Substantial compliance under settlement schemes protects timely payers when remittance fails due to banking or technical error

A taxpayer's timely attempt to pay under a beneficial dispute settlement scheme was not defeated when the remittance failed and the amount was re-credited because of a technical or banking error beyond its control. The scheme benefit was treated as available on substantial compliance, and the rejection of relief was not sustained. Because the amount remained with the taxpayer after re-credit, payment of interest for the relevant period was directed before closure of the matter.

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Issues: Whether the petitioner was entitled to the benefit of the dispute settlement scheme despite the remitted amount being re-credited to its account because of a mismatch in challan amount and banking constraints.

Analysis: The petitioner had made the payment attempt within the scheme timeline, but the amount was returned to its account due to a technical and banking-related failure in the remittance process. The Court treated the failure as not attributable to the petitioner and followed the view that a beneficial settlement scheme should not be defeated where the assessee has substantially complied and the system prevented successful transfer of funds. At the same time, since the amount remained with the petitioner after re-credit, the Court directed payment of interest for the relevant period before closure of the matter.

Conclusion: The petitioner was held entitled to the scheme benefit, and the impugned rejection was not sustained, but the relief was conditioned on payment of the retained amount with interest within the time stipulated by the Court.

Ratio Decidendi: A taxpayer who timely attempts payment under a beneficial settlement scheme cannot be denied relief when the remittance fails and is re-credited because of a technical or banking error beyond the taxpayer's control, though interest may be directed for the period during which the amount remained with the taxpayer.

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