The Bombay High Court has quashed the review order passed by the state tax joint commissioner under Maharashtra Settlement Act, 2022 (Settlement Act).
The bench of Justice M. S. Sonak and Justice Jitendra Jain has observed that in the absence of any order under Section 50 of the MVAT Act by the authorities under the Settlement Act, review orders passed by authorities under the Settlement Act conferring power upon itself powers under Section 50 of the MVAT Act is without jurisdiction and also there is no provision under the Settlement Act to adjust such refund for arriving at the amount to be considered for the settlement and, therefore, there cannot be any error in the settlement orders for the authorities to exercise review powers under Section 15 of the Settlement Act.
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Background
The Petitioner/assessee is in the business of manufacturing and sale of machineries and is registered under the MVAT Act. The Petitioner is regularly filing its MVAT returns which are subjected to scrutiny and assessment orders are passed by the Respondents exercising its powers under the MVAT Act which are also carried in appeal by the Petitioner.
The petitioner challenged the review orders passed by the Joint Commissioner of State Tax, Pune under Section 15 of the Maharashtra Settlement of Arrears of Taxes, Interest, Penalties or Late Fees Act, 2022 (Settlement Act) in which invoking provisions of Section 50 of the Maharashtra Value Added Tax Act, 2002 (MVAT Act), refund amount for financial year 2016-2017 is sought to be adjusted against the outstanding demand for the financial years 2013-2014, 2015-2016 and 2017-2018 and consequently seeks to review settlement orders passed under Section 13(1) of the Settlement Act.
Proceedings Under Section 13(3) Of The Settlement Act
The Deputy Commissioner of State Tax issued show cause notice under Section 13(3) of the Settlement Act for the financial years 2013-2014, 2015-2016 and 2017-2018 by which a rectification was sought of its settlement orders on the ground that after the settlement orders were passed it was noticed by Respondent No.2 that the Petitioner was entitled to a refund for the financial year 2016-2017 amounting to Rs.2,72,08,381 by virtue of appeal order dated 13th May 2022 for that year.
The show cause notice stated that the refund for financial year 2016-2017 was available for adjustment towards pending dues under the MVAT Act and therefore in the application for settlement, Petitioner should have adjusted refund against demand for the years 2013-2014, 2015-2016 and 2017-2018 for arriving at outstanding amount for settlement. In the show cause notices provisions of Section 50 of the MVAT Act were invoked.
As per these review orders, no amount was outstanding for the financial years 2013-2014, 2015-2016 and 2017-2018 for consideration under the Settlement Act. Pursuant to these orders, a communication was addressed by the Respondent No.2 to the Petitioner referring to the settlement proceedings and the review orders passed in those proceedings and it was proposed as to why refund for financial year 2016-2017 should not be adjusted against dues payable as per the office records.
Arguments
The petitioner contended that the orders are wholly without jurisdiction inasmuch as calculation of arrears made in the impugned orders is contrary to the provisions of the Settlement Act. There is no provision in the Settlement Act for calculating arrears of a particular year by adjustment of refund of the other years. As per the scheme of the Settlement Act and the orders passed accepting the settlement application, Petitioners have not challenged and/or withdrawn appeals for those years and they have lost a vital remedy which were proposed to be settled under the Settlement Act.
The petitioner contended that the Settlement Act is a self-contained code. On the date when the settlement orders were passed, there was no order under Section 50 of the MVAT Act for adjustment of refund nor the order is passed and therefore exercise done by the Respondents to recalculate the arrears/outstanding as per the Settlement Act by invoking provisions of Section 50 of the MVAT Act is without jurisdiction.
The department contended that the Petitioner has not disclosed in the application that they were eligible for refund for the financial year 2016-2017 and therefore the calculation made in the settlement application and accepted by Respondents in the settlement order contains an error which empower them to review the order under Section 15 of the Settlement Act.
Issue Raised
The issue raised was whether the Respondents were justified in exercising the review powers under Section 15 of the Settlement Act to review the settlement orders passed under Section 13(1) of the said Settlement Act and recalculating the amount of ‘arrears’ which were initially accepted by the Respondents while passing the settlement orders.
Conclusion
The court quashed the review orders passed under Section 15 of the Settlement Act for the years 2013-2014, 2015- 2016 and 2017-2018 and consequently impugned communication were also quashed and set aside.
The court directed the department to to refund sum of Rs.2,72,08,381/- being refund for the financial year 2016-2017 alongwith interest as per the Act and the said refund should be credited to the Petitioner’s account within four weeks from the date of uploading the order.
Case Details
Case Title: Andreas Stihl Private Limited Versus The Joint Commissioner of State Tax
Case No.: Writ Petition No. 15511 Of 2023
Date: 23/10/2024
Counsel For Petitioner: Anay Y. Banhatii
Counsel For Respondent: S. D. Vyas
