Beneficial tax settlement scheme construed liberally to accept bona fide marginal delay and grant clearance certificate.

A beneficial tax settlement scheme may be construed liberally where a declarant makes a bona fide attempt to pay within time and cures only a marginal delay on the next working day. The Bombay HC accepted a two-day delay under section 90(2) of the Kar Vivad Samadhan Scheme, 1998, because the petitioner tried to deposit the amount on the last date, could not do so at the department, and paid through a nationalised bank immediately after. The rejection of the declaration was set aside and the clearance certificate was held to be payable, as the explanation was genuine and no prejudice to the Revenue was shown.

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Issues: Whether the delay of two days in making payment under section 90(2) of the Kar Vivad Samadhan Scheme, 1998, could be accepted on the facts of the case and whether the petitioner was entitled to the clearance certificate under the scheme.

Analysis: The scheme was held to be a beneficial settlement measure for both the assessee and the Revenue, and section 90(2) was construed in a flexible manner rather than as an inflexible bar. The requirement that the declarant pay the amount within thirty days was not treated as excluding a genuine explanation for a marginal delay. Since the petitioner attempted payment on the last date, was unable to deposit it at the department, and made payment in a nationalised bank on the next working day, the explanation was accepted as bona fide. The provision was read liberally to advance the object of the scheme and to avoid defeating a genuine settlement on a technical ground.

Conclusion: The delay was accepted, the rejection of the declaration was set aside, and the petitioner was held entitled to the clearance certificate under the scheme.

Ratio Decidendi: A beneficial tax settlement scheme requiring payment within a specified period may be construed flexibly so as to accept a bona fide and promptly cured marginal delay where the declarant shows a genuine explanation and no prejudice to the Revenue is caused.

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