The Bombay High Court quashed review orders issued under Section 15 of the Maharashtra Settlement of Arrears of Taxes Act, 2022 (Settlement Act). The court held that the review orders adjusting a refund for FY 2016-17 against outstanding dues from earlier years under the Maharashtra Value Added Tax Act (MVAT) were without jurisdiction. The court ruled that the provisions of Section 50 of the MVAT Act, dealing with refund adjustments, could not be invoked in the review proceedings under the Settlement Act, particularly when no such adjustment order under Section 50 was in existence. The Court directed the authorities to refund Rs. 2.72 crores to the petitioner within four weeks.

1. Introduction of the Case

The petitioner, Andreas Stihl Private Limited, challenged the review orders issued by the Joint Commissioner of State Tax. These orders sought to adjust a refund of Rs. 2.72 crores (for FY 2016-17) against tax dues from FY 2013-14, FY 2015-16, and FY 2017-18 under the MVAT Act.

2. MVAT Proceedings and Refund Orders

For FY 2016-17, the petitioner was entitled to a refund of Rs. 2.72 crores under an appeal order dated 13 May 2022. Separately, settlement applications for earlier years (FY 2013-14, 2015-16, and 2017-18) were submitted under the Settlement Act, resulting in certain payments being made as per statutory orders.

3. Review Orders and Adjustment under MVAT

Subsequently, show-cause notices were issued by the tax authorities, proposing to adjust the refund from FY 2016-17 against the outstanding dues of earlier years, invoking Section 50 of the MVAT Act. The petitioner opposed this move, arguing that there was no existing order under Section 50 for such an adjustment.

4. Key Legal Questions

The Court identified the core issues as:

• Whether the Settlement Act allows authorities to invoke MVAT provisions for refund adjustments.
• Whether refund adjustments for one financial year can be applied to dues from previous years under the Settlement Act.

5. Analysis and Legal Interpretation

The Court held that the Settlement Act was a self-contained statute, and its provisions did not allow for importing powers under the MVAT Act. In particular, no order for adjustment under Section 50 of the MVAT Act had been passed at the time of settlement under the Settlement Act. Therefore, the review and adjustment of the refund were beyond the scope of the Settlement Act.

6. Judgment and Order

The Court quashed the review orders issued under Section 15 of the Settlement Act and directed the tax authorities to refund the amount of Rs. 2.72 crores to the petitioner, along with interest.

Relevant Acts and Sections Discussed:

1. Maharashtra Value Added Tax Act, 2002 (MVAT Act)

   • Section 50: Deals with the refund of excess tax payments and permits adjustments of refunds against outstanding dues, provided an order is passed for such adjustments.

2. Maharashtra Settlement of Arrears of Taxes, Interest, Penalties or Late Fees Act, 2022 (Settlement Act)

   • Section 13: Provides for the settlement of arrears through application and payment of specified amounts.
   • Section 15: Allows review of settlement orders if an error prejudicial to the revenue is found.
   • Section 50 (MVAT): Discussed in relation to refund adjustments but not applicable under the Settlement Act.

Ratio Decidendi:

The core legal principle established in this case is that the authorities under the Settlement Act cannot exercise powers granted under the MVAT Act, such as adjusting refunds, unless explicitly provided for within the Settlement Act. Each statute operates independently, and powers cannot be intermixed or assumed without proper legal basis.

Subjects:

• MVAT Act Refunds
• Settlement Act 2022
• Tax Law Review Powers
• Tax Refund Adjustments