SC Upholds Rajasthan High Court’s Differential KVSS Refund Treatment

Hindustan Zinc Ltd. Vs CIT (Supreme Court of India)

Summary: The Supreme Court dismissed Hindustan Zinc Ltd.’s Special Leave Petition and declined to interfere with the Rajasthan High Court order concerning refund claims arising after settlements under the Kar Vivad Samadhan Scheme, 1998 (KVSS). The High Court had decided two connected Revenue appeals arising from a common ITAT order but reached different conclusions for AY 1993-94 and AY 1995-96 because the respective KVSS certificates covered materially different demands. For AY 1993-94, the certificate dated 02.02.1999 showed an outstanding demand of Rs.20,30,04,511/- entirely towards interest, against which Rs.10,15,02,255/- was paid. Subsequently, while giving effect to the ITAT orders relating to AY 1992-93, the Assessing Officer, by order dated 30.12.2002, determined a brought-forward loss of Rs.5,53,13,531/- available for set-off against AY 1993-94 income.

The High Court held that the right to consequential refund crystallised only through that later order and could not have been covered by the antecedent KVSS declaration and certificate. As no outstanding income-tax demand was covered by the AY 1993-94 certificate, the High Court agreed with the ITAT that the assessee’s right to set-off and refund could not be denied merely because KVSS had been availed in relation to interest. Revenue’s D.B. ITA No.96/2008 was accordingly dismissed. For AY 1995-96, however, the certificate dated 03.02.1999 recorded total outstanding demand of Rs.50,30,76,207/-, including income tax of Rs.22,13,44,799/-, interest of Rs.23,94,46,911/- and further interest of Rs.4,22,84,497/-.