Deferred tax liability was not an arrear under the settlement scheme when payment was postponed beyond the cutoff date.

A settlement scheme confined to tax, penalty and interest outstanding and recoverable on 1 April 2001 did not cover deferred tax liability payable only after that date. Reading the scheme with the Deferment Rules, the Court treated "due" as meaning payable and enforceable on the relevant date, not merely an assessed liability whose payment had been postponed. On strict construction, there was no basis to extend the scheme to deferred amounts, and a taxpayer could not keep the benefit of deferment while also claiming settlement of the same liability as arrears. The deferred tax therefore fell outside the definition of arrear under the scheme.

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Issues: Whether tax liability deferred to a date after 1 April 2001 could be treated as an amount "due" or as "amount of arrear" so as to qualify for benefit under the Madhya Pradesh Bakaya Rashi Saral Samadhan Yojna, 2002.

Analysis: The Scheme applied only to tax, penalty and interest that were outstanding for payment on 1 April 2001 and fell within the definition of "amount of arrear" under the Rules. The Court read the Scheme and the Deferment Rules together and held that the deferred amount was not recoverable or enforceable on 1 April 2001 because the demand itself was postponed to a future date. The expression "due" was construed in context to mean payable and recoverable on the relevant date, not merely an existing liability whose payment stood postponed. On a strict construction of the taxing scheme, the Court found no ambiguity warranting supply of any omission, and held that the petitioners could not simultaneously retain the benefit of deferment and seek settlement of the deferred amounts as arrears under the Scheme.

Conclusion: Deferred tax liability payable only after 1 April 2001 was not an arrear due on 1 April 2001 and therefore did not qualify for settlement under the Scheme.

Ratio Decidendi: Where a settlement scheme is confined to amounts due and recoverable on a specified date, tax liability deferred to a later date is not an arrear within the scheme merely because the assessment has been completed and the liability has been quantified.

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