Settlement certificate under sales tax dispute scheme bars fresh interest demands after final discharge of disputed liability.

Under the Andhra Pradesh Sales Tax (Settlement of Disputes) Act, 2001, issuance of a settlement certificate under Form III discharged the applicant from the balance liability for the disputed tax, penalty or interest. The scheme was intended to conclude the dispute finally and conclusively, and in the absence of an express provision authorising later recovery, no fresh demand for interest on the settled amount could be raised after settlement. Fresh demand notices issued for such interest were therefore unsustainable and were quashed by the Andhra Pradesh HC in favour of the assessee.

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Issues: Whether interest could be levied and recovered on amounts settled under the Andhra Pradesh Sales Tax (Settlement of Disputes) Act, 2001 after issuance of a settlement certificate under Form III.

Analysis: The settlement scheme was intended to resolve disputed tax, penalty and interest liabilities by payment of the prescribed percentage. Section 6 provided for waiver of disputed amounts and Section 12 stated that upon payment and issue of the settlement certificate, the applicant stood discharged from liability to pay the balance amount of tax, penalty or interest in dispute. Once the dispute had been settled and the certificate issued, the liability became final and conclusive. In the absence of any specific provision in the settlement scheme permitting later recovery of interest on the settled amount, the authority could not issue fresh demand notices for such interest after settlement.

Conclusion: Interest could not be demanded or recovered after settlement under the Act and issuance of the settlement certificate; the demand notices were unsustainable and were quashed, in favour of the assessee.

Ratio Decidendi: Where a statutory settlement scheme provides that issuance of a settlement certificate discharges the applicant from the balance liability in respect of disputed tax, penalty or interest, no further demand for interest can be raised in the absence of an express enabling provision in the scheme.

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