Tax Arrears | Lok Ayukta Can't Entertain Plea Against Rejection Of Application Opting For Amnesty Scheme: Kerala High Court

The Kerala High Court recently deliberated as to whether the Lok Ayukta could adjudicate upon the correctness of an order passed by the assessing authority rejecting the option for settling arrears of sales tax under the Amnesty Scheme, and answered the same in the negative. 

The Division Bench comprising Chief Justice S. Manikumar and Justice Murali Purushothaman observed,

"If orders passed by quasi-judicial functionaries exercising powers under a statute are for any reason untenable in law, resort must be had to the remedies under the statute and the complainants cannot bypass the procedure and approach the Lok Ayukta. The Lok Ayukta is a creation of the statute and has no inherent jurisdiction. It cannot assume any jurisdiction otherwise confirmed by the Lok Ayukta Act". 

The married couple who are the Directors of M/S. Welgate Video Private Limited, were the complainants before the Lok Ayukta. The Managing Director of the Company had submitted an option for payment of arrears of sales tax under the Amnesty Scheme, 2020, but the same was rejected by the Sales Tax Officer on the ground that the Tahsildar (RR) has collected and remitted an amount of Rs.1,23,71,421/- through auction. It was pointed out by the Sales Tax Officer that the complainants would not be entitled to opt for settling the arrears of sales tax under the Amnesty Scheme-2020, since the auction of another property was already under processing.

The Directors thus submitted the complaint challenging the said order before the Lok Ayukta, seeking a declaration that they are entitled to the benefit of the Amnesty Scheme-2020 and that the amount of Rs.1.33 crores obtained by way of auction sale of their properties is liable to be apportioned as per the Scheme, while the balance amount Revenue/Sales Tax authorities is liable to be remitted with the Union Bank of India towards their dues.

The Lok Ayukta held that the order of the Sales Tax officer rejecting the application of the complainants for the benefit of Amnesty Scheme is discriminatory, violating their fundamental right under Article 14 of the Indian Constitution. It added that the order rejecting the option of the complainants for settling the sales tax arrears under the Amnesty Scheme-2020 is illegal, and set aside the same, and went on to declare that the Sales Tax authorities concerned are bound to consider the option exercised by the complainants in the light of Amnesty Scheme-2020. It also asked the competent authority to consider the option under the Amnesty Scheme-2020 and to apportion the amount of Rs.1.33 crores within a period of two months from the date of receipt of the report of the Lok Ayukta.

It is challenging the same that the present petition was filed. 

It was contended by the Special Government Pleader Mohammed Rafiq and Government Pleader Resmitha R. Chandran on behalf of the petitioners that the revenue recovery proceedings had been legally initiated against the complainants, and that after recovering the amounts through the machinery available under the Kerala Revenue Recovery Act, 1968 ('Act, 1968'), they could not be granted the benefit of Amnesty Scheme-2020 for the same amount, since such payment cannot be considered as payment of outstanding arrears either fully or partially.

It was contended that the action of the petitioners could not be termed as 'maladministration' under the Lok Ayukta Act since the same could only apply to administrative functions and not judicial or quasi-judicial, nor could the impugned action be said to be a complaint involving a 'grievance' or an 'allegation' as defined under the Act. Additionally, it was submitted that Section 51 of the KGST Act bars proceedings against officers for any act done or purporting to be done under the Act in good faith and that the same had been overlooked by the Lok Ayukta while passing the order. 

On the other hand, it was contended by the respondents that the the application for option under the Amnesty Scheme-2020 was rejected by the Sales Tax officer arbitrarily and that the Lok Ayukta is vested with the jurisdiction to entertain the complaint when the action of the Revenue/Sales Tax authorities had resulted in injustice and hardship to the complainants. 

The Court in this case perused the definitions of 'grievance', 'allegation' and 'maladministration' as provided under the Lok Ayukta Act, and ascertained that the power exercised by the Sales Tax Officer in rejecting the application of the complainants opting for the Amnesty Scheme-2020 is a quasi judicial function. The Court observed that a hierarchy of remedies is provided against the said order under Chapter-VII of the KGST Act apart from the remedy available before the High Court under Article 226 of the Constitution in appropriate cases, and if the complainants are aggrieved by the order of the Sales Tax Officer rejecting the application opting for the Amnesty Scheme 2020, they ought to have invoked the said remedies. 

It is in this regard that the Court took note of the decisions in Sudha Devi K. v. District Collector, Thiruvananthapuram & Ors. (2017), and State of Kerala & Ors v. John Joseph & Anr. (2011) to emphasize that if orders passed by quasi-judicial functionaries exercising powers under a statute are found to be untenable in law, the remedies stipulated under the statute ought to be resorted to, and that the complainants cannot bypass the procedure and approach the Lok Ayukta. 

The Court found that in this case, the complaint did not reveal any allegation or grievance in consequence of maladministration.

"Therefore, Ext. P1 complaint, in our view, is not maintainable before the Lok Ayukta and the Lok Ayukta has no jurisdiction to decide the correctness of the order rejecting the option for settling the arrears under the Amnesty Scheme-2020. Accordingly, Ext.P3 report of the Lok Ayukta is set aside," the Court held while allowing the petition. 

The Court also clarified that through the present order, it has not adjudicated upon the correctness of the order of the assessing authority in rejecting the application opting for Amnesty Scheme- 2020, but only the jurisdiction of the Lok Ayukta in entertaining the complaint. 

The respondents were represented by Advocates D. Sajeev, ASP Kurup, Ligey Antony, Sadchith P. Kurup, and C.P. Anil Raj.

Case Title: The Additional Chief Secretary (Revenue) & Ors. v. Kerala Lok Ayukta & Ors. 

Citation: 2023 LiveLaw (Ker) 159 

Click Here To Read/Download The Judgment