TMI Blog2018 (10) TMI 1710X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel at the Bar. They submit that the present issue is with regard to the interpretation of provisions of the Karasamadhana Scheme, 2017, is covered by the decision of this court in the case of WS Retail Services Private Limited v. State of Karnataka [2018] 48 GSTR 51 (Karn) and in W. P. Nos. 33176 of 2017 and connected matters, decided on November 14, 2017. This court in the aforesaid case has held as under (pages 68 to 71 and 79 in 48 GSTR) : 23. In order to appreciate the rival contentions raised before this court, one has to understand the basic Scheme of levy of tax, interest and penalty itself under the taxing statutes. While the 'tax' as per the charging provisions of these enactments is a compulsory exaction of tax from the subjects, the levy of interest even though the necessary corollary of tax is a compensatory levy in nature, to compensate the State for the loss caused to it by the non-payment of the due tax for the period for which it remains unpaid and the third component, viz., 'penalty' which generally depends upon the presence of guilty animus or mens rea on the part of the taxpayer, is also consequential and depends upon the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposits' can be made by the Revenue Department. Until that is done, it remains the colourless deposit. 28. Since under the 'KSS 2017', the arrears of tax as well as the arrears of interest and penalty were to be determined in terms of the assessment order itself and remaining unpaid as on March 15, 2017, as required in clause 2.4 quoted above, while scrutinizing the appli cations as per clause 3.2 of the 'KSS 2017' itself, the assessing authority is not entitled to undertake fresh adjudication process of computing or adjusting the amounts deposited, in the manner he chose or applying the provisions of section 42(6) of the Act. 29. The provisions of section 42(6) of the Act, read in conjunction and on sequence with other sub-sections of section 42, upon a harmonious reading would reflect that normally assessee is expected to first square up its liability to pay the tax with the returns itself and thereafter upon passing of the assessment order and if the amount paid falls short of the aggregate amount of tax and other amount (penalty) and interest payable, such amount paid shall be first adjusted against interest. This sequence of payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt can adjust it against the interest and thereafter under the head 'penalty'. 32. Unless this sequence of adjustment or computation of arrears is followed, it will defeat the very purpose of this beneficial Scheme which was promulgated to provide for the quicker recovery of arrears of tax and the dealers giving up their right to challenge the very imposition by the withdrawal of their appeals. 33. As already stated above, unless the tax dues or the arrears of tax are first satisfied, the question of levying of interest and penalty itself may be without any foundation and therefore, the arrears of interest and penalty cannot be allowed to be first satisfied and adjusted out of the payments and deposits already made by the dealers and there after still requiring them to pay the arrears of tax as per the impugned assessment orders, without taking into account the payments already made. 34. The normal and ordinary sequence of levying of these three components of demand namely, the tax, interest and penalty should be followed in the beneficial piece of legislation like 'KSS 2017' in the present case. The provisions of section 42(6) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er cent. shall be granted to the petitioners-assessees under the said Scheme. The said exercise be completed within a period of three months from today. No order as to costs. 2. The aforesaid decision was upheld by the Division Bench decision of this court in the case of State of Karnataka v. WS Retail Services Private Limited [2019] 61 GSTR 102 (Karn) in W. A. No. 72 of 2018 and connected matters, decided on August 31, 2018, as held as under (pages 122 to 124 in 61 GSTR) : 26. It is clear that in view of the discussion supra, the payments made which are referred to by any nomenclature being made while preferring an appeal or as a prerequisite to consider the application for stay being statutorily mandated cannot be the subject-matter of appropriation till the adjudication process has reached a finality and such deposits could only be regarded as 'colourless deposits.' The finding of the learned single judge as regards the payments made pending adjudication being in the nature of 'colourless deposits' requires no interference. 27. The very Scheme as envisaged in its preamble provided for waiver of 90 per cent. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d offset from unpaid amount for calculation of arrears to be waived. Unlike in the case of Assistant Commissioner v. ACC Limited [2015] 78 VST 169 (Ker) where the deposits were no longer under dis pute 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., March 15, 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. 31. In the light of the above discussion, the order of the learned single judge (WS Retail Services Private Limited v. State of Karnataka [2018] ..... X X X X Extracts X X X X X X X X Extracts X X X X
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