Omkar Land Developers Vs Additional Commissioner Of Commercial Taxes (Karnataka High Court)
Conclusion: When once the assessee-appellant is granted benefit under Karasamadhana Scheme, 2021, the benefit granted cannot be taken away by initiating proceedings under Section 64 of KVAT Act, then introducing Karasamadhana Scheme, 2021 would be otiose and it would defeat the purpose for which Karasamadhana Scheme, 2021 was introduced.
Held: Assessee was issued a notice under Section 39 of the KVAT Act alleging wrongful claim of labour deductions without Books of Account and denial of TDS credit due to lack of acknowledgment. Assessee failed to respond or appear, and the Prescribed Authority confirmed the tax demand at 14.5% along with interest and penalty through an order. Assessee filed an appeal, and the First Appellate Authority partly allowed it accepting the claim of labour charges, ITC, and TDS credit after verifying the Books of Account. The remaining demand was confirmed, but assessee was permitted to opt for the Karasamadhana Scheme, 2021. Assessee applied under the Scheme, and by order, the waiver of interest and penalty was granted. The balance tax demand was also paid. Later, the Revisional Authority issued a notice under Section 64, claiming the appellate order was prejudicial to revenue. Assessee objected, stating that once benefits under the Scheme were granted, revision was not permissible. However, the Revisional Authority passed an order, setting aside the appellate order and restoring the original reassessment. Aggrieved, assessee filed the present appeal before the High Court. It was held that If the revisional authority was permitted to initiate proceedings under Section 64(1) of KVAT Act subsequent to granting benefit under Karasamadhana Scheme, 2021, the very purpose and object of introducing Karasamadhana Scheme, 2021 would be defeated. When the proceedings against the appellant-assessee for the period from April 2016 to March 2017 has culminated and attained finality under Karasamadhana Scheme, 2021 by passing order dated 28.12.2021, it is unreasonable and arbitrary to invoke revisional power under Section 64 of KVAT Act. When once the assessee-appellant is granted benefit under Karasamadhana Scheme, 2021, the benefit granted cannot be taken away by initiating proceedings under Section 64 of KVAT Act, then introducing Karasamadhana Scheme, 2021 would be otiose and it would defeat the purpose for which Karasamadhana Scheme, 2021 is introduced. To get waiver of arrears of interest and penalty, the assessee-appellant shall have to make payment of full arrears of taxes. When the assessee pays the entire tax arrears, seeking waiver of interest and penalty which is accepted, cannot be deprived by initiating proceedings under Section 64 of KVAT Act.
