TMI Blog2008 (8) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... unication of this order.The petitioner shall be entitled to refund of 50% of the sales tax amount. The refundable amount may, however, be treated as advance tax and adjusted against future dues of the petitioner to the Excise Authorities. - W.P. No. 188 of 2002 - - - Dated:- 19-8-2008 - Indira Banerjee, J. Shri D. Pal, Sr. Advocate, Miss M. Seal, Malay Dhar, Advocates, for the Petitioner. Shri Swapan Datta, Advocate, for the Respondent. JUDGMENT The main issue in this writ petition is whether the Designated Authority under the Kar Vivad Samadhan Scheme, 1998, as contained in the Finance Act, 1998, can include contingent sales tax liability to the State Government, in computing tax arrears in relation to an indirect tax enactment, as defined in Section 87(j) of the Finance Act, 1998. 2. The petitioner, a company incorporated under the Indian Companies Act, 1913, and an existing company within the meaning of the Companies Act, 1956 carries on business inter alia of manufacture of electrical goods including electric lamps. 3. The goods manufactured by the petitioner being excisable goods under the Central Excise Act, 1944, an L-4 licence was issued to the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scheme, as explained by the Finance Minister in his speech, is extracted hereinbelow for convenience : Litigation has been the bane of both direct and indirect taxes. A lot to energy of the Revenue Department is being frittered in pursuing large number of litigations pending at different levels for long periods of time. Considerable revenue also gets locked up in such disputes. Declogging the system will not only incentivise honest taxpayers, enable Government to realize its reasonable dues much earlier but coupled with administrative measures, would also make the system more user-friendly. I, therefore, propose to introduce a new Scheme called Samadhan. 14. The scheme gave assessees locked in litigation the opportunity of settling disputes at a discount. The scheme provided that any tax arrear, whether under a direct or an indirect tax enactment, specified in the scheme, could be settled by declaring the arrears and paying the amount prescribed in the scheme. 15. Some of the relevant provisions of the Kar Vivad Samadhan Scheme, 1998 as contained in Chapter IV of Finance Act, 1998 (Sections 86 to 98) are set out hereinbelow for convenience : 87. In this Scheme, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or before the date of making a declaration by him under section 88 which includes any deposit made by him pending any appeal or in pursuance of a court order in relation to such duties, cesses, interest, fine or penalty, such payment shall not be deemed to be the amount unpaid for the purposes of determining tax arrear under this sub-clause; 88. Subject to the provisions of this Scheme, where any person makes, on or after 1st day of September, 1998 but on or before the 31st day of December, 1998, a declaration to the designated authority in accordance with the provisions of section 89 in respect of tax arrear, then, notwithstanding anything contained in any direct tax enactment or indirect tax enactment or any other provision of any law for the time being in force, the amount payable under this Scheme by the declarant shall be determined at the rates specified hereunder, namely :- (a) ......... (b) ......... (c) ......... (d) ........ (e) ........ (f) where the tax arrear is payable under the indirect tax enactment (i) in a case where the tax arrear comprises fine, penalty or interest but does not include duties (including drawback ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise to the tax arrear before any authority or Tribunal or Court, then, notwithstanding anything contained in any other provisions of any law for the time being in force, such appeal or reference or reply shall be deemed to have been withdrawn on the day on which the order referred to in sub-section (2) is passed : Provided that where the declarant has filed a writ petition or appeal or reference before any High Court or the Supreme Court against any order in respect of the tax arrear, the declarant shall file an application before such High Court or the Supreme Court for withdrawing such writ petition, appeal or reference and after withdrawal of such writ petition, appeal or reference with the leave of the Court, furnish proof of such withdrawal along with the intimation referred to in sub-section (2). 91. The designated authority shall, subject to the conditions provided in section 90, grant immunity from instituting any proceeding for prosecution for any offence under any direct tax enactment or indirect tax enactment, or from the imposition of penalty under any of such enactments, in respect of matters covered in the declaration under section 88. 93. Any amount paid in pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x liability to the disputed tax arrears disclosed by the petitioner and claimed 50% of the enhanced amount. The amount claimed was Rs. 9,82,40,482/-. 23. The Kar Vivad Samadhan Scheme provides for settlement of disputes, with regard to taxes, duties and/or levies under the enactments specified in Section 88 read with Sections 87(j) and 87(l) of the Finance Act, 1998 and the Schedule to the Scheme. The Scheme does not cover any sales tax enactments, as argued by Dr. Pal appearing on behalf of the petitioner. 24. Under the Kar Vivad Samadhan Scheme, the petitioner was entitled to settle tax arrears, that is, the amount of all duties, cesses, interest, fine or penalty determined as due and payable on 31st March, 1998 under any indirect tax enactment covered by the said Scheme, but remaining unpaid as on the date of making the declaration under Section 88 of the Finance Act, or the amount of all duties, cesses, interest, fine or penalty which constituted the subject matter of a demand notice or a show cause notice issued before 31st March, 1998 under any indirect tax enactment covered by the said Scheme, but remaining unpaid on the date of the declaration under Section 88 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the purview of the said Kar Vivad Samadhan Scheme, 1998. Since there is no designated authority as submitted by Mr. Roychowdhury appearing for the respondent, it would be proper for me to direct the Commissioner of Central Excise, Calcutta -1; who at that point of time acted as the designated authority to give a hearing to the petitioner and to pass a reasoned order within six weeks from the date of communication of this order and shall communicate his order to the petitioner within fortnight thereafter. 28. Pursuant to the aforesaid order, the petitioner made a representation dated 17th August, 2001, to the Commissioner of Central Excise. The aforesaid representation was followed by another representation dated 3rd October, 2001. 29. By an order No. CC/Kol-1/No-40/2001 dated 10th October, 2001, which is impugned in this writ application, the Commissioner of Central Excise rejected the claim of the petitioner for refund of Rs.50,20,207. The reasoning as contained in the order impugned is extracted hereinbelow : Further when the sale price of related person is basis, the excise duty and sales tax, as per Section 4(4)(d)(ii) are to be excluded from the gross sale p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit even after getting greater benefit. I would further like to mention that the benefit of sales tax which is claimed by the said assessee is not permissible under law as discussed supra and at the same time the amount Rs. 50, 20, 207/- on the sales tax account neither paid by them nor at the time of hearing they could produce any documentary evidence for such payment towards Sales Tax. Moreover, under Section 90(3) of the Finance (No. 2) Act 1998 (KVSS 1998) provides that Every Order passed under sub-section (1) determining the sum payable under the scheme shall be conclusive as to the matters stated therein and no matter covered by such order shall be re-opened in any other proceedings. Further, I would like to mention that in the Finance (No. 2) Act 1998 (KVSS 1998) there is no provision to refund any amount which has been settled under the said Act. Every particular case should be dealt under the provisions of the said particular Act only, as there is no provisions in the said Act for refunding any amount, being the creature of statute, the Commissioner of Central Excise can not act beyond the provision of statute. 30. It is a matter of record that the Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utes the subject matter of a demand notice or a show cause notice issued on or before 31st March, 1998 and remaining unpaid on the date of declaration under Section 88. 37. The Kar Vivad Samadhan Scheme might be open to criticism, for giving an advantage to those who had withheld payment of taxes, over those who had cleared taxes under protest, subject to the outcome of their litigation. The Scheme has perhaps enabled numerous, dishonest assessees to avoid arrears of taxes running into lakhs and crores. 38. Be that as it may, the Kar Vivad Samadhan Scheme had been framed by legislative enactment. The designated authority had no power or authority or jurisdiction to modify the Kar Vivad Samadhan Scheme. 39. As on 31st March, 1998, there was no determination of liability, demand or show cause in respect of Rs. 1,40,00,450/-added to the Certificate in addition to the amount declared by the petitioner. Furthermore, under the Kar Vivad Samadhan Scheme, there could be no question of settlement of any sales tax arrears. 40. Section 90(3) of the Finance Act, 1998, provides that every order of the designated authority under sub-section (1), determining the sum payable under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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