Gei Engineering LTD.(Now Gei Hamon Industries LTD)) Represented By C.E. Fernandes vs. The Additional Commissioner

Held

The Court held that the 18% per annum interest, which was levied by the High Court's order dated 17.03.1992 and confirmed upon the dismissal of the writ petition and SLP, was not eligible for liquidation under the M.P. Bakaya Rashi Saral Samadhan Yojna, 2002. The reasoning was that this interest was imposed by a judicial order and not directly under the provisions of the M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976, which was the basis for the Samadhan Scheme. The Court found that the order dated 17.03.1992 had become final, and the amount of interest at 18% per annum could not be reduced or settled under the Samadhan Scheme. Furthermore, the Court noted that a similar writ petition (W.P. No. 5150-2002) filed by the petitioner concerning the assessment year 1994-95, where the cancellation of settlement was challenged, had already been dismissed on 07.07.2003, with a finding that the 18% interest rate was final and only the assessment for tax payment could be done. The Court found no grounds to interfere with the cancellation orders. The writ petitions were dismissed.

Facts

The petitioners, Birla Jute Industries Ltd. and GEI Engineering Ltd., challenged orders cancelling the acceptance of their settlement applications under the M.P. Bakaya Rashi Saral Samadhan Yojna, 2002. The dispute centers on the calculation of interest arrears. The petitioners had challenged the M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976, and an interim order directed payment of taxes along with 18% annual interest if the petition was dismissed. The petition was dismissed, leading to demand notices for tax and substantial interest. The Samadhan Scheme aimed to settle arrears outstanding as of April 1, 2001, for years ending up to March 31, 1997. The authorities cancelled the settlement acceptance, arguing that the 18% interest was based on a High Court interim order, not the Act itself, and thus not eligible for liquidation under the scheme. A previous writ petition by the petitioner challenging a similar cancellation for the assessment year 1994-95 was dismissed.

Key Issues

1. Whether the interest at the rate of 18% per annum, levied pursuant to an interim order of the High Court and subsequently confirmed upon dismissal of the writ petition, is eligible for liquidation under the M.P. Bakaya Rashi Saral Samadhan Yojna, 2002, given that it was not levied under the provisions of the M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976? Petitioner's arguments: The petitioner contended that all forms of tax, penalty, and interest were covered under the Samadhan Scheme, with no specific exclusion clause for interest levied by a court order. They argued that once a settlement certificate was issued, it could only be revoked for arithmetical errors, as per Rule 8 of the Scheme. They relied on Supreme Court judgments in National Bal Bhawan, Prem Chandra Agarwal, Kalabharti Advertising, State of Kerala v. M.K. Kunhikannan Nambiar, and Patel Narshi Thakershi. Revenue's arguments: The State argued that the 18% interest was levied based on the High Court's interim order and the ultimate dismissal of the writ petition, not directly under the Entry Tax Act or the Samadhan Scheme. Therefore, this specific interest amount could not be liquidated under the scheme. They also pointed out that a similar writ petition (W.P. No. 5150-2002) filed by the petitioner challenging the cancellation of settlement for the assessment year 1994-95 had already been dismissed by this Court.