VAT settlement finality bars later revisional notices unless fraud or a statutory exception is shown

A writ petition challenging show-cause notices was maintainable where the objection was lack of jurisdiction after a VAT one-time settlement had been entered into and recorded. The settlement scheme was treated as a final resolution of the disputed tax liability, and the revenue's later revisional notices were inconsistent with that finality. Although revisional power may exist in ordinary circumstances, it could not be used to defeat an accepted settlement absent fraud or a statutorily preserved exception. The recorded settlement therefore operated as a conclusive closure of the liability, and the subsequent notices could not stand.

---

---

Issues: (i) Whether a writ petition against the impugned show-cause notices was maintainable on the ground of lack of jurisdiction after the parties had entered into a one time settlement under the VAT settlement scheme; (ii) whether, in the peculiar facts of the case, the respondents could invoke revisional power and issue the impugned show-cause notices after the settlement had been recorded.

Issue (i): Whether a writ petition against the impugned show-cause notices was maintainable on the ground of lack of jurisdiction after the parties had entered into a one time settlement under the VAT settlement scheme.

Analysis: The challenge was not a mere objection to disputed facts at the stage of notice. The core grievance was absence of authority to proceed after the settlement had been entered into and recorded. Where the objection goes to jurisdiction, interference under Article 226 is not barred merely because the impugned action is in the form of a show-cause notice.

Conclusion: The petition was maintainable insofar as it assailed the notices on the ground of lack of jurisdiction.

Issue (ii): Whether, in the peculiar facts of the case, the respondents could invoke revisional power and issue the impugned show-cause notices after the settlement had been recorded.

Analysis: The settlement mechanism was intended to conclusively resolve the disputed tax liability. The respondents themselves had initiated the settlement process, scrutinised the application through the prescribed committee, issued the settlement communication, and recorded acceptance after being aware of the audit communication indicating further objection. In these circumstances, the subsequent notices were inconsistent with the object and finality of the settlement, and the absence of any allegation of fraud further weakened the attempt to reopen the matter. Section 32 was held to be available in ordinary circumstances, but not in a manner that would defeat an already recorded settlement.

Conclusion: The respondents had no authority to issue the impugned show-cause notices after the one time settlement had been entered into and recorded.

Final Conclusion: The settlement operated as a conclusive closure of the disputed liability, and the later attempt to revive the same demand could not stand.

Ratio Decidendi: Once a tax dispute is conclusively settled under an accepted settlement scheme, the revenue cannot reopen the very same liability by issuing a subsequent notice unless the settlement itself is shown to be vitiated by fraud or a statutorily preserved exception.

---