Statutory tax settlement protection keeps coercive recovery in abeyance while disputed dues are under consideration.

Where a dealer has invoked the statutory settlement mechanism for disputed tax dues, coercive recovery should ordinarily remain in abeyance until the application is decided, while any undisputed liability may still be required to be paid. The Madhya Pradesh HC noted that the scheme under sections 24B and 24C provides for settlement of disputed tax, interest and penalty through a prescribed determination process, and it treated pending settlement proceedings as a basis to protect the dealer from recovery action. The settlement authority was also directed to decide the application within a fixed outer limit.

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Issues: Whether coercive recovery proceedings could continue when the dealer had already applied for settlement of disputed tax dues under the statutory settlement mechanism, and whether the settlement authority should be directed to decide the application expeditiously.

Analysis: The statutory scheme under section 24B permits a dealer to seek settlement of disputed tax, interest and penalty, and section 24C prescribes the procedure for consideration, hearing, determination of the amount payable, and passing of the settlement order. The order notes that the dealer had already invoked this mechanism and that the scheme affords protection against penal action after settlement. In that context, the Court considered it appropriate to protect the dealer from coercive recovery while the settlement application remained pending, while also requiring payment of any undisputed amount within the stipulated time. The Court also directed the settlement authority to decide the matter within a fixed outer limit.

Conclusion: Coercive recovery was stayed until the settlement proceedings were concluded, the undisputed amount was required to be deposited, and the settlement authority was directed to decide the application expeditiously.

Ratio Decidendi: Where a dealer has invoked a statutory settlement procedure for disputed tax dues, coercive recovery should ordinarily be kept in abeyance pending decision of the settlement application, while compliance with any undisputed liability may still be enforced.

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