Kar Vivad Samadhan Scheme appropriation rules bind authorities; payment had to go first to tax, not interest.

The Kar Vivad Samadhan Scheme required authorities to follow binding Central Government instructions for administering declarations, including the rule that part payments against arrears comprising tax and interest had to be appropriated first towards tax and only then towards interest. The designated authority instead adjusted the payment first towards interest and then towards tax, which was inconsistent with the governing clarification. On that basis, the certificate was quashed and the declaration was restored for fresh determination in accordance with the binding instructions.

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Issues: Whether the certificate issued under the Kar Vivad Samadhan Scheme was liable to be quashed for failing to follow the Central Government's instructions on appropriation of part payments towards tax before interest.

Analysis: The Scheme empowered the Central Government to issue instructions for its proper administration, and the authorities were bound to follow those directions to ensure uniform treatment of declarations. The relevant clarification stated that where tax arrears comprised both tax and interest, part payments were to be appropriated first towards tax and only thereafter towards interest. The designated authority, on its own showing, had proceeded by adjusting the payment first towards interest and then towards tax, which was inconsistent with the binding instruction. The larger computation controversy was not required to be decided once this defect was established.

Conclusion: The certificate was quashed and set aside, and the declaration was restored for fresh determination in accordance with the binding instructions.

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