Delay Caused By Portal Glitch Cannot Defeat Amnesty Benefit: Gujarat High Court Quashes Rejection Under GVAT Scheme In Tax Settlement Dispute
Isabella Mariam
The High Court of Gujarat Division Bench of Justice Bhargav D. Karia and Justice Pranav Trivedi held that a dealer was entitled to benefit under the Amnesty Scheme of the Gujarat Value Added Tax Act, 2003, after being unable to make full payment due to an automatic re-adjustment of instalments on the tax portal. The Court set aside the rejection of the application, noting that the shortfall arose solely from technical glitches that prevented timely payment of the differential amount. Observing the applicant’s clear intention to comply with the Scheme, the Bench directed that the two-day delay in depositing the final amount be condoned and that the authorities extend the settlement benefit accordingly.
The matter concerned a challenge to an order issued by the Sales Tax Officer, Ghatak-2, Rajkot, rejecting an application filed under the “Vera Samadhan Yojna,” a tax amnesty mechanism under the Gujarat Value Added Tax Act, 2003. The petitioner, a company registered under the Act, had applied under the scheme for Assessment Year 2015–16 and was required to deposit ₹12,50,258 on or before 31 August 2021. It paid the first five instalments of ₹1,25,025.80 each. Subsequently, the online portal automatically readjusted the instalment amount to ₹1,02,293.84 from the sixth instalment onward, resulting in a shortfall of ₹34,102 as of the final date.
The petitioner attempted to clear the remaining amount between 29 August and 31 August 2021 through the e-payment system. The portal indicated that payments through the general e-payment option would not reconcile with the amnesty scheme. The petitioner produced screenshots indicating technical difficulties. It approached the respondent for assistance before the deadline but no workable solution was provided. On 2 September 2021, the petitioner deposited ₹40,500 and informed the authority, followed by a written request dated 2 October 2021 seeking acceptance of the payment.
By communication dated 7 October 2021, the respondent rejected the application due to a two-day delay in the final payment and also froze the petitioner’s bank account by creating a lien for VAT dues. A subsequent order dated 26 July 2022 reiterated the rejection.
Before the Court, the petitioner contended that the delay was caused solely by technical issues on the department’s portal and that substantial compliance had been achieved. It relied on the regularity of prior instalments and the bona fide efforts made before the deadline. The State’s counsel did not dispute that the instalments had been timely paid and acknowledged the possibility of technical difficulties. The Court considered the facts, supporting material, and prior decisions on similar issues while evaluating the petitioner’s entitlement under the scheme.
The Court recorded that “it is an admitted position that the petitioner has paid the first five installments within time limit.” It noted that the petitioner was on the verge of completing the final payment but “due to some technical issue on the online Portal, the petitioner was not able to make payment of differential amount of Rs.34,102/-.” The Court further recorded that the petitioner had already paid a substantial portion of the amount and was attempting to deposit only the balance, stating that “Even attempts were made by the petitioner to pay the differential amount which was short on record.” The delay was linked directly to platform-related obstacles, as “It was only due to technical glitches of the online portal, the amount was paid after delay of 2 days.”
The Court noted the petitioner’s consistent intention to comply, observing that “There was a clear and unequivocal intention of the petitioner to avail the Scheme and this fact is not disputed by the respondent.” It referred to earlier judgments addressing similar issues, including the decision in Pranav Ashokkumar Shah v. Assistant Commissioner of State Tax, where comparable circumstances were examined. The Court cited the passage that the object of the amnesty scheme is “to bring about expeditious and effective resolution of old disputes and recoveries of old outstanding dues of the Government and reduction of administrative costs.” It further recorded the finding that officers are expected “to ensure that the assessees get the benefit under the scheme.”
The Court also reproduced observations from other decisions, including the view that minor or inadvertent shortfalls should not preclude access to settlement mechanisms, noting that “merely because the Petitioner inadvertently paid Rs.2000/- less… it cannot be denied the benefit of the Amnesty Scheme.”
The Court referenced reasoning stating equitable relief where delays are unintentional, including the statement: “this Court under its inherent powers… can pass whatever orders are necessary for doing equity and justice.” It stated judicial acknowledgement that delay caused by bona fide circumstances should not deprive taxpayers of scheme benefits, especially where the scheme’s object would otherwise be defeated.
Ultimately, the Court found that the petitioner’s situation fell within the principles recognised in prior authorities. It recorded that the facts demonstrated bona fide hardship supported by contemporaneous attempts to comply, concluding that “the apparent bonafides of the petitioner which are on record” supported intervention.
The Court set aside the authority’s rejection of the amnesty application. It directed that “The order dated 7.10.2021 rejecting the application of the petitioner under the Amnesty Scheme is hereby quashed and set-aside. The delay of 2 days in making the payment in the aforesaid Scheme is condoned. Rule is made absolute to the aforesaid extent. No order as to costs.”
Advocates Representing The Parties
For the Petitioners: Mr. Jaimin R. Dave, Ms. Hirva R. Dave, Priyank S. Dave
For the Respondents: Ms. Shrunjal Shah, Assistant Government Pleader
Case Title: M/s Kamnath Private Ltd. v. State Tax Officer
Case Number: R/Special Civil Application No. 1231 of 2024
Bench: Justice Bhargav D. Karia, Justice Pranav Trivedi
