Settlement Commission immunity automatically ends when taxpayer fails to pay required 25% tax demand installments

The HC dismissed a writ petition challenging withdrawal of immunity granted by the Settlement Commission. The petitioner failed to pay 25% of tax demand by the specified deadline and subsequent installments as required under the settlement order. The court held that immunity automatically ceased upon non-compliance with payment conditions, and the Central Government's communication merely permitted further proceedings rather than actively withdrawing immunity. The court found no merit in the petitioner's claim of lack of hearing, noting non-payment of even minimal amounts. An earlier interim order by another Division Bench was also rendered ineffective due to the petitioner's continued non-compliance with payment undertakings.

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Issues:
Challenge to withdrawal of immunity granted by Settlement Commission based on non-payment of directed amounts within specified time frame.

Analysis:
The petitioner challenged the withdrawal of immunity granted by the Settlement Commission due to non-compliance with payment conditions within the specified time frame. The Settlement Commission had granted immunity from penalty and prosecution under the Income Tax Act subject to payment conditions outlined in the order. The order required the petitioner to pay 25% of the demand by a specified date and the balance in equal monthly installments in the following financial year. Despite the specified time frame, the petitioner failed to make the payments, leading to the withdrawal of immunity.

The Central Government's communication allowing further proceedings cannot be construed as a withdrawal of immunity. The immunity granted by the Settlement Commission was contingent upon the petitioner satisfying the payment conditions within the specified time frame. Failure to comply automatically resulted in the cessation of immunity. The petitioner's argument that they were not heard before withdrawal of immunity was deemed irrelevant as they did not fulfill the payment obligations as per the Settlement Commission's order.

A separate Division Bench had issued an interim order directing the petitioner to deposit the remaining amount within a specified period, with a partial payment deadline. While the petitioner made an initial payment within the deadline, they failed to comply with the undertaking to pay the entire amount within the stipulated time frame. The delayed payments were not in accordance with the interim order, leading to the nullification of the interim order's effects.

The failure to comply with payment obligations not only resulted in the withdrawal of immunity but also incurred liabilities for interest, interest on interest, and penalties as per the statutory provisions. The petitioner's submission of the quantum of amounts made liable on delayed payment was also disputed by the respondent department. The court upheld that the Settlement Commission's order and the interim order had both ceased to be enforceable due to the petitioner's non-compliance with payment conditions.

In conclusion, the writ petition challenging the withdrawal of immunity was dismissed as the petitioner failed to adhere to the payment conditions specified by the Settlement Commission, leading to the automatic cessation of immunity. The delayed payments made by the petitioner would be set off against any outstanding demands as mandated by the statute.

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