Mandatory compliance with settlement scheme interest requirements upheld, while adjustment under a later scheme was left open if legally permissible.

Compliance with the prescribed interest payment under a statutory settlement scheme was treated as a mandatory precondition for settlement, and the rejection of the application for non-payment was upheld because repeated demands were not met before rejection and a later payment could not revive the application. The Court also indicated that, subject to law and the absence of any statutory bar, the assessee may seek consideration under a later settlement scheme and ask for adjustment of the amount already paid under the 2002 scheme for the relevant assessment year.

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Issues: (i) Whether the designated authority was justified in rejecting the application for settlement under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 for non-payment of interest under the Scheme; (ii) Whether a direction could be issued to consider adjustment of the amount already paid under the 2002 Scheme against any application under the later settlement scheme.

Issue (i): Whether the designated authority was justified in rejecting the application for settlement under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 for non-payment of interest under the Scheme.

Analysis: The Scheme required an eligible assessee to file the application within time with proof of payment of the amount payable under section 7. The authority had to verify the particulars, determine the amount payable, and the applicant was required to pay the interest component under section 7(2) before issuance of the settlement certificate under section 8. On the facts, repeated intimations and demands for the interest amount were issued, including a final notice with time to comply, but there was no payment within time and no request for extension. The later payment made after rejection could not revive an application that had already been rejected.

Conclusion: The rejection of the settlement application was upheld and the challenge to the impugned order failed.

Issue (ii): Whether a direction could be issued to consider adjustment of the amount already paid under the 2002 Scheme against any application under the later settlement scheme.

Analysis: Since the amount payable under the earlier Scheme had been paid and the application was rejected only for non-payment of a small interest amount, the Court found it to enable the assessee to seek consideration under the later scheme, if permissible in law and if no statutory bar existed to such adjustment.

Conclusion: A direction was issued to the authorities to consider any application under the later scheme for the relevant assessment year and to examine adjustment of the amount paid under the 2002 Scheme, if legally permissible.

Final Conclusion: The settlement rejection remained undisturbed, but limited equitable relief was granted by permitting consideration of adjustment under the subsequent settlement framework, subject to law.

Ratio Decidendi: Under a statutory settlement scheme, compliance with the prescribed payment of interest is a mandatory condition for settlement, and an application validly rejected for non-compliance cannot be revived by a subsequent payment made after rejection.

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