitioner is not entitled to the benefit of the Amnesty Scheme. 7.5 It was submitted that as per the assessment order, a demand was raised qua penalty only and therefore, the petitioner was supposed to pay the amount as stated in the intimation letter as per Clause 4.5 of the Amnesty Scheme. Learned AGP Mr. Tanna therefore submitted that the petitioner having failed to comply with the requisite condition to avail the benefit of the Amnesty Scheme by not depositing 20% of the penalty amount as per the assessment order, the petitioner was rightly denied the benefit of the Amnesty Scheme. 8. Having heard learned advocates for the respective parties and having considered the facts of the case as well as the provisions of the Amnesty Scheme, it is not in dispute that the petitioner is entitled to the benefit of the Amnesty Scheme which was launched vide Resolution dated 11.09.2019 by the Government and subsequently revised by Resolution dated 06.12.2019 for remitting the pending dues. As per the Clause 4.1 of the Scheme, the vendor would be able to claim the remission of interest and penalty upon payment of tax amount. Clause 4.2 deals with enforcement cases where turnover .is increased. Clause 4.3 pertains to enforcement cases other than prescribed in Clause 4.2 for such cases where penalty is imposed under section 34(7) by the VAT Act wherein and in such cases, benefit of Clause 4.1 shall be extended. Clause 4.4. Clause 4.2 deals with enforcement cases where turnover .is increased. Clause 4.3 pertains to enforcement cases other than prescribed in Clause 4.2 for such cases where penalty is imposed under section 34(7) by the VAT Act wherein and in such cases, benefit of Clause 4.1 shall be extended. Clause 4.4. of the Amnesty Scheme deals with voluntary disclosure whereas, Clause 4.5 prescribes for eventualities where assessment order pertains to the interest or penalty or both wherein total of 20% of outstanding demand shall stand payable in order to avail the benefit of Amnesty Scheme. 9. Clause 5 of the Amnesty Scheme pertains to cases where appeal under Central Sales Tax is pending or for such eventualities prescribed in Clause 5.2 whereas Clause 6 provides for cases where the department has preferred appeal. Clause 7 provides for manner and method of making application under the Amnesty Scheme. Clause 8 of the Scheme prescribed the time limit for payment of first instalment i.e. 10% of the amount payable on or before 15.03.2020 and the remainder to be paid in 11 installments. Said time limit was extended from time to time and lastly, it was extended upto 31.08.2021. 10. It is also not in dispute that the petitioner has paid the tax and interest prior to the framing of the assessment and therefore, assessment order under which, the tax and interest and penalty was imposed and ultimately, after giving set off of the payment of tax and interest, the demand was raised qua penalty only. 11. It is also a matter of fact that the petitioner challenged the assessment order wherein tax, interest and penalty is imposed before the First Appellate Authority. Thus, the petitioner was aggrieved by imposition of tax, interest, and penalty and not only penalty. 12. Therefore, it cannot be said that the petitioner has accepted the assessment order qua tax and interest and only was aggrieved by imposition of penalty. 13. The benefit of the Amnesty Scheme is available for waiver of interest and penalty. However, the Scheme also provides that no refund would be issued qua interest or penalty which is already deposited by the applicant. Therefore, the petitioner is not entitled to the refund of interest but so far as the penalty is concerned, the petitioner was entitled for the waiver thereof. However, the Scheme also provides that no refund would be issued qua interest or penalty which is already deposited by the applicant. Therefore, the petitioner is not entitled to the refund of interest but so far as the penalty is concerned, the petitioner was entitled for the waiver thereof. The respondent authorities however invoking the Clause 4.5 by misinterpreting the object of the Scheme to give waiver of interest and if the amount of tax is deposited by the assessee. According to the respondent- authority, only the outstanding amount is to be seen which pertains to the penalty and therefore as per Clause 4.5 of the Amnesty Scheme, the petitioner was directed to deposit 20% of the penalty. The petitioner under the bona fide belief that the petitioner already deposited the entire tax and interest and the order under challenge before the appellate authority was the assessment order comprising of tax interest and penalty and therefore as per Clause 4.5 of the Amnesty Scheme, the petitioner is not liable to deposit any penalty. The petitioner therefore did not deposit amount of penalty as intimated by the respondent- authority. The petitioner however, intimated the respondent-authority that as the petitioner has already paid tax and interest before assessment order was passed, the petitioner is not liable to deposit any amount of the penalty as required by the intimation letter. However, the respondent-authority rejected the application of the petitioner for the benefit of the Amnesty Scheme as the petitioner did not deposit the amount as required by the intimation letter. 14. Approach of the respondent-authority is therefore contrary to the Amnesty Scheme which is considered by this Court in various decisions as under: In case of Sunflowers Developers (supra) this Court has held as under: “20 In this backdrop, it may be germane to refer to the object behind the above referred amnesty scheme. The preamble of the Amnesty Scheme provides that the Goods and Services Act has been brought into force in the State with effect from 1.7.2017. Prior to the coming into force of this enactment, there were approximately more than 20,000 cases pending at different levels under the Sales Tax Act, Value Added Tax Act, Central Sales Tax Act, Motor Spirit Taxation Act, Entry Tax Act and Sugar Cane Purchase Tax Act. As a result considerable recoveries of the amounts involved in such cases were outstanding. Prior to the coming into force of this enactment, there were approximately more than 20,000 cases pending at different levels under the Sales Tax Act, Value Added Tax Act, Central Sales Tax Act, Motor Spirit Taxation Act, Entry Tax Act and Sugar Cane Purchase Tax Act. As a result considerable recoveries of the amounts involved in such cases were outstanding. Various business associations in the State had made representations for expeditious and effective disposal of such old cases. By this scheme the Government will get the amounts of old pending recoveries, the business segment will get a huge relief and the administrative cost of the Government will be reduced. Considering this submission a proposal had been made for introducing the Amnesty Scheme. Under this scheme, the outstanding recoveries under the above enactments are to be covered. 21. Thus, the object of the amnesty scheme is to bring about expeditious and effective resolution of old disputes and recoveries of old outstanding dues of the Government and reduction of administrative costs. Since such scheme is applicable to all pending cases, the officers acting under the relevant statutes are expected to respect the object of the scheme and to ensure that the assessees get the benefit under the scheme. Therefore, when a bona fide request is made by an assessee to adjourn the hearing of a case with a view to enable him to avail the benefit of the scheme, the concerned officer is duty bound to respect such request. Therefore, when in the present case, where the matter had not been taken up for hearing for a considerable period of time, when the petitioners requested the second respondent to keep the assessment proceedings in abeyance as they wanted to avail the benefit of the amnesty scheme, the respondent ought to have respected such request and afforded the petitioners sufficient time to avail the benefit of the amnesty scheme, however, on the contrary, the second respondent, in undue haste, has proceeded to pass an ex parte high pitched best judgment assessment order under section 34(8) of the GVAT Act.” In case of Safal Developers (supra) this Court has held as under: “10. On behalf of the respondents, it has been contended that in view of paragraph 7 of the Scheme, the petitioners are not entitled to the benefit of the Scheme as the amount of tax and interest has been paid prior to the Scheme having been brought into effect. As noticed earlier, paragraph 7 of the Scheme provides that the dealers shall be entitled to the benefit of the Scheme only after the payment of the taxes payable under the Scheme during the period of the Scheme. In the opinion of this court, the contention that in cases where the tax and interest have been paid prior to the coming into force of the Scheme, the Scheme would not be applicable, does not appear to be a true construction of the provisions of paragraph 7. Paragraph 7 only provides that the dealer, to be entitled to the benefit of the Scheme, shall have to have paid the taxes thereunder during the operation of the Scheme. The same does not in any manner preclude those dealers who have already paid the tax prior to the coming into force of the Scheme. 11. At this juncture, reference may also be made to paragraphs 10 and 13 of the Scheme, which give a clear indication of the intent of the Government while introducing the Scheme. Paragraph 10 of the Scheme provides that the benefit of the Scheme shall also be available to those cases where appeal proceedings are pending. However, the dealer who takes the benefit shall be required to withdraw the appeal to the extent of the transactions shown in paragraph 1(B) or shall be required to revise the appeal accordingly. Paragraph 13 provides that where in connection with transactions under paragraph 1(B), tax, interest and penalty has already been paid, then the dealer availing of the benefit of the Scheme shall under no circumstances be entitled to refund of the amount so paid. On a conjoint reading of paragraph 10 and paragraph 13 of the Scheme, it is evident that the intention is to grant benefit also to those dealers who have paid the tax and interest prior to coming into operation of the Scheme. The only condition is that in case where the tax, interest and penalty has already been paid, the dealer shall not be entitled to refund thereof. The only condition is that in case where the tax, interest and penalty has already been paid, the dealer shall not be entitled to refund thereof. The provisions of paragraph 7 of the Scheme have to be construed in consonance with the provisions of paragraph 10 and 13 thereof, which clearly indicate that all those dealers who have paid the taxes during the period of operation of the Scheme and prior thereto are brought within the ambit thereof. 12. Under the circumstances, the second ground raised by the respondents for denying the benefit of the Amnesty Scheme to the petitioners is also not in consonance with the provisions of the Scheme. The respondents are, therefore, not justified in denying the benefit of the Amnesty Scheme to the petitioners. The above view is fortified by the view taken by the Karnataka High Court in the above referred decisions. 13. Examining the case from another angle, if the interpretation put forth by the respondents were to be accepted, the same would result in a situation where dealers who have paid their taxes prior to the coming into force of the Scheme, would be denied the benefit thereof, whereas those dealers who have not paid the taxes would be granted the benefit of the Scheme, which would be clearly violative of the constitutional provisions as envisaged under Article 14 of the Constitution of India and would amount to putting a premium on non- payment of taxes whereby dealers who have not paid taxes steal a march over those dealers who have paid their taxes in time.” 15. It is also pertinent to note that against the order passed by this Court in case of Safal Developers (supra), the State preferred Special Leave Petition No. 19629 before Hon’ble Supreme Court by the State was also dismissed. Keeping in view the observation made by this Court in case of Safal Developers (supra) and considering the facts of the present case, we are of the opinion that respondents have committed error while rejecting the application under Amnesty Scheme as the petitioner has already paid amount of tax and interest prior to passing of the order of assessment and prior to the announcement of the Scheme. Therefore, reliance placed by the respondent authority on Clause 4.5 of read with Clause 8 of the Scheme would not be applicable as the petitioner is entitled to the waiver of interest and penalty under the Scheme on having paid the entire amount of tax considering the fact that the petitioner had challenged the assessment order comprising of tax, interest and penalty. The petitioner is therefore entitled to the waiver of the penalty as per the provisions of the Scheme accordingly. As the petitioner is not entitled to the Amnesty Scheme alternative prayer with regard to restoration of the second appeal before the Tribunal would not survive. 16. In view of foregoing reasons, the petitions stand allowed. Impugned Communication dated 11.03.2022 at Annexure-A as well as attachment order passed by the respondent-authorities are hereby quashed and set aside. The respondent No.3 is hereby directed to grant benefit of Amnesty Scheme to the petitioner. The respondents are further directed to refund amount recovered from the petitioner pursuant to the recovery proceedings with statutory interest within a period of 12 weeks from the date of receipt of copy of this order. Rule is made absolute to the aforesaid extent. No order as to costs.