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TMI Blog2023 (8) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... authority under the amnesty scheme; B This Hon'ble Court may be pleased to issue a writ of certiorari or writ in the nature of certiorari or any other appropriate writ or order modifying assessment order dated 20.12.2020 in so far as tax paid by the Petitioners is adjusted against interest liability under the Vat Act and the tax paid may please be treated as adjusted against principal tax liability as per the assessment order; C This Hon'ble Court may be pleased to declare that the Petitioners do not have any further liability under the Vat Act for the year 2016-17 having paid the tax due as per original intimation given by the Respondents under the amnesty scheme" 3. Facts in brief are as under: 3.1 The petitioner No. 1, is a Co-operative Society Limited. Petitioner No. 2 is the Managing Director and authorized signatory of the first petitioner. The petitioners are engaged in the business of manufacture and sale of Sugar. 3.2 It is the case of the petitioners that while they have paid tax dues as per returns filed under the Gujarat Value Added Tax Act (for short "VAT Act"), insofar as the years 2015-16 and 2016-17 are concerned, the petitioners have subsequently realized t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s paid the amount. Despite this, the application under the scheme is partially rejected by passing an assessment order. In the assessment order, interest has been imposed on the tax declared by the petitioners under the amnesty scheme, and thereafter, the tax paid by the petitioners along with returns has been illegally adjusted against such interest. He would therefore submit that artificial short fall of tax payment has been created as a result of such illegal adjustment. 4.2 That the total tax liability declared by the petitioners in the application under the amnesty scheme was Rs. 4,65,09,169/-. Out of such tax, since an amount of Rs. 2,39,55,879/- was paid by the petitioners along with the returns, the amount of outstanding tax was Rs. 2,25,53,290/-. Hence, the amount of tax liability assessed in the assessment order and the amount of tax declared by the petitioners under the scheme was equal. The petitioners are, therefore, entitled to the complete waiver of interest and penalty. The impugned notice dated 30.10.2021, therefore, is contrary to the intention of the terms of the amnesty scheme. 4.3 Reading the scheme, including the preamble thereof it is submitted that the obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad claimed erroneous input tax credit of the purchase tax amount. Reliance was placed on a decision of the Constitution Bench of the Hon'ble Supreme Court in the case of J.K. Synthetics Ltd., Vs. Commercial Tax Officer, reported in 1994 (4) SCC 276. The judgement has been followed by this Court in the case of Brook Bond India Ltd Vs. State of Gujarat., reported in 1998 SCC Online Guj. 530. Mr. Sheth, learned counsel, would further submit that reliance placed by the respondents on the audit report is also misconceived. 4.7 Mr. Sheth, learned counsel, would submit that interest under Sec. 30(5) and 30(6) has to be waived under the amnesty scheme. 5. Ms. Shrunjal Shah, learned Assistant Government Pleader appearing for the respondent - State, would submit as under: 5.1 According to learned AGP, reading the scope of the scheme would indicate that the benefit of the scheme can only be taken on the additional amount disclosed under the scheme. Ms. Shah, learned AGP, would submit that as per Clause 4.1, only after the payment of complete tax demand, interest and penalty will be remitted. 5.2 Ms. Shah, learned AGP, would further submit that as per the provisions of the GVAT Act, the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT paid 23955879 VAT Payable 22553290 6.1 It is the case of the petitioners that of the total tax payable of Rs. 4,65,09,169/-, since an amount of Rs. 2,39,55,879/- was paid along with the returns, the outstanding tax was towards purchase tax of Rs. 2,25,53,290/-, i.e. Rs. 14,48,345 + Rs. 2,11,04,945/-. 6.2 Perusal of the intimation letter pursuant to the application made under the scheme also indicated the same figure i.e. of Rs. 2,25,53,290/-. The Assessment Order (page 59 of the paper book) also indicated that the tax payable was assessed at Rs. 4,65,09,169/- which was equal to the amount of tax declared by the petitioners in the application under the amnesty scheme. The amount of assessed tax which was outstanding, which figures match with the intimation letter, was the exact amount which was declared by the petitioners in an application under the scheme and the amount was paid during the time stipulated in the scheme. 6.3 In other words, if the three documents are compared i.e. the application for amnesty, the letter of intimation and the assessment order, there is no dispute to the extent that the outstanding tax demand for the purpose of which amnesty was sought was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The intention of the scheme has been explained by this Court in its judgement in the case of Sunflowers Developers (supra). Paragraphs 20 and 21 of the judgement, read 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. 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 thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty scheme and the petitioner paid the said amount, accordingly. 7.2.3 Now, it is the case of the Respondents that the petitioner was required to pay Rs. 5,39,787/-, but, he paid Rs. 5,37,686/-, i.e. Rs. 2000/- less, and therefore, he cannot be granted the benefit of the amnesty scheme. 7.3 At this stage, it would be relevant to refer to the observations made by the Division Bench of this Court in the case of 'SUNFLOWERS DEVELOPERS'(Supra), more particularly, in Paragraphs-20 and 21 thereof, which reads thus; 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. Various business associations in the State had made representations fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew 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 bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would strike at the very root of the amnesty scheme. What is evident is that out of the total tax liability of Rs. 4,65,09,169/-, the petitioners had paid an amount of Rs. 2,39,55,879/- along with the returns filed which was prior to filing of an application under the scheme. It was not a case where no tax at all was paid. Having found a bonafide short fall, the remaining tax was paid. In case where no payment of taxes are made by an assessee-dealer, he would take advantage of the scheme, and once on its having come into force, such a dealer would get remission of penalty and interest. By an interpretation put forward by the respondents, it cannot be the case where the petitioners are worse off because of the fact that part of the amount of tax has already been paid by the petitioners along with the returns prior to filing of the application under the amnesty scheme. As held by the Division Bench of this Court in Safal Developers (supra), that even if there was no express provision permitting adjustment of tax paid prior in point of time, such adjustment was required to be made. The decision of Safal Developers (supra), has also been relied upon by the Division Bench in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest, the amount so paid shall be first applied towards the amount of interest. In case of the petitioners, at the relevant time, there was no purchase tax due nor was it payable. Even as per the judgement of the Constitution Bench and in the case of J.K. Synthetics (supra), what is evident is that the expression "tax payable" must be understood in the context of the full amount of tax due. Paragraphs 13 and 16 to 17 of the decision, read as under: "13. Bhagwati, J. after referring to Sections 3, 7, 10, 11 and 11-B of the Act, points out that Section 7(2) speaks of "full amount of tax due on the basis of the return" and adds: (SCC pp. 586-87, para 6) "We must look at the return actually filed by the assessee in order to see what is the full amount of tax due on the basis of such return. It is not the assessed tax nor is it the tax due on tile basis of a return which ought to have been filed by the assessee but it is the tax due according to the return actually filed that is payable under sub-section(2) of Section 7. This provision is really in the nature of self-assessment and what it requires is that whatever be the amount of tax due on the basis of self-assessment must be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arging interest on delayed payments, etc. Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. (See Whitney v. IRC, CIT v. Mahaliram Ramjidas, India United Mills Ltd. v. Commissioner of Excess Profits Tax, Bombay and Gursahai Saigal v. CIT, Punjab). But it must also be realised that provision by which the authority is empowered to levy and collect interest, even if construed as forming part of the machinery provisions, is substantive law for the simple reason that in the absence of contract or usage interest can be levied under law and it cannot be recovered by way of damages for wrongful detention of the amount. Our attention was, however, drawn by Mr Sen to two cases. Even in those cases, CIT v. M. Chandra Sekharl and Central Provinces Manganese Ore Co. Ltd. V. CIT, all that the Court pointed out was that provision for charging interest was, it seems, introduced in order to compensate for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld equivalent to 'due'. Therefore, the conjoint reading of Sections 7(1), (2) and (2-A) and 11-B of the Act leaves no room for doubt that the expression 'tax payable' in Section 11-B can only mean the full amount of tax which becomes due under sub-sections (2) and (2-A) of the Act when assessed on the basis of the information regarding turnover and taxable turnover furnished or shown in the return. Therefore, so long as the assessee pays the tax which according to him is due on the basis of information supplied in the return filed by him, there would be no default on his part to meet his statutory obligation under Section 7 of the Act and, therefore, it would be difficult to hold that the 'tax payable' by him 'is not paid' to visit him with the liability to pay interest under clause (a) of Section 11 -B. It would be a different matter if the return is not approved by the authority but that is not the case here. It is difficult on the plain language of the section to hold that the law envisages the assessee to predicate the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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