Tax settlement waiver must apply to disputed liability first, with prior deposits credited afterward to preserve the statutory benefit.

Under a beneficial tax settlement scheme, waiver must be computed on the disputed tax liability itself, not after first reducing that liability by amounts already deposited as pre-deposit or during the dispute. The Court reasoned that deducting such payments first would give a smaller benefit to taxpayers who had partly paid the demand and would defeat the scheme's object. On the facts, the revised computation on the disputed amount was the correct basis, and the authorities' adjustment method was unsustainable. The impugned settlement-related orders were set aside, and refund of the excess amount with interest was directed.

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Issues: Whether, under the settlement scheme, the amount deposited by the assessee as pre-deposit or during stay was required to be first adjusted against the disputed tax before granting waiver, and whether the assessee was entitled to refund and interest on the excess amount recovered.

Analysis: The scheme drew a clear distinction between admitted tax and disputed amount. The waiver under the scheme was intended to operate on the disputed liability itself, and not by first reducing that liability by amounts already deposited during the dispute. If pre-deposit were deducted first, an assessee who had already paid part of the demand would receive a lesser benefit than one who had paid nothing, which would defeat the object of the beneficial legislation. The Court therefore held that the settlement amount had to be computed by applying the scheme's waiver on the disputed tax and only thereafter giving credit for amounts already paid. On the facts, the revised computation placed before the appellate authority was the basis on which relief could be granted.

Conclusion: The adjustment method adopted by the authorities was incorrect, the settlement order and appellate order were unsustainable, and the assessee was entitled to refund of the excess amount with interest.

Final Conclusion: The writ petition succeeded, the impugned settlement-related orders were set aside, and the respondents were directed to refund the excess amount with interest within the stipulated time.

Ratio Decidendi: Under a beneficial tax settlement scheme, waiver must be computed on the disputed liability as such, and amounts paid as pre-deposit or during the dispute cannot be deducted first so as to diminish the statutory benefit.

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