Kar Vivad Samadhan Scheme, 1998 — What is conclusive is the order passed U/ss.(1) of S. 90 of the Scheme determining the sum payable under the Scheme and the terms ‘direct tax enactment’ or ‘indirect tax enactment’ or ‘any other law for the time being in

[ Master Cables P. Ltd. v. State of Kerala and
Anr., (2008) 296 ITR 8 (SC)]

The appellant was engaged in the business of manufacture and
sale of insulated electrical cable. It was registered under the Kerala General
Sales Tax Act, 1963 (for short, ‘the Act’). Assessment proceedings in respect of
the A.Ys. 1995-96 and 1996-97 were completed relying upon or on the basis of the
books of account maintained by it. An inspection, however, was carried out in
the premises of the appellant. A certain amount of unaccounted production and
sale of goods was found. The appellant admittedly took recourse to the
provisions of the Kar Vivad Samadhan Scheme. Declaration made by it thereunder
was accepted. By an order dated January 14, 2003, the earlier assessment order
was set aside. The appellant filed an appeal before the Kerala Sales Tax
Appellate Tribunal. The matter was remitted to the Deputy Commissioner for its
re-examination. By an order dated May 20, 2003, the assessment in respect of the
A.Y. 1996-97 was set aside. The said authority directed reassessment for the
year 1995-96 by an order dated November 7, 2003. Questioning the said orders,
appeals were filed by the appellant before the Tribunal, which by reason of a
common judgment dated December 21, 2005, were dismissed. Two sales tax revisions
were filed thereagainst before the High Court, which by reason of the impugned
judgment had been dismissed. Before the Supreme Court it was contended by the
appellant that having regard to the provisions of Ss.(3) of S. 90 of the Scheme,
the term ‘any other law for the time being in force’ must be given a wide
meaning, so as to cover not only the direct tax or indirect tax envisaged
thereunder, but also the sales tax laws of the State in the light of the
provisions of clause (3) of Article 286 of the Constitution of India and
sub-clauses (c) and (d) of clause (29A) of Article 366 thereof. After
considering the provision of S. 90(3) and S. 91 of the Kar Vivad Samadhan
Scheme, the Supreme Court held that what is conclusive is the order passed U/ss.(1)
of S. 90 of the Scheme determining the sum payable under the Scheme. The terms
‘direct tax enactment’ or ‘indirect tax enactment’ or ‘any other law for the
time being in force’ refer only to those statutes under which the order had been
passed. Immunity is in respect of institution of any proceeding for prosecution
of any offence under direct tax enactment or indirect tax enactment or from
imposition of penalty under any of such enactments. The terms ‘direct tax
enactment’ and ‘indirect tax enactment’ have been defined u/s.87(h) and 87(j) of
the Scheme. Admittedly, the case of the appellant did not come within the
purview thereof. The amplitude of the provisions of the Scheme having been
extended only to the enactments made by Parliament, having regard to the
constitutional scheme contained in Article 246 of Constitution of India, the
same cannot be extended to assessment of sales tax under a State legislation.
The legislative field to enact a law relating to sales tax is within the
exclusive domain of a State Legislature in terms of entry 54, List II of the
Seventh Schedule to the Constitution of India. The Supreme Court held that once
it is found that a statutory authority had the jurisdiction to reopen a
proceeding or set aside the order of the assessing authority, only the higher
authorities can interfere therewith. Only because the appellant had taken
recourse to the Scheme, the same would not attract either Ss.(3) of S. 90 of the
Scheme or S. 91 thereof, so as to cover a subject which is within an exclusive
domain of the State Legislature. The appeal was therefore dismissed.