Tata Hitachi Construction Machinery vs. State Of Karnataka

Learned AGA is directed to take notice for respondents/ Revenue.

Heard learned counsel for the petitioner and learned AGA for respondent Nos.1 to 6. 3. This petition is filed by the petitioner, which is a Private Limited Company for a writ of mandamus seeking for a direction that the petitioner be entitled to the benefit of Karasamadhan Scheme 2017 vide Annexure-A and to direct respondent Nos.3 and 4 to accept the applications filed by NC: 2024:KHC-D:9777 the petitioner and consequently, to quash all other orders vide Annexures- C1 to C5. 4. Sri.H.R.Kambiyavar, learned counsel for the petitioner contends that the petitioner being a Private Limited Company, is involved in manufacturing earth moving equipments such as hydraulic excavators, excavator loaders, wheel loaders, transit mixes, compactors, motor graders, cranes etc.,. It is registered under the provisions of the Karnataka VAT Act, 2003 as well as Central Sales Tax Act, 1956. 5. Respondent No.1 introduced a scheme known as Karasamadhan Scheme 2017, dated 31.3.2017. The scheme was formulated for waiver of penalty and interest under the Karnataka Sales Tax Act, 1957, Central Sales Tax Act, 1956, the Karnataka Value Added Tax, 2003, the Karnataka Tax on Luxuries Act, 1979, Karnataka Tax on professions, Trades, Callings and Employments Act, 1976, the Karnataka Income Tax Act, 1957, the Karnataka Entertainment Tax Act, 1958 and it was introduced in view of the proposed introduction of NC: 2024:KHC-D:9777 the Goods and services tax with an intent to reduce the arrears of tax and other amounts due.

The scheme primarily granted waiver of 90% of the arrears of penalty and 90% of the arrears of interest payable by the dealer upon payment of arrears of tax, which remained unpaid up to 15.03.2017 and payment of 10% of interest and 10% of penalty on or before 31.3.2017. The petitioner claims that it has made applications before various forums and it had paid the disputed tax, interest and penalty under protest.

It is contended by learned counsel for the petitioner that petitioner wanted to avail the benefit of the said scheme as regards certain pending appeals and applications, approached the respondents, who orally informed the petitioner that it would not be entitled to the benefit of the scheme as it had already remitted/paid the disputed tax, interest and penalty.

This being the state of affairs, the petitioner made five separate written applications to the juri ictional NC: 2024:KHC-D:9777 respondents giving details of the pending appeal and sought for confirmation from the respondents as to it’s eligibility to take the benefit under the scheme. Respondent Nos. 2 to 6 passed five separate orders/endorsements to the said applications made by the petitioner. It is these endorsements that the petitioner is questioning in this writ petition, wherein the respondents stated in the impugned orders that it is not eligible to take the benefit of the scheme. So there is an appeal provision before the Appellate Tribunal that it may be appealed. Being aggrieved by issuance of the endorsements at Annexures- C1 to C5, the petitioner is before this Court.

It is the vehement contention of learned counsel for the petitioner that the impugned endorsements issued by the respondents is discriminatory, arbitrary, unreasonable against the petitioner as the benefit of the scheme is not extended to the petitioner, who has paid the disputed tax, interest or penalty under protest and sought the same to be extended to him, whereas the respondent had extended the scheme to those, who have not paid any tax or who was in arrears of payment of tax, interest or penalty as on NC: 2024:KHC-D:9777

2017. Therefore, non-extending of the benefit of the scheme to the petitioner is absolutely arbitrary, discriminatory, unfair, unreasonable and hence, the same is bad in law.

Learned counsel further contends that object of the scheme was to provide benefits to goods and services tax regime. Therefore, it was the object of the Government to reduce the pending litigation by way of withdrawal of the appeals or applications and payment of the disputed tax. Under the circumstances, it is the contention raised by the learned counsel for the petitioner that non applicability or the providing the benefit of the scheme to the petitioner is discriminatory and violative of Article 14 of the Constitution of India and any amount that is paid in protest by the petitioner cannot deprive him of obtaining the benefit under the scheme. Accordingly, he seeks to allow his petition and grant benefit of the scheme to the petitioner.

Per Contra, learned AGA representing the respondents/revenue vehemently objects to the arguments put forth by learned counsel for the petitioner primarily NC: 2024:KHC-D:9777 contending that, this petition itself is not maintainable, it is misconceived and the same is liable to be dismissed.

It is contended by learned AGA that initially the petitioner had made a representation/application posing a question as to whether the petitioner is entitled for the benefit under the Karasamadan Scheme of 2017 and on the application made, a suitable reply has been given by the respondents to the petitioner, wherein it is held that the petitioner would not be entitled for the benefit of the scheme, unless it was in arrears or not paid the tax, interest or penalty as on the cut off date i.e. 15.03.2017. 13. Learned AGA also contends that object and intent of the scheme is not in dispute with regard to waive of 90% of the arrears of interest, tax or penalty in case assessee pays 100% of the tax and 10% of the total of penalty interest pending as on 15.03.2017. It is vehemently contended by learned AGA that in the case of petitioner, as on 15.3.2017, no tax, interest or penalty was due or pending and hence, the petitioner/company was not entitled to take the benefit of the scheme. He further contends that the NC: 2024:KHC-D:9777 petitioner has paid all the tax, interest or penalty much prior to 31.03.2017 or that is the date on which the scheme came into effect. Under these circumstances, it is contended that the respondents/authorities are perfectly justified in issuing the endorsement, which is questioned here and hence, there is no illegality, arbitrariness, perversity or un- constitutionality in the issuance of the endorsement by the respondents to the petitioner.

Learned counsel for the petitioner has relied on paragraph Nos.48 and 51 of the judgment in the case of M/s. WS Retail Services Private Limited V/s. The State of Karnataka, represented by it’s Finance Secretary in W.P.No.33176/2017 and connected matter, disposed of on 14.11.2017. 15. However, this judgment is of no application to the present case on hand. Whereas, learned AGA, relying on the very same judgment in the case of M/s. WS Retail Services Private Limited V/s. The State of Karnataka, represented by it’s Finance Secretary takes this Court to judgment of Hon’ble Apex Court judgment in the case of NC: 2024:KHC-D:9777 Union of India and others V/s. NITDIP Testile Processing private Limited and Another reported in (2012) 1 SCC 226. He relies upon paragraph 48 of the said judgment, which is also relied by the Co-ordinate Bench of this Court.

For the purpose of better understanding, paragraph No.39 of the judgment in the case of M/s. WS Retail Services Private Limited V/s. The State of Karnataka, represented by it’s Finance Secretary is extracted herein below:

In Union of India and Others vs. NITDIP Textile Processing Private Limited and Another[(2012) 1 SCC 226], the Hon’ble Apex Court also dealing with the same Scheme, namely ‘Kar Vivad Samadhan Scheme, 1998’ under Income Tax law, in paragraph-48 observed that ‘Kar Vivad Samadhan Scheme’ is a complete code in itself and the Courts must construe the provisions of the Scheme with reference to the language used therein. Paragraph-48 of the said judgment is quoted below for ready reference:- NC: 2024:KHC-D:9777 “48. The Kar Vivad Samadhan Scheme is a step towards the settlement of outstanding disputed tax liability. The Scheme is a complete code in itself and exhaustive of matter dealt with therein. Therefore, the courts must construe the provisions of the Scheme with reference to the language used therein and ascertain what their true scope is by applying the normal rule of construction. Keeping this principle in view, let us consider the reasoning of the High Court”.

Learned Addl. Government Advocate also takes me through the Kar Samadhan Scheme of 2017 dated 31.03.2017 wherein in the definition clause ‘arrears of tax’ is defined as under:

Now coming back to the present case on hand, admittedly the petitioner was not in arrears as on 15.03.2017, either with regard to payment of tax, interest or penalty. Under the circumstances, though the petitioner has made some protest and payment, he would not be entitled to the benefit of the scheme as it is in the interest of the dealers and the taxpayers. This scheme was floated to benefit them so that the payment of tax which has not been paid or kept in arrears or with penalty and interest could be availed of by those dealers if not paid within the said date, i.e., 15.03.2017 and for those persons or taxpayers who have paid prior to 31.03.2017, the present scheme would not be applicable. Under the circumstances, the learned Addl. Government Advocate contends that the petitioner having paid the entire amount and not being in arrears as on the date of 31.03.2017, or 15.03.2017, he will certainly not NC: 2024:KHC-D:9777 be entitled to the benefit of this Kar Samadhan Scheme 2017. Hence, the judgment of the co-ordinate Bench of this Court relied by the petitioner would not be beneficial to him.

Under the circumstances, having dealt with the facts of the issue, and there being no dispute with regard to the petitioner having paid the entire amount of tax, interest and penalty, within the period prescribed by the Scheme of 2017, he would not be entitled to the benefit of the scheme. Therefore, rightfully the respondents have issued the endorsement which is questioned herein.

It is also submitted by the learned Addl. Government Advocate that against the judgment passed by the co-ordinate Bench of this Court in WS Retail Services Private Limited, the State had preferred an appeal, which also came to be dismissed upholding the judgment of the single Judge. He also contends that unless there is arrears, the scheme would not be applicable nor the waiver would come into play. When there is no question of arrears or unpaid due, the question of waiver coming into play would not arise. NC: 2024:KHC-D:9777

In view of the above discussions, I pass the following: ORDER The petition being devoid of merits is dismissed. JUDGE