The court established that the words 'arrears of tax' in the Amnesty Scheme do not include amounts subject to an appeal filed by the State and pending consideration, and the assessees are bound to comply strictly with the conditions of the scheme.

JUDGMENT :

Bechu Kurian Thomas, J.

The Amnesty Scheme 2020 (for short 'the Scheme') introduced by the Kerala Finance Act, 2020 (for short 'the Act') contemplates clearing of the arrears in its entirety for all assessment years. The issue that arises for consideration is whether under the said scheme, can an appeal filed by the Revenue, relating to one assessment year and pending consideration before Tribunal be included for settlement, if the assessee does not opt for that to be settled.

2. Appellant opted for the benefit of the Scheme for the assessment year 2014-15. Though appellant expressed its willingness to settle the entire arrears, as contemplated under the Scheme, for the assessment year 2014-15, the 1st respondent directed the appellant to settle the alleged arrears in respect of the assessment year 2012-13 also. Appellant expressed its disinterestedness to settle the alleged arrears for the assessment year 2012-13. The reason for the disinclination of the appellant to settle the alleged arrears for 2012-13 was due to the absence of any arrears for the year 2012-13. According to the appellant, all that remains for the assessment year 2012-13, is an appeal filed by the State, which is pending consideration.

3. Contending that the appeal filed by the State before the Appellate Tribunal does not constitute any 'arrears of tax' to be settled, the assessee approached this Court under Article 226. The learned Single Judge disposed of the writ petition by denying the main relief and after finding that the Scheme has to be read holistically and should not be rendered illusory to the rights conferred under the statute. It was further held that since an appeal filed by the State was pending consideration relating to the year 2012-13, the said year must also be included for settlement under the Scheme. Liberty was granted to the appellant to include the said assessment year also in the Scheme.

4. Aggrieved by the judgment of the learned Single Judge, this appeal is preferred. Appellant insists that since the first appeal preferred by it against the assessment order for the year 2012-13 was allowed, there are no arrears of tax other than for the year 2014-15. It is also contended that, though, against the order of the first Appellate Authority the State has preferred an appeal and the same is pending consideration, no tax for the assessment year 2012-13 can be included for settlement under the Scheme terming an amount as arrears of tax.

5. We have heard Adv.Santhosh P. Abraham on behalf of the appellant as well as Adv.Mohammed Rafiq, learned Senior Government Pleader on behalf of the respondents.

6. The Scheme introduced through section 10 of the Kerala Finance Act, 2020 is intended as a beneficial scheme for settlement of arrears of tax or other amounts due under the Kerala Value Added Tax Act, 2003 and under the Central Sales Tax Act, 1956. For easier reference section 10 of the Kerala Finance Act, 2020 dealing with the Scheme is extracted as below:

“10. Special provision for Reduction of arrears in certain cases.-(1) Notwithstanding anything contained in sub-section (1) of section 174 of the Kerala State Goods and Services Tax Act, 2017 (20 of 2017) and in the Kerala Value Added Tax Act, 2003 (hereinafter referred to as the former Act) or rules made thereunder or in any judgment, decree or order of any court, tribunal or appellate authority, any assessee who is in arrears of tax or any other amount due under the former Act or under the Central Sales Tax Act, 1956 (Central Act 74 of 1956) relating to the period up to and including 30th June, 2017, may opt for settling the arrears on payment of, -

(i) fifty per cent of the principal amount of the tax in arrears; or

(ii) forty per cent of the principal amount of the tax in arrears, if the amount is paid in lump sum within 30 days of receipt of intimation of the assessing authority referred to in sub-section (7) :

Provided that in case where the evidence, details and records pertaining to t