DILIP KUMAR AGARWAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY the Finance (No. 2) Act, 1998, the Government of India introduced a scheme for the settlement of direct and indirect tax disputes. The scheme is known as the Kar Vivad Samadhan Scheme, 1998, and applies only to tax dues that are in arrears. A person who wanted to take benefit of the scheme and to get the disputes settled in terms of the scheme was required to file a declaration after 1st Sept., 1998, but on or before 30th Dec., 1998. The declaration has to be made in the prescribed form and the taxpayer for the purpose of the scheme is known as the declarant. Under s. 90(1) of the Act the designated authority is required to determine the amount payable by the declarant in accordance with the provisions of the scheme within 60 days from the date of the declaration and to grant a certificate, in the prescribed form to the declarant setting forth the particulars of the tax arrear and the sum payable after such determination towards full and final settlement of tax arrears. Sub -s. (2) of S. 90 provides that the declarant shall pay the sum determined by the designated authority within 30 days of the passing of an order by the designated authority and intimate the fact of such payment to the designated authority and intimate the fact of such payment to the designated authority along with proof thereof and the designated authority shall thereupon issue the certificate to the declarant. Sub -s. (3) of S. 90 provides that every order passed under Sub -S. (1), determining the sum payable under this scheme, shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any proceedings.

(2.) IN accordance with the provisions of the scheme and the rules made thereunder, the present petitioner filed a declaration in respect of the arrears of his income -tax dues for the asst. yrs. 1982 -83, 1983 -84, 1984 -85 and 1995 -96. The declaration is stated to be filed on 28th Dec., 1998. The designated authority, i.e., the CIT, Allahabad, determined the amount payable by the petitioner in accordance with the provisions of the scheme and granted a certificate in terms of s. 90(1) in Form No. 2 -A. This determination was admittedly done on 25th Feb., 1999. The Kar Vivad Samadhan Scheme Rules, 1998, provide that the certificate in Sub -S. (1) of S. 90 of the scheme shall be in Form No. 2 -A setting forth therein the particulars of the tax arrears and the sum payable under the direct tax enactment after determination towards full and final settlement of tax arrears under that enactment. As stated above, Sub -S. (2) of S. 90 requires the declarant to pay the sum determined by the designated authority within 30 days of the passing of an order by the designated authority. In pursuance of the determination under S. 90(1), the designated authority, i.e., the CIT, issued a certificate to the petitioner stating that a sum of Rs. 99,353 has been determined as the amount payable towards the full and final settlement of the tax arrears covered by the said declaration. At the foot of the certificate it has been stated that "the declarant is hereby directed to make the payment of sum payable within thirty days from the date of this certificate" which is dt. 25th Feb., 1999. The petitioner's case is that this intimation was served upon the petitioner on 18th March, 1999, and he deposited the amount in terms of this certificate on 30th March, 1999, i.e. within about 12 days of the receipt of the intimation and yet the designated authority is not issuing to him the second certificate mentioned in Sub -S. (2) of S. 90 which has to be in Form No. 3 prescribed under r. 5 of the aforesaid Rules. The reason assigned by the designated authority for refusing to issue the said certificate for full and final settlement of the tax arrears is that the petitioner did not deposit the amount within 30 days of the passing of the order which was passed on 25th Feb., 1999. The petitioner is aggrieved by this denial of the certificate in Form No. 3 and has come to this Court in the present writ petition for quashing a letter dt. 22nd June, 1999, issued by the designated authority intimating the reason for denial of the certificate in Form No. 3. The petitioner's contention is that the petitioner availed of the benefit of a statutory scheme and made a valid declaration and paid the tax as required within the time prescribed, i.e., 30 days of the receipt of the intimation, and that the denial of the certificate is illegal. It is claimed that the law required the deposit to be made within 30 days and this period could not be curtailed by the designated authority by delay in the service of the order and the action of the designated authority is illegal. In the counter -affidavit reliance has been placed on the provisions of the scheme and it is stated that the petitioner was statutorily required to deposit the arrears of tax within 30 days of the date on which the determination was made and the certificate of intimation under S. 90(1) was signed by the designated authority. It is also stated that the intimation was served on the petitioner within time and he could have deposited the money within 30 days, i.e., by 25th March, 1999.

(3.) A perusal of the provisions of the scheme would show that s 90(1) contemplates a determination of the amount of tax dues payable by the declarant and an intimation of such determination in the form of the certificate. The certificate is to be contained in the case of direct taxes in Form No. 2 -A.Sub -s. (2) requires the declarant to pay the sum determined by the designated authority within 30days of the passing of an order by the designated authority. Thus, Sub -S. (2) contemplates an order to be passed by the designated authority subsequent to the determination under S. 90(1) and it is within 30 days of the passing of such order that the declarant has to pay the amount. The rules framed under the scheme and the forms prescribed, however, have combined the determination under S. 90(1) and the order for payment contemplated by Sub -S. (2) of S. 90, in one form, i.e., Form No. 2 -A which contains the details of the amount payable and at the foot thereof requires the declarant to make the payment of the sum payable within 30 days from the certificate. The question is whether this direction can be treated as a direction within the meaning of Sub -S. (2) of S. 90 and the question, however, is whether the words "passing of an order" mean the date on which the designated authority signs the certificate of intimation in Form No. 2 -A or for the purposes of Sub -S. (2) of S. 90, the words "passing of an order" mean communication or service of the order on the declarant. The period of 30 days has been statutorily granted to a declarant and it cannot be presumed that the legislature wanted that the designated authority should have the authority to curtail this period nominally or substantially or to frustrate the declaration by not intimating the determination under S. 90(1) within 30 days at all. When a declarant makes a valid declaration he acquires a statutory right of determination and to pay the amount determined within 30 days and this right cannot be frustrated in the manner advocated by the Revenue in the present case. The order contemplated in Sub -S. (2) is an order which requires compliance and the declarant has to pay the amount within 30 days of the passing of the order. Sec. 93 of the scheme provides that any amount paid in pursuance of a declaration made under s. 88 shall not be refundable under any situation. Therefore, if what the Revenue says is accepted the sum of Rs. 99,353 paid by the petitioner cannot be refunded to him and the scheme does not provide how the same will be dealt with.