Settlement scheme refund denial violates equal protection where excess payment is barred without intelligible differentia.

Section 6(4) of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 was analysed as a classification within a settlement scheme that fixed liability under a common statutory formula. The scheme required any amount already paid to be adjusted against the amount determined under section 7, so excess payment would ordinarily be refundable. By denying refund of that excess, section 6(4) treated eligible dealers who had overpaid differently from those who had not, without any intelligible differentia. The provision was therefore held unconstitutional for violating article 14 of the Constitution of India.

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Issues: Whether section 6(4) of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002, which denies refund of excess amount paid by an applicant under the settlement scheme, is violative of article 14 of the Constitution of India.

Analysis: The settlement scheme required determination of the payable amount at the rates fixed under section 7 and directed, under section 6(1), that any amount already paid by the applicant be taken into account and deducted from the amount determined. The scheme applied the same rate structure to all eligible dealers. In that setting, if the amount already paid exceeded the amount determined, the excess would ordinarily be refundable on the logic of the scheme itself. Section 6(4), by prohibiting refund of such excess, created an unequal treatment between dealers who had paid nothing and those who had paid more than the amount ultimately determined, without any intelligible differentia supporting the classification.

Conclusion: Section 6(4) is unconstitutional as it violates article 14 of the Constitution of India, and the challenge succeeds in favour of the petitioners.

Ratio Decidendi: A settlement scheme that fixes the payable amount on a common statutory formula cannot, without an intelligible differentia, deny refund of excess payment to one class of eligible applicants while granting the benefit of the scheme to others.

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