TaxTMI 
TaxTMI 
2026 (3) TMI 586
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....ent has been made despite there being no pending dues for recovery, by invocation of the proviso to Section 50(1) of the Maharashtra Value Added Tax Act, 2002 ("MVAT Act") which is wholly unjustified. 3. It would be convenient to reproduce the prayers as sought for in the present the Petition: "a. This Hon'ble Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ or direction in the nature of Mandamus under Article 226 of the Constitution of India, setting-aside and annulling the Settlement Order which was issued after the adjustment of refund for Tax Period: 2007-08 against Tax Period:2008-09 ignoring the fact that there were no pending "dues for recovery' so as to justify invocation of refund adjustment under the Proviso appended to Section 50(1) of the MVAT Act, 2002 as the Petitioner had already made an application for availing benefits under the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fees Act, 2023 before issuance of the refund adjustment order. b. This Hon'ble Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ or direction in the nature of Mandamus under Article ....
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....- i. The Petitioner is a proprietorship concern engaged in the business of resale, distribution, and wholesale trade of paper and paper-based products. The Petitioner is a registered dealer under the MVAT Act. ii. Investigation was initiated against the Petitioner for the tax periods 2007-08, 2008-09, and 2009-10, alleging that the Petitioner had claimed ineligible Input Tax Credit (ITC). iii. During the course of investigation, the Petitioner paid an additional amount of Rs. 10 lakhs and filed revised returns. Pursuant thereto, recovery proceedings and provisional bank attachment proceedings were initiated by the Sales Tax Department. The Petitioner filed a representation challenging the said attachment and recovery proceedings. As no action was taken on the representation, the Petitioner approached this Court by filing Writ Petition No. 1602 of 2009. By an order dated 28th January 2009, this Court directed Respondent No. 4 to consider the Petitioner's representation within four weeks and communicate the decision thereof within a week. Thereafter, Respondent No. 4 rejected the representation and confirmed the recovery as well as the provisional bank atta....
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....As the Petitioner noticed mistakes apparent on the face of the record in the appellate orders for the tax periods 2008-09 and 2009-10, rectification applications were filed against the said orders. xi. During the pendency of the rectification applications for the tax periods 2008-09 and 2009-10 the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Act, 2023 (hereinafter referred to as the "Settlement Act") was introduced by Respondent No. 1 in the form of the Amnesty Scheme, 2023, providing for settlement of disputes under various indirect tax legislations, including the MVAT Act. xii. Respondent No. 4 issued Trade Circular No. 11T of 2023 dated 26^th June 2023, clarifying that disputes under the MVAT Act could be settled by payment of the requisite amounts specified under the Settlement Act, for each tax period individually and separately. Upon satisfaction of the prescribed conditions, including payment of the requisite amount, the pending litigation would stand settled and the balance dues would be waived, culminating in issuance of a Settlement Order. xiii. Pursuant to the aforesaid Settlement Act, Respondent No. 2 issued Courtes....
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....,00,000/-.These dues of Rs. 45,00,000/- being less than Rupees Fifty lakh the dealer under such scenario shall be eligible to opt for the lamp (2) One Time payment option: This Act provides for One Time payment for making payment of the requisite amount to avail the benefit of settlement of arrears. (3) Instalment Option: (a) However, in case the arrears are in excess of rupees fifty lakh then the applicant may opt to pay under the Instalment option.i arrears as per any statutory order or as per recommendation of auditor are in excess of rupees fifty lakh then Instalment option available. (b) The instalment option is also available, in case the return dues of one Financial year are in excess of fifty lakh and if a single application is preferred for such return dues of multiple periods within the same financial year. 9.3. Where, the dealer desires to settle the arrears under option of One Time Payment or, as the case may be, under Instalment option, then the dealer shall be required to determine the requisite amount to be paid and the extent of the waiver available as provided in the Annexure-A and Annexure-B. Relevant Portion of Anne....
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....count of non-removal of office objections under Rule 986 of the Bombay High Court (Original Side) Rules, 1980. After filing of the aforesaid Petitions, a Settlement Order dated 16th April 2024 was passed for the tax period 2009-10. xxi. Thereafter, on 18th April 2024, Respondent No. 2 passed a Settlement Order under Section 13(1) of the Settlement Act, whereby the refund amount of Rs. 33,29,000/-, determined as payable to the Petitioner for the tax period 2007- 08, was adjusted against alleged pending dues for the tax period 2008-09 (hereinafter referred to as the "impugned order"). xxii. It is this Settlement Order dated 18th April 2024, which is impugned in the present Petition. 5. We have heard learned counsel Mr. Manohar Samal and Mr. Ratan Samal on behalf of the Petitioner and learned counsel Ms. Naira Jeejeebhoy, Ms. Jyoti Chavan, and AGP Mr. Amar Mishra on behalf of the Respondents. 6. In the backdrop of the above factual position as stated above, the short issue which has arisen for consideration in the present proceedings is whether by the impugned order, the Respondents could adjust the refund amount of Rs. 33,29,000/- for the tax period of 2007-20....
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....riod 2008-09, which was settled under the Settlement Act, was not justified. The Petitioner also sought to place reliance on the decisions rendered by this court in the case of TML Business Services Ltd. Vs. Deputy Commissioner of Sales Tax and Others (2024) SCC OnLine Bom 2177 and on the decision in the case of Andreas Stihl Private Limited Vs. Joint Commissioner of State Tax, Pune and Others (2025) 138 GSTR 313, wherein it has been held that the refund adjustment under Section 50 of the MVAT Act cannot be made once a taxpayer has paid all outstanding dues under the Settlement Act. 9. Per contra, Learned Counsel Ms. Naira Jeejeebhoy along with Addl. G.P. Ms. Jyoti Chavan and AGP Mr. Amar Mishra, who appeared on behalf of the Respondents have submitted as follows:- a) It is Respondents contention that at no point of time was any representation made by the Respondents to the Petitioner that the entire amount due for the tax period 2008-09 was available for settlement under the Settlement Act. The refund order was passed for the tax period 2007-08 on the same day as the demand orders for the tax periods 2008-09 and 2009-10 were issued and by way of the statutory mandate u....
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....id to be sufficient to extinguish the dues of the Petitioner. Therefore, as on the date of the order of refund adjustment, i.e., the impugned order, the dues for subsequent period of 2008-09 were outstanding and the refund amount was required to be adjusted against the same by virtue of Section 50 of the MVAT Act. f) Learned Counsel on behalf of the Respondents therefore contended that that the impugned order, whereby the refund adjustment for the period of 2007-08 has been carried out, needs to be upheld and the provisions of Section 50 of the MVAT Act 2002 have been rightly applied. It was further submitted that the decisions of TML Business Services (supra) and Andrea Stihl Private Limited (supra) have no application to the facts of the present case and they are distinguishable vis-a-vis the present petition. ANALYSIS AND CONCLUSION 10. We have heard Learned Counsels on behalf of the Petitioner and Respondents and perused the papers and also the relevant provisions of the Settlement Act and the MVAT Act. In order to appreciate the controversy at hand, it would be beneficial to reproduce certain important provisions of the Settlement Act and the MVAT Act. It will a....
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.... Act has been issued or not, and such arrears of tax, interest, penalty or late fee, pertains to specified period and it also includes the interest payable on the admitted tax and arrears of tax, under the Relevant Act for the specified period; 2(g) "disputed tax" means the tax other than un-disputed tax as defined in clause (q) 2(q) "un-disputed tax" means,- (i) the taxes collected separately under the Relevant Act; or (ii) the taxes shown payable in the return or the revised return under the Relevant Act; or (iii) an amount claimed by the dealer as deductions as per rule 57 of the Value Added Tax Rules or similar rules under other Relevant Act; or (iv) an amount forfeited under the statutory order or excess tax collection shown in the return, revised return or audit report, as the case may be, submitted under the Relevant Act; or (v) any amount of tax determined and recommended to be payable by the auditor, in the audit report submitted as per section 61 of the Value Added Tax Act, and accepted by the assessee, either wholly or partly; or (vi) the tax deducted at source (TDS) by the employer under th....
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....the Relevant Act, such applicant shall be discharged of his liability to the extent of the amount of waiver specified in the order of settlement. (2) Where, the application for settlement of arrears of tax, interest, penalty or late fee is not in accordance with the provisions of this Act, then the designated authority may, by an order, in writing, reject the application, after giving an opportunity of being heard to the applicant. On rejection of such application and if the applicant had withdrawn the appeal to apply for settlement, then the said original appeal under the Relevant Act shall be reinstated on application made in this behalf to the appellate authority under the Relevant Act subject to the provisions of section 14. (3) The designated authority may, on his own motion or on application of the applicant, within six months from the date of the receipt of the order of settlement by the applicant, rectify any error apparent from the record: Provided that, the application for rectification shall be made within sixty days from the date of the receipt of the order of settlement by the applicant: Provided further that, no order adversely affe....
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....Local Areas Act, 2002 (Mah. IV of 2003)] : [Provided that, for the period commencing on or after the 1st April 2012, a dealer whose refund claim in a year is rupees five lakh or less, may, carry forward such refund to the return or revised return for immediate succeeding year to which such refund relates.] Rule 60 of the MVAT Rules 60. Grant of Refund. - (1) Application for refund under section 51 shall be made in Form 501 (2) When the Commissioner is satisfied that a refund is due, he shall pass an order in Form 502, showing the amount of refund due and shall communicate the same to the dealer. (3) When an order for refund has been made under any rule, the Commissioner shall, if the applicant desires payment in cash, issue to him a refund payment order either in Form 503 or, in form, 504. If the dealer desires adjustment of refund, against tax payable in respect of any subsequent period contained in the year to which the refund relates under this Act, the Central Sales Tax Act, 1956, or the Maharashtra Tax on Entry of Goods into Local Areas Act, 2003, the Commissioner shall issue a Refund Adjustment Order in Form 506.] 13. O....
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.... the benefit of settlement by suppression of material information etc., then the settlement order can be revoked, and so on and so forth. Therefore, on a holistic reading of the provisions of the Settlement Act, it is clear that the same is a self-contained code and nothing more or less can be read into it. And once the assessee avails of the scheme as provided in the Settlement Act, then the assessee is absolved from any further tax liabilities. 17. In the facts of the present case, the Petitioner had availed of the One Time Payment Option, whereby if the outstanding dues of tax, interest, penalty, or late fee as per statutory order are below Rs. 50,00,000/-, then the assessee can opt for lump sum payment at 20% and the remaining 80% would be waived off. It is under this One Time Payment Option that the Petitioner sought to avail that out of an amount of Rs. 45,64,433/- which was outstanding for the tax period 2008-09 Rs. 9,12,887/- was determined to be payable under the Settlement Act. 18. It is our firm view on a harmonious reading of the provisions of Section 50 of the MVAT Act and Rule 60 of the MVAT Rules, along with the provisions of the Settlement Act, the adjustment ....
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....nd for tax period 2008-09 has been made in consonance with the provisions of Section 6 of the Settlement Act. Here it will be beneficial to reproduce the provisions of Section 6 of the Settlement Act:- "(1) Notwithstanding anything contained in the Relevant Act or under this Act, - (a) any payment made in respect of a statutory order either in the appeal or otherwise, on or before the 30th April 2023, shall first be adjusted towards the amount of un-disputed tax and then disputed tax, thereafter, towards the interest and the balance amount remaining unadjusted, shall then be adjusted towards the penalty and the late fee, sequentially; (b) after adjustment of amount as specified in clause (a), only the amount remaining outstanding for the specified period, if any, as on the 1st May 2023 or any demand raised for the specified period by any statutory order during the period from 1st May 2023 to 31st October 2023, shall be considered for the settlement under this Act. (2) The provisions of foregoing clauses in respect of adjustment of amount paid and determination of arrears shall be applicable mutatis mutandis to the return dues or, as the ....
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....45,64433/-. There was also no refund order passed under Section 50 of the MVAT Act to adjust the refund of tax period 2007-08 against these demands. 22. Further the decisions passed by the Co-ordinate Bench of this Court in Andrea Stihl Private Limited (supra) also fortifies our view. Relevant paragraphs of the same are reproduced below:- Issue A "(A) Whether authorities under the Settlement Act can abdicate and exercise powers granted to authorities under the MVAT Act? 25. Under Section 3 of the Settlement Act, an authority is designated for implementation of the said Act. The Commissioner of State Tax is the said authority. 26. The Settlement Act is a separate Act which is enacted for settlement of outstanding dues under various State Acts, each of which have separate and distinct authorities under their respective Acts for their administration. Although the Commissioner of State Tax is a Commissioner under the MVAT Act, he wears a different hat as a "designated authority" under the Settlement Act. Though he is one person but he wears 2 hats. In such a situation, it is well settled that the powers available under different enactments are not to be....
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....conferred under the MVAT Act would be without jurisdiction. Issue B (B) Whether, on a reading of the Settlement Act, amount for considering for settlement is to be arrived at after adjusting refund of other years against the dues of the years for which application is made under the Settlement Act? 29. The requisite amount to be paid under the Settlement Act can be found in Sections 6 and 8 read with Annexures (A) and (B) of the Settlement Act. Section 6(1)(a) provides that if any payment is made in respect of the statutory order, then same would be adjusted towards undisputed tax, then disputed tax, then interest and balance towards penalty and late fee and it is only the balance amount which would be considered as outstanding for the purposes of the Settlement under the Act and this amount so arrived will be the basis of computing the amount payable under the Settlement Act as per Section 8 read with Annexures (A) and (B). If the legislature intended that any refund due on the date of making the application or cutoff date for any year is required to be adjusted against the demand of the year for which the application under the Settlement Act is made and ....
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....roceedings pending or any order passed under Section 50 of the MAT Act to adjust refund for the year 2016-2017 against these demands. 31. In our view, there is no provision under Settlement Act which provides for calculation of outstanding arrears of a particular year to be arrived at after adjustment of refund for another year moreso in a case where there is no such adjustment of the refund order on the date of application or on the date of settlement order under Section 13 of the Settlement Act. In our view, therefore the impugned action of the Respondents to recalculate the outstanding arrears for the financial years 2013-2014, 2015-2016 and 2017-2018 after passing the settlement order by invoking provisions of Section 15 of the Settlement Act admittedly without there being an order Section 50 of the MVAT Act is certainly without jurisdiction." 23. This Court in TML Business Services (supra) has also taken a similar view. Relevant paragraphs of the same are reproduced below:- "14. There is no dispute that as per the Settlement Scheme for the year 2010- 2011, Petitioner is liable to make payment of Rs. 8,46,84,821/-. There is also no dispute that the said amo....
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....dated 14th May 2019, wherein the outstanding amount as per Respondents record is shown at Rs. 3,30,85,284/- being difference between the outstanding for the year 2010-2011 amounting to Rs. 14,00,74,890/- and the adjustment of refund of Rs. 10,69,89,606/- for the year 2011-2012. We fail to understand as to how on 14th May 2019, Respondents have arrived at the outstanding amount of Rs. 3,30,85,284/- after adjusting the refund for the year 2011-2012, when refund adjustment order is itself of 23rd May 2019. Therefore, the defect notice itself is defective and not in accordance with the law. Furthermore, on a reading Section 11 of the Settlement Scheme, the defect notice is issued when there is a shortfall in making the payment and not when an applicant has paid the correct amount. In the instant case, on a perusal of the defect notice it states that requisite amount payable is Rs. 66,17,057/-, whereas Petitioner has paid Rs. 8,46,84,821/- which is excess payment and not short payment. 18. Reliance placed by Respondents on Section 18 of the Settlement Scheme for not granting the refund is also misconceived. Section 18 provides that under no circumstances, shall the applicant be....