P. R. Ramachandra Menon :-

The issue involved in this case is, whether the payments effected by the petitioner towards the arrears of tax liability, after the declaration of the proposed "Amnesty Scheme" with effect from April 1, 2010 in the "Budget Speech" 2010, with specific request to have it set off against the principal tax and surcharge, could have been unilaterally appropriated by the departmental authorities against "interest", placing reliance on section 55C of the Kerala General Sales Tax Act, 1963, contending that, as on the date of payment, the scheme had not actually come into force.

The petitioner - firm was in arrears of sales tax with regard to the year 1997-98 and the first respondent initiated recovery steps for realization of the dues, coming to a total of Rs. 3,82,015 including interest. In the meanwhile, the proposal for settlement of tax dues was announced in the Kerala budget speech, 2010, letting it known to all concerned that, similar benefit as announced in the 2008 Scheme, would be implemented with effect from April 1, 2010 till June 30, 2010, enabling the defaulters to clear the liability by availing of the benefit of the scheme. True copy of the relevant portion of the Budget Speech as above is produced as exhibit P1.

Immediately on coming to know about the declaration made by the Finance Minister in the budget speech, the petitioner volunteered to avail of the benefit of the said scheme, which in fact, was to be applied for and obtained after notification of the scheme with effect from April 1, 2010. A specific request was made before the second respondent, as borne by exhibit P2 dated March 20, 2010 (with reference to the contents of paragraph "205" of the budget speech, whereby the scheme was announced), requesting to keep the revenue recovery proceedings in abeyance till proper application is filed under the scheme and orders are passed by the assessing authority thereon. In token of willingness of the petitioner to pay the arrears under the Amnesty Scheme, a sum of Rs. 75,000 was also caused to be paid, which was requested to be adjusted against the sales tax and surcharge dues.

In the meanwhile, the scheme was declared and the petitioner filed necessary application for availing of the benefit under the scheme and this was sanctioned as per exhibit P3 dated May 28, 2010, whereby the petitioner was required to satisfy a total sum of Rs. 1,64,291 to settle the liability once and for all. On receipt of exhibit P3, the petitioner submitted a letter dated June 1, 2010, referring to the payment of Rs. 75,000 already made by the petitioner along with exhibit P2 and to have it set off/given credit to, while fixing the liability under the scheme. This was replied by the first respondent vide exhibit P4 dated June 2, 2010, stating that, as on the date of remittance of Rs. 75,000 on March 20, 2010, the Amnesty Scheme was not brought into force and that the application form for availing of the benefit under the scheme, having been filed by the petitioner only on May 9, 2010, the request could not be entertained and that the amount paid was adjusted towards "interest" under section 55C of the KGST Act, which course is subjected to challenge in this writ petition.

The respondents have filed a counter-affidavit seeking to justify the stand reflected in exhibit P4. It is stated that the entire dues of the petitioner were calculated as Rs. 3,62,251 including tax, surcharge and interest and it was notified for revenue recovery on January 14, 2010. The "Amnesty Scheme" introduced by section 23B of the KGST Act by the Kerala Finance Act, 2008 was not in force at that time. However, it is conceded that, the Finance Minister had announced the reintroduction of the "Amnesty Scheme" with effect from April 1, 2010 to June 30, 2010 in the Budget Speech and that the Kerala Finance Bill, 2010 also contained the provisions, by which the scheme was brought into force with effect from April 1, 2010. Since, filing of