The Assistant Commissioner vs. M/S.Steel Exchange INDIA LTD.

Facts

The Assistant Commissioner, Special Circle 1, SGST Department, Ernakulam, and the Secretary, Taxes Department, filed a Review Petition against a judgment dated July 24, 2020, passed by the High Court of Kerala in WP(C) No. 14031 of 2020. In the original writ petition, M/s. Steel Exchange India Ltd. (the petitioner) sought directions for the appropriation of refund amounts due to them towards amounts payable under an Amnesty Scheme. The High Court had allowed the writ petition, directing the respondents to adjust the refund amounts against the petitioner's liability under the Amnesty Scheme and release the balance refund expeditiously. The review petitioners contended that the Amnesty Scheme did not permit such an adjustment and that the refund amounts became due only due to opting for the scheme.

Held

The High Court dismissed the Review Petition. It held that the review petitioners' contention that the petitioner became entitled to the refund only on account of opting for the Amnesty Scheme was fundamentally flawed. The Court reiterated that the petitioner's entitlement for refund was independent of the Amnesty Scheme and pertained to assessment years different from those covered by the scheme. The Amnesty Scheme's option merely reduced the petitioner's liability for the opted assessment years. The Court found no reason why the direction to set off amounts due from the petitioner under the Amnesty Scheme against amounts admittedly due to the petitioner by way of refund would contravene the Amnesty Scheme or the statutory scheme under the KVAT Act. Therefore, the original judgment allowing the adjustment was upheld.

Key Issues

1. Whether the Amnesty Scheme permits the adjustment of refund amounts due to an applicant against amounts payable by the applicant under the scheme, and if so, whether the High Court's direction in the impugned judgment to appropriate refund amounts towards Amnesty Scheme dues is legally sustainable? Petitioner's Arguments (Review Petitioners): The review petitioners argued that the Amnesty Scheme does not provide for any set-off of amounts due to the petitioner from amounts due from the petitioner. They further contended that, in this specific case, the refund amounts became due to the petitioner solely on account of his opting for the Amnesty Scheme. Respondent's Arguments (Original Petitioner): The original petitioner argued that the adjustment of refund amounts towards Amnesty Scheme dues was permissible and did not offend the scheme's language. They asserted their entitlement to the refund amounts, which were confirmed by departmental orders and against which no appeal was preferred by the department. They contended that adjusting these admitted refund amounts against their liability under the Amnesty Scheme was a practical and lawful method of payment.