Authorities Under Settlement Act Cannot Pass Review Orders In Absence Of Order U/S. 50 Of MVAT Act: Bombay HC

The Bombay High Court held that the authorities under the Maharashtra Settlement of Arrears of Taxes, Interest, Penalties or Late Fees Act, 2022 (Settlement Act) cannot pass review orders in the absence of an order under Section 50 Of the Maharashtra Value Added Tax Act, 2002 (MVAT Act).

The Court held thus in a writ petition seeking to challenge review orders passed by the Joint Commissioner of State Tax, Pune under Section 15 of the Settlement Act.

A Division Bench comprising Justice M.S. Sonak and Justice Jitendra Jain observed, “In the absence of any order under Section 50 of the MVAT Act by the authorities under the said 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.”

The Bench emphasised that the calculation of arrears and the amount payable under the Settlement Act must be strictly in accordance with the scheme of the said Act.

Advocate Anay Y. Banhatti appeared for the petitioner while Additional GP S.D. Vyas appeared for the respondents.

Brief Facts -

The petitioner company was engaged in the business of manufacturing and sale of machineries and was registered under the MVAT Act. It was regularly filing its MVAT returns which were subjected to scrutiny and the assessment orders were passed by the respondents exercising powers under the MVAT Act which were also carried in appeal by the petitioner. For the financial year 2013-2014, an appeal order was passed by the Appellate Authority under the MVAT Act and pursuant thereto tax amount of Rs. 1,01,51,134/- was payable by the petitioner.

In 2022, an assessment order for the financial year 2017-2018 was passed by the respondents under the MVAT Act and a demand of Rs. 30,40,559/- was raised against the petitioner. Meanwhile, the Settlement Act was passed for settlement of arrears of tax, interest, penalty, or late fee which were levied, payable or imposed under various Acts administered by the State.

The High Court in view of the above facts, noted, “In our view and on a reading of Section 50 of the MVAT Act, it provides that there has to be an order granting refund either by cash payment or by deduction of such refund against the demand for any other period and such order is required to be passed by the Commissioner appointed under the said MVAT Act. In the instant case, there is no such order. Section 50 of the MVAT Act has to be read along with Rule 60 of the MVAT Rules.”

The Court added that, unless an assessee desires for adjustment of refund of one year against demand of another year, the Commissioner cannot, under Section 50 of MVAT Act adjust the same on its own volition and even if he proposes to do so he has to do so by giving an opportunity of hearing.

“Therefore, in our view in absence of any order under Section 50 read with Rule 60 of the MVAT Rules, the impugned action of the Respondents to adjust refund by resorting to the provisions of the Settlement Act is wholly without jurisdiction”, it further said.

The Court elucidated that, unless proceedings initiated under one section are concluded by passing an order one way or the other, on the same ground initiation of proceedings under another provision would be bad-in-law.

“… if on the day when the application was made and the order of settlement was passed, there was no order adjusting the refund then we fail to understand how can there be an error in the settlement order. For an error in the settlement order, in the facts of our case, there should have been any existence of order under Section 50 of the MVAT Act on the date of application by which the refund for the year 2016- 2017 was adjusted against the demand for the years 2013-2014, 2015- 2016 and 2017-2018”, it also noted.

Accordingly, the High Court disposed of the petition, quashed the impugned review orders, and directed the respondents to refund the amount within four weeks.

Cause Title- Andreas Stihl Private Limited v. The Joint Commissioner of State Tax & Ors. (Neutral Citation: 2024:BHC-AS:42242-DB)

Appearance:

Petitioner: Advocates Anay Y. Banhatti, Asmita Gupta, and Siddhant Chhabra.

Respondents: Addl G.P. S. D. Vyas and AGP Vrishali Raje.

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