Interest exemption on tax arrears applies only to dealers in arrears when the scheme begins

The Government Order granting exemption from interest on tax arrears applied only to dealers who remained in arrears when the scheme commenced and who paid during its operative period. A dealer who had already paid the tax before the scheme began was outside the scope of the exemption and could not claim relief from interest liability. The same construction had earlier been applied to an analogous circular governing arrears paid after the circular's issuance. On that basis, the petitioner was held not entitled to the benefit of the Government Order, and the claim for interest exemption was rejected.

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Issues: Whether the petitioner was entitled to the benefit of the Government Order dated 12-5-1989 granting exemption from interest on tax arrears already paid before the commencement of the scheme.

Analysis: The scheme was intended to encourage payment of long-standing tax arrears during its operative period by granting exemption from interest liability. Its benefit was confined to dealers who were in arrears at the commencement of the scheme and who made payment during the period when the scheme remained in force. A dealer who had already paid the tax before the scheme began was outside its scope and could not claim the exemption. The same principle had been applied earlier to an analogous circular dealing with arrears paid after issuance of the circular.

Conclusion: The petitioner was not entitled to the benefit of the Government Order and the claim for exemption from interest liability was rejected.

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