Sales tax settlement relief for non-deferral arrears cannot be denied merely because a deferral scheme also applies.

The Madras HC noted that the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 was meant to settle disputes finally, and that an assessee covered by an interest-free deferral scheme was not barred from seeking settlement for arrears outside the deferral period. Amounts deferred under the deferral arrangement were not arrears for the settlement scheme, but unpaid dues relating to the non-deferral period remained within its scope. On that basis, rejection of the application in its entirety was unsustainable, and settlement could be availed only for the non-deferral arrears.

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Issues: Whether the petitioner, though covered by an interest-free sales tax deferral scheme, was entitled to settlement under the Samadhan Scheme for arrears relatable to the non-deferral period, and whether rejection of the application in its entirety was sustainable.

Analysis: The scheme under the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 was intended to bring disputes to an end, and its benefit could not be denied merely because the assessee was also governed by a deferral scheme. Amounts deferred under the deferral arrangement could not be treated as arrears for the purpose of the settlement scheme, but amounts that remained unpaid outside the deferral period continued to constitute arrears within the scope of the settlement provisions. The Act did not expressly bar an assessee from seeking settlement in respect of the non-deferral component. On that basis, the rejection of the application insofar as it covered non-deferral arrears was not justified.

Conclusion: The petitioner was entitled to avail settlement only for the arrears relating to the non-deferral period, and the rejection of the application to that extent was unsustainable.

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