M/S MASTER CABLES PVT. LTD. versus STATE OF KERALA

Citation: [2007] 6 S.C.R. 219 · Decided: 09-05-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed

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Judgment (excerpt)

MIS MASTER CABLES PVT. LTD. 
v. 
STA TE OF KERALA 
MAY 9, 2007 
[S.B. SINHA AND MARKANDEY KA TJU, JJ.] 
Kar Vivad Samadhan Scheme, 1998 (framed under the Finance Act, 
1998): 
A 
B 
Enactment of-Purpose-ls to achieve recovery of tax arrears by way C 
of settlement. 
ss. 90(3), 90(1), 87(h) & 870)-Applicability of the Scheme, to State 
sales tax legislations-Held: The Scheme must be read as limited to those 
laws which the Parliament has the legislative competence to eanct and not D 
which falls within the exclusive legisa/tive field of a State, save and except 
where expressly so stated or inferred by necessary implicatio-Jf the contention 
that the provisions of the Scheme would also apply to tax laws c;eated by 
the Stae is accepted, it being beyond the legislative competence, would 
amount to clourable piece of legislation-Consitution of lnida, I 950-Articles 
246 and 286; Seventh Schedule, List II. Entry 54. 
E 
Aeppellant is engaged in business of manufacture and sale of insulated 
electrical cable. It is registered under the Kerala General Sales Tax Act, 1963. 
Assessment proceedings in respect of the Appellant were completed relying 
upon or on the basis of the books of accounts maintained by it. An inspection, 
however, was carried out in the premises of the Appellant on which certain F 
amount ofunacounted production and sale of goods was found. Appellant took 
recourse to the provision of the Kar Vivad Samadhan Scheme, 1998 framed 
under the Finnce Act, 1998. Declaration made by it thereunder was accepted. 
Declaration made by it thereunder was accepted. 
The question which arose for consideration is as to whether by reason G 
os sub-section (3) of Section 90 of the Kar Vivadh Samadhan Scheme, the 
State legislation relating to the imposition of the sales tax by re-opening an 
assessment under the State Sales Tax laws shall be affected, having regard 
to Article 246 of the Constitutions of India. 
219 
H 
A 
B 
c 
D 
E 
F 
220 
SUPREME COURT REPORTS 
(2007) 6 S.C.R. 
It is contended by the appellant that having regard to the provisions of 
Sub-section (3) of Section 90 of the Kar Vivad Samadhan Scheme, the term 
"any other law for the time being in force" therein 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 29 A of the Article 366 thereof. 
Dismissing the appeal, the Court 
HELD: I.I. The Kar Vivad Samadhan Scheme was enacted with a view 
to acheive the purpose mentioned therein, viz., recovery of tax arrears by way 
of sttlement. It applies provided that conditions precedent therefor are 
satisifed. "Immunity" is provided under Section 91 of the Scheme. What is 
conclusive is the order passed under Sub-section (I) of Section 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" therein refer only to those statutes under which the order 
had been passed. Immunity is in respect of instiution of any proceeding for 
prosecution of any offence under direct tax enactment or indirect tax 
enactment or from imposition of pentaly under any of such enactments. The 
terms "direct tax enactment" and "indirect tax enactment" have been defined 
under Section 87(h) and 87(j) of the Scheme. Admittedly, the case of the 
appellant does not come within the purview thereof. 
(Paras 7, 8, 9 and 10) (223-D, F; 224-A-B; E] 
1.2. Amplitude of the provisions of the Scheme having been extended 
only to the enactments made by the Parliament, having regard to the 
constitutional Scheme contained in Article 246 of the Constitution of India, 
the same cannot be extneded to assessment of sales tax under a State 
legislature. The legislative field to enact a law relating to sales tax is within 
the exclusive domain of a State Legislaure in terms of Entry 54, List II of the 
Seventh Schedule of the Constitution of India. The power and jurisdiction of 
the assessing authorities as also other authorities is required to be exercised 
G in terms of the provisions of the said Act. Power to tax carries with it power 
to do all things which are necessary and ancillary therefor including taking 
preventive measures in regard to evasion of tax. [Para 10) (224-E-G] 
1.3. Once it is found that a statuto

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