Unstayed appellate tax orders bind assessing authorities; pending appeals do not revive original demand for settlement calculation.

An un-stayed appellate order passed in a tax assessment binds the assessing authority, and the original demand cannot be revived merely because further appeals are pending. Under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010, settlement applications had to be examined on the basis of the demand as revised by the appellate authority, not the superseded assessment order. Rejection on the contrary basis was unsustainable because revenue authorities must follow appellate orders in judicial discipline. The impugned rejection was set aside and the applications were directed to be reconsidered under the settlement scheme on the correct legal basis.

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Issues: Whether the rejection of applications under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010 on the ground that the department's appeal against the appellate order was pending and the original assessment demand alone should be treated as the basis for computation was sustainable.

Analysis: The Scheme required an applicant to seek settlement of arrears by paying the amount determined under the statutory formula, and the designated authority could summarily reject an application only when the statutory payment conditions were not met. Once the Appellate Deputy Commissioner passed orders partly allowing the assessee's appeals, those orders bound the assessing authority and superseded the original assessment orders unless stayed or set aside by the competent appellate forum. The mere pendency of further appeals by both sides did not justify ignoring the appellate order and reverting to the original demand for calculating settlement liability. The settlement applications therefore had to be tested with reference to the demand as revised by the appellate authority, and the rejection on the contrary basis was unsustainable. The Court also applied the principle that revenue authorities must follow appellate orders in judicial discipline.

Conclusion: The rejection of the settlement applications was unjustified and the applications were required to be entertained in accordance with law; the decision was in favour of the assessee.

Final Conclusion: The impugned rejection was set aside and the designated authority was directed to reconsider the applications under the settlement scheme on the correct legal basis, without affecting the pending appellate proceedings.

Ratio Decidendi: An un-stayed appellate order governing a tax assessment binds the subordinate assessing authority, and a pending appeal against that appellate order does not revive the original assessment demand for the purpose of a statutory settlement scheme.

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