Gujarat High Court: Benefit of Amnesty Scheme Cannot be Denied Merely Because of Short Payment of Tax

Gujarat High Court: Benefit of Amnesty Scheme Cannot be Denied Merely Because of Short Payment of Tax

The Gujarat High Court in the matter of Sky Industries Ltd. vs. State of Gujarat has held that merely because the petitioner inadvertently paid Rs.2000/- less towards the principal outstanding amount of tax, it cannot be denied the benefit of the Amnesty Scheme ‘Vera Samadhan Yojna, 2019.’

The factual background of the case was that the concerned authority issued a demand notice in 2011, requiring the petitioner to pay Rs. 5,39,787/- towards taxes. Subsequently, the State Government introduced the Amnesty Scheme in 2019, which stated that the assessee must pay the full principal amount of tax to have their liability for interest and penalties waived off.

The petitioner applied under the Amnesty Scheme but mistakenly mentioned the outstanding tax amount as Rs. 5,37,686/- instead of Rs. 5,39,787/- due to inadvertence. The petitioner raised a grievance that after paying an amount of Rs. 5,37,686/-, they were orally informed that they had paid Rs. 2,000/- less.

As a result, the impugned communication dated 6 October, 2022 was issued, stating that the petitioner’s application under the Amnesty Scheme had been disposed of due to the failure to make full payment of the principal amount of tax.

The division bench of Justices Vipul M. Pancholi and Devan M. Desai referred to the decision rendered in Sunflowers Developers vs. State of Gujarat (2019), and observed that the object of the amnesty scheme was to bring about expeditious and effective resolution of old disputes and recoveries of old outstanding dues of the Government and reduction of administrative costs.

Since such scheme was applicable to all pending cases, the officers acting under the relevant statutes were expected to respect the object of the scheme and to ensure that the assessees get the benefit under the scheme, opined the bench.

The Court observed, “Thus, from the observations made by the Division Bench of this Court, as referred to herein above, it can be said that the object of the amnesty scheme is to bring about expeditious and effective resolution of old disputes and recoveries of old outstanding dues of the Government and reduction of administrative costs. Since such scheme is applicable to all pending cases, the officers acting under the relevant statutes are expected to respect the object of the scheme and to ensure that the assessees get the benefit under the scheme.”

Therefore, the bench ruled that the petitioner should not be denied the benefit of the Amnesty Scheme solely due to inadvertently paying Rs. 2000/- less towards the principal outstanding amount of tax.

Consequently, the petition was allowed, and the court set aside and quashed the impugned communication. The respondents were directed to grant the benefit of the Amnesty Scheme to the petitioner as requested.