In a significant case, the Karnataka High Court quashed the recovery from the banker and directed the department to reconsider the application under the Karasamadhana Scheme.
M/s. GE T& D India Limited, the petitioner challenged the Endorsement dated 05.01.2019, a copy of which is produced in Annexure-A, whereby the respondent- Authority has rejected the application of the complainant seeking benefits under the Karasamadhana Scheme (‘the Scheme’).
The department passed the re-assessment order under Section 9(2) of the Central Sales Tax Act, 1956 (‘CST Act’), levying tax and interest of Rs.57,16,022/-. Pursuant to this, a demand notice was stated to have been raised. The petitioner filed an appeal under Section 62 of the Karnataka Value Added Tax Act, 2003 (‘KVAT Act’) before the Joint Commissioner of Commercial Taxes (Appeals) along with an application for stay and has complied with the requirement prescribed under Section 62(4) of KVAT Act on depositing 30% of the disputed amount.
During the pendency of the appeal, in light of the introduction of the “CST Karasamadhana Scheme 2018” by the order dated August 4, 2018, which provided for waiver of penalty and interest subject to payment of tax, the petitioner had opted for relief under the Scheme.
It was viewed that only after full recovery of arrears, the assessee has withdrawn the petition to obtain benefit under Karasamadhana Scheme and filed an application requesting for refund of the interest amount. The Authority in the impugned endorsement has rejected the application referring to the Circular No.1/2018-19 dated 13.08.2018 while relying on the contents of the Circular.
The bench of Justice S. Sunil Dutt Yadav has observed that if the application is rejected, it is needless to state that the petitioner cannot be placed in a position worse off, and the petitioner is entitled to the restoration of his appeal, which would be a logical course of action.
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