Sanjeev Kumar Katta, S/O Late Shri Vishnu Kishore Katta vs. Union Of INDIA

Facts

The petitioner, Sanjeev Kumar Katta, filed a writ petition before the Rajasthan High Court. The petitioner sought an amendment to the writ petition, which was allowed. Subsequently, another application was filed seeking a direction to decide the amended writ petition in light of a Constitution Bench judgment of the Apex Court. The petitioner's prayer was for the refund of interest and penalty deposited. The respondents contended that the interest and penalty were deposited voluntarily, no appeal was filed, and the refund application was made after more than two years, based on a judgment to which the petitioner was not a party. The tax period is not specified. The authorities involved are the Union of India, State of Rajasthan, Chief Commissioner Central Taxes, and Joint Commissioner Circle-B, Zone Jaipur-I.

Held

The Court held that the Constitution Bench judgment of the Apex Court in Mineral Area Development Authority & Anr. vs. M/s Steel Authority of India & Anr. Etc. is a judgment in rem and applies to all taxpayers, including the petitioner. The Court found the respondents' objections unsustainable. Consequently, the petitioner's prayer for the refund of interest and penalty was allowed. The respondents were directed to refund the amount deposited, with the portion relating to penalty and interest to be released forthwith. The Court did not expressly leave any issue undecided. The ratio decidendi is that judgments in rem, such as the one by the Apex Court, are binding on all taxpayers, irrespective of whether they were parties to the original proceedings, and entitle them to relief granted therein, including the waiver of interest and penalty.

Key Issues

1. Whether the petitioner is entitled to a refund of interest and penalty deposited, in light of the Constitution Bench judgment of the Apex Court in Mineral Area Development Authority & Anr. vs. M/s Steel Authority of India & Anr. Etc. (Civil Appeal Nos.4056-4064 of 1999)? Petitioner's contention: The petitioner argued that the Apex Court's judgment is a judgment in rem and applies to all taxpayers, including the petitioner, entitling them to a refund of interest and penalty. The petitioner relied on the conclusion drawn by the Constitution Bench, specifically the waiver of interest and penalty for periods before July 25, 2024. Respondents' contention: The respondents argued that the interest and penalty were deposited voluntarily by the petitioner, no appeal was filed, and the refund application was made after more than two years, based on a judgment to which the petitioner was not a party. Therefore, the amount ought not to be refunded.