The State Tax Officer vs. Abdul Salim
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W.A.No.29 of 2021 1 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS MONDAY, THE 11TH DAY OF JANUARY 2021 / 21TH POUSHA, 1942 WA.No.29 OF 2021 AGAINST THE JUDGMENT IN WP(C) 21533/2020(N) OF HIGH COURT OF KERALA APPELLANTS: 1 THE STATE TAX OFFICER STATE GOODS AND SERVICES TAX DEPARTMENT, KUNDARA, KOLLAM - 691001. 2 THE ASSISTANT COMMISSIONER STATE GOODS AND SERVICES TAX DEPARTMENT, KUNDARA, KOLLAM - 691 001. 3 THE TAHSILDAR (RR) TALUK OFFICE, KOLLAM - 691 001. 4 THE STATE OF KERALA REPRESENTED BY THE SECRETARY, REVENUE DEPARTMENT, THE SECRETARIAT, THIRUVANANTHAPURAM - 695 001. BY SPL.GOVERNMENT PLEADER C.E.UNNIKRISHNAN RESPONDENT: ABDUL SALIM,AGED 50 YEARS PROPRIETOR, M/S.VALIYA VEETTIL, INDUSTRIES, KIZHAVOOR, MUKHATHALA P.O., KOLLAM DISTRICT. OTHER PRESENT: SPL GP C E UNNIKRISHNAN FOR APPELLANT. ADV HARISANKAR V MENON FOR RESPONDENT THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 11.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.A.No.29 of 2021 2 JUDGMENT Dated this the 11th day of January 2021 S.V.Bhatti, J. Heard Spl.G.P. Sri C.E.Unnikrishnan and Adv.Harisankar V.Menon for parties.
Respondents in WP(C) No.21533 of 2020 are the appellants. The sole respondent herein, filed WP(C) No.21533 of 2020 for a direction to the first respondent/first appellant to pass orders on Ext.P5 by granting credit of the payment made by auction purchaser as per Ext.P3, on the application filed by the respondent for availing the benefit of amnesty extended by the Finance Act, 2020 to the individuals in arrears of revenue. The circumstances leading to the Writ Petition are not in dispute and are considered in detail by the learned Single Judge as well in the judgment under appeal. For brevity, we refer to such circumstances which have bearing on the disposal of the instant Writ Appeal.
The respondent is a Dealer and an Assessee under KVAT
W.A.No.29 of 2021 3 Act. The respondent, admittedly, fell in VA Tax arrears for the years 2009-2010 and 2010-2011 to Govt. The continued default of respondent resulted in initiation of recovery proceedings of tax arrears under the Kerala Revenue Recovery Act, 1968 (for short 'RR Act'). The appellants, therefore issued recovery notices in Ext.P1 dated 18.1.2013 and Ext.P2 notice dated 18.1.2013 under RR Act. The steps taken by the 3rd and 4th appellants for realising the tax arrears due from the respondent for the assessment years 2009-2010 and 2010-2011 did not fructify. In other words in the auction held by the 3rd and 4th appellants, for the sale of respondent's property, one Madanan participated to purchase the property and under Ext.P3 receipt dated 11.9.2014 paid Rs.5,73,750/- representing 15% of the bid amount. The auction purchaser committed default of complying with the other conditions of auction/sale resulting in forfeiture of earnest money of Rs.5,73,750/- paid by the auction purchaser/Madanan. Thus the recovery proceedings initiated in Exts.P1 and P2 were discontinued. As available from record, it is noted that further or fresh steps for sale of W.A.No.29 of 2021 4 attached property were not initiated by the appellants. The Finance Act, 2020 (for short 'Scheme') provided for amnesty scheme to the defaulters of revenue arrears including VAT arrears. The respondent applied for availing amnesty benefit under the Scheme vide Exts.P4 and P5. The respondent, through a few of the letters addressed to appellants 1 and 2, requested to credit the amount paid by Madanan (auction purchaser) towards 15% of the bid amount forfeited for the amount payable by respondent under the Scheme. Explained further, the respondent desires to have credit of 15% of Rs.5,73,750/- deposited by the auction purchaser/Madanan for the tax arrears payable by respondent and receive the balance amount payable by respondent for processing the application submitted in Ext.P5. The learned Single Judge, in the aforesaid circumstances, taken the view that the amount was forfeited to the Government, on account of default committed by auction purchaser and the forfeited amount ought to be credited to the liability of the petitioner. The Writ Petition was disposed of by directing the appellants to consider and pass orders on W.A.No.29 of 2021 5 Ext.P5 application of the respondent by granting credit of the forfeited amount of Rs.5,73,750/- to the amount payable by the respondent under the scheme. Hence the appeal.
Spl.Government Pleader C.E.Unnikrishnan contends that the writ prayer does not refer to a vested right or statutory right of respondent, still directions are issued to appellant. The proceedings initiated under the Revenue Recovery Act are independent. It is one thing to canvass that sale was completed and proceeds realised by sale of property; surplus sale consideration is available with the appellants and on the contrary in an aborted sale on account of breach of auction purchaser, EMD is forfeited to Govt. account. The respondent desires to avail the amnesty benefit provided under the Finance Act, 2020, must comply with the conditions of the scheme. The forfeited earnest amount under the Revenue Recovery Act cannot and could not be considered in law and fact as amount paid by respondent towards tax arrears. The respondent, because of the default committed by the auction purchaser cannot step into shoes of the auction purchaser and claim
W.A.No.29 of 2021 6 credit of the said amount for the amount payable by the respondent as a person in default of tax arrears for availing amnesty scheme. The auction purchaser alone has right to canvass forfeiture or otherwise of the earnest money deposit and the respondent is not entitled to claim credit of the forfeited amount.
Adv.Harishankar canvasses that the request of respondent is considered as per Section 10 of Finance Act, 2020 and the applicant under amnesty, no doubt, is required to pay 50% of the tax arrears or alternatively 40% as per Sec.10 of Finance Act, 2020. In the case on hand Rs. 5,73,750/- is forfeited in auction, the same represents tax arrears due from respondent. Therefore the liability of respondent has been proportionately reduced. By a combined reading of Section 42 and Section 60 of the Kerala Revenue Recovery Act, the respondent is entitled to claim credit of the amount deposited by the auction purchaser. He prays for dismissing the appeal.
We have taken not of the rival submissions and perused the record. The respondent fell in tax arrears for the assessment
W.A.No.29 of 2021 7 years 2009-2010 and 2010-2011. The appellants initiated recovery proceedings under the Revenue Recovery Act through Exts.P1 and P2 dated 18.1.2013. The sale proceedings could not be completed on account of auction purchaser's default in complying with the bid conditions. Appellant Nos.3 and 4 forfeited Rs.5,73,750/- deposited by the auction purchaser. By referring to the above circumstances, we are of the view that the recovery proceedings initiated under the Revenue Recovery Act are independent and not to be misunderstood for determining the tax arrears of respondent under amnesty scheme provided in Finance Act, 2020. Forfeiture entails the consequence of loosing the right; or renders oneself deprivation of a right of something in consequence of a breach of the condition by him or the like situations. Therefore, the default of auction purchaser resulted in forfeiture of 15% to Govt. account, and the auction is derived the right to claim the amount. Once the amount is forfeited by the Government, that amount is not to be continued or maintained as amount received on account of tax arrears of the respondent or sale surplus under Sec.42 of RR
W.A.No.29 of 2021 8 Act. Section 10 of Finance Act, 2020 is the self contained scheme, with a few conditions for performance by the defaulters. The respondent since, desires to avail the benefit, must pay the amount as per Section 10. Sections 42 and 60 of Revenue Recovery Act deal with surplus from sale proceeds to go to the defaulter, i.e. revenue defaulter and sale shall be free of all encumbrances. We are, from a plain reading of Secs.42 and 60 of the view that the benefit of these two sections cannot be extended to incomplete recovery proceedings under Revenue Recovery Act and reduce the amount payable under Sec.10 of Finance Act, 2020. We are at loss to discern the source of right of respondent for claiming credit of 15% to his account. The scheme operates as per its tenor and directing consideration of respondent's request to credit 15% to respondent's account amounts adding or deleting the criteria for availing the amnesty benefit. For the above reasons, we are of the view that the view taken by the judgment under appeal and the consequential direction to give credit to the respondent of the amount deposited by the auction purchaser are unsustainable.
W.A.No.29 of 2021 9
Accordingly set aside. The writ appeal is allowed. No order as to costs. S.V.BHATTI JUDGE BECHU KURIAN THOMAS JUDGE css/
Reproduced from the public record of the Kerala High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.