2011 (6) TMI 516

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....ned counsel appearing for the petitioner and the learned Government Pleader for the State.   The assessee, a dealer in paper, remitted tax at four per cent on paper sold during the year 2001-02. However, rate of tax on paper was increased during the financial year from four per cent to eight per cent. Since returns filed and tax paid was at four per cent as against eight per cent payable, the assessee was in arrears of substantial amount of tax. Even before assessment was taken up, the assessee made an application on February 20, 2004 for settlement of liability under the Amnesty Scheme under section 23B(2) of the KGST Act, which provides for waiver of default interest up to 70 per cent. The application filed for settlement under th....

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....ed by them.   The question to be considered is whether the petitioner, who was allowed to settle liability under the Amnesty Scheme before assessment was rightly declined the benefit in the course of completion of assessment. In order to consider this question, we have to necessarily consider the scope of section 23B of the KGST Act, the relevant portion of which is extracted hereunder:-   "23B. Reduction of interest in certain cases:-   (1) Notwithstanding anything contained in this Act, or in any judgment, decree or order of any court or Tribunal, an assessee, who is in arrears to pay tax or any other amount due under this Act up to the period ending on 31st March, 2003 may opt for settling the arrears, by availing....

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.... or revision pending can be pursued and the dealer will be entitled to the benefit. There is nothing in section 23B barring a dealer from settling a liability even before the completion of assessment by making payment of the tax due in terms of the returns filed and the interest accrued thereon less deduction admissible. However, what happens in such a situation is that if the tax or interest determined on assessment is more than the amounts offered by the assessee in the returns filed based on which settlement is made, the basis of settlement under section 23B goes and the settlement will be subjected to assessment. In other words, if in the course of assessment more than the admitted tax becomes due from the dealer, then the dealer cannot....