Year-wise settlement scheme prevents cross-year refund adjustments; refund restored and subsequent year settlement must proceed without adjustment.

Year-wise settlement under the 2023 Settlement Act is a self-contained statutory scheme whose definitions and procedures prescribe year-specific discharge of liabilities; authorities may not import MVAT adjustment powers to reallocate refunds across years. The court applied principles of statutory interpretation and precedent preventing intermixed adjustment mechanisms, found absence of any Section 50 order or defect notice and lack of opportunity to be heard, and concluded the impugned cross-year adjustment was invalid, quashing the order and directing refund with interest and acceptance of the subsequent year's settlement without that adjustment.

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Issues: Whether the Settlement Order dated 18th April 2024 adjusting the refund of Rs. 33,29,000/- (tax period 2007-08) against alleged dues for tax period 2008-09 could be validly made by invoking Section 50 of the MVAT Act when the petitioner had availed the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fees Act, 2023 and no defect notice or Section 50 order had been made prior to the settlement.

Analysis: The Settlement Act is a self-contained statutory scheme enacted to allow year-wise settlement of arrears by specified procedures and payments; its definitions (including 'arrears', 'disputed tax' and 'un-disputed tax'), conditions (including withdrawal of appeals and year-wise application) and Section 13 prescribe the circumstances in which a settlement order discharges liability. Section 6(1)(a) governs adjustment of payments made on or before 30th April 2023 and contemplates sequential application of such payments towards undisputed tax, disputed tax, interest, penalty and late fee; it does not treat refunds of other years as a payment made in respect of a statutory order for the year applied for. Section 50 of the MVAT Act permits refund adjustment under the MVAT statutory regime but does not supply authority for the Designated Authority under the Settlement Act to import Section 50 to recalculate settlement dues for a different year. Precedent of this Court (Andrea Stihl; TML Business Services) establishes that authorities exercising powers under the Settlement Act must not intermingle or invoke adjustment powers under the MVAT Act in a manner that defeats the year-wise settlement scheme. Procedurally, Section 13(2) and Section 13(3) require that applications be processed and, where rejection or rectification is contemplated, the applicant be afforded opportunity to be heard; in the present facts the impugned order effected an adjustment without issuance of any Section 50 order or defect notice and without affording hearing to the petitioner.

Conclusion: The impugned Settlement Order dated 18th April 2024 adjusting the refund of Rs. 33,29,000/- for tax period 2007-08 against alleged dues for 2008-09 is quashed and set aside; the petitioner is entitled to the refund of Rs. 33,29,000/- for tax period 2007-08 with interest and the settlement application for 2008-09 shall be accepted without adjustment of that refund.

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