Initiating suo motu revision proceedings after granting benefits under a waiver scheme is impermissible, as it negates the scheme's efficacy, thus violating statutory protections.

ORDER :

M. NAGAPRASANNA, J.

Petitioners are before this Court calling in question the suo motu revisional proceedings initiated by the respondents- Authorities against the petitioners under the KARNATAKA VALUE ADDED TAX ACT , 2003, after an order of waiver has been passed under the Karasamadhana scheme. The issue in all these cases is common.

2. Heard Sri Sandeep Huilgol, learned counsel appearing for petitioners and Sri K Hema Kumar, learned Additional Government Advocate appearing for respondents, in all these cases.

3. Learned counsel for petitioners submits that the issue in the lis stands answered by the judgment rendered by the Division Bench in SALES TAX APPEAL (STA) No.8 of 2025 disposed on 18-06-2025. The Division Bench has held as follows:

“…. …. ….

9. Answer to the above point would be in the negative for the following reasons:

The facts are not in dispute. Reassessment proceedings were initiated against the assessee-appellant, by issuing notice under Section 39 of KVAT Act by the Prescribed Authority which culminated in order dated 15.03.2021, against which, the assessee-appellant filed an appeal which was partly allowed and for the remaining grounds which were not allowed by the First Appellate Authority, demand was raised along with interest and penalty. In the meanwhile, Karasamadhana Scheme, 2021 was introduced under notification dated 29.03.2021. The assessee-appellant filed application to avail the benefit under Karasamadhana Scheme, 2021 well within the time prescribed under the scheme. It is also to be noted that the time to avail benefits of scheme was extended further in view of lockdown due to COVID-19.

10. A dealer shall not be eligible to avail the benefits of Karasamadhana Scheme, 2021 in terms of clause 5.7 of the scheme. Clause 5.7 of Karasamadhana Scheme, 2021 reads as follows:

“5.7. The dealer shall not be eligible to avail the benefits of this Scheme in relation to an order giving rise to arrears of tax, penalty and interest where:-

(a) State has filed an appeal before the Karnataka Appellate Tribunal or the Central Sales Tax Appellate Authority; or

(b) State has filed an appeal or revision or any kind of application before the High Court or the Supreme Court; or

(c) any competent authority has initiated suomotu revision proceedings as on the date of this Government Order; or

(d) any rectification is made after 31.07.2021.

In terms of the above clause, a dealer, against whom any competent authority has initiated suo-motu revision proceedings as on the date of coming into force of Karasamadhana Scheme, 2021, such a dealer would not be eligible to avail benefits of the said Scheme.

11. In the case on hand, the assessee-appellant submitted application under Karasamadhana Scheme, 2021 to avail waiver of 100% arrears of interest and penalty well within the time i.e., 31.10.2021. The application submitted by assessee-appellant was accepted by order dated 28.12.2021 confirming the waiver of interest and penalty. However, notice under Section 64(1) of KVAT Act was issued subsequently on 16.02.2024. The above Clause 5.7 makes it clear that a dealer shall not be eligible to avail benefits of the Karasamadhana Scheme, 2021 if suo-motu revision proceedings has already been initiated by the time, the scheme was introduced. In the instant case, no suo-motu revision was pending against the assessee-appellant as on the date of notifying the Karasamadhana Scheme, 2021, but suo-motu revision was initiated much subsequent to accepting and passing order in favour of the assessee-appellant under Karasamadhana Scheme, 2021.

12. If the revisional authority is 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, 2