IMPORTANT POINT
Payments made under the Amnesty Scheme are to be treated as deposits and not appropriated under Section 91 of the KVAT Act, allowing for potential refunds of excess payments.

JUDGMENT

Harisankar V. Menon, J.

[WP(C) Nos.17130/2017 and 22262/2020]

These two writ petitions essentially call into question the manner in which certain payments made by the petitioner are to be treated while considering the petitioner's application for Amnesty.

2. The petitioner, an assessee under the provisions of the Kerala Value Added Tax Act, 2003 (for short, KVAT ‘Act’) claims to be dealing in margarine. There were certain disputes with respect to the tax payable on the sale of margarine by the petitioner within the State of Kerala. While the petitioner took the stand that margarine was taxable only at the rate of 5%, the Department took the stand that the same is assessable at the higher rate of 12.5% /13.5% / 14.5%. Assessments were also finalized accordingly for the various assessment years at the higher rates as above. The assessments at the higher rate were questioned before this Court and the matter stood decided against the petitioner by Ext.P5 judgment produced in W.P(C) No.17130 of 2017. The said judgment stood confirmed by a Division Bench of this Court, on account of which, the petitioner filed Special Leave Petitions before the Apex Court. When coercive steps were taken for the realization of the dues, the petitioner sought for stay before the Apex Court by filing an appropriate application. By Ext.P7, the Apex Court ordered interim stay “on deposit of Rs.20 crores within 8 weeks’ time”. The petitioner remitted the amount of Rs.20 crores along with Ext.P8 covering letter, to the Assessing Authority. The Special Leave Petitions were finally dismissed by Ext.P9 judgment dated 30.09.2016. Though review petitions were filed before this Court, by Ext.P10 judgment dated 04.01.2017, the petitions were rejected on the ground of delay, refusing to condone the same.

3. The assessment for the year 2013-14 stood completed by Ext.P11, produced in W.P(C)No.17130/2017. Against this order, the petitioner preferred a statutory appeal under Section 55 of the KVAT Act before the Deputy Commissioner (Appeals) and voluntarily remitted 30% of the dispute, amounting to Rs.1,48,15,905/- as provided under Rule 72A of the KVAT Rules.

4. Later, when coercive proceedings were taken for the realization of arrears, the petitioner filed W.P(C) No.17130 of 2017 (captioned writ petition) and sought for stay of recovery proceedings, pointing out that the Government has come out with an amnesty Scheme for settlement of arrears. This Court, while admitting this writ petition on 24.05.2017, passed the following interim order:

“Admit. GP takes notice for R1 to R5. Notice by speed post to R6. Post on 3.7.2017.

There will be an interim stay as prayed for on condition that the petitioner pays an amount of Rs. 7,50,00,000/- to the respondent within one month. It is made clear that the said amount of Rs. 7,50,00,000/- shall be treated as a deposit with the respondent and appropriation of the same to any account shall not be made without getting further orders from this Court. The above arrangement is for the purposes of deciding whether the amount paid by the petitioner pursuant to the interim order can be adjusted towards any liability of the petitioner under the amnesty scheme which he proposes to avail.”

(underlining supplied)

The petitioner has remitted the above sum of Rs.7.5 crores in two installments on 20.07.2017 and 29.07.2017.

5. Thus, the following amounts have been remitted by the petitioner towards the arrears payable against various orders.

6. Later, when the Government came with a fresh Amnesty Scheme in 2017, the petitioner opted for the said benefits by presenting Ext.P27 application. In the above application, the petitioner specifica