The Patna High Court, on 6 November, held that a taxpayer can avail the benefit of the Bihar Settlement of Taxation Disputes Act, 2024, even after the settlement scheme expires, if the outstanding admitted tax is paid within the time granted by the Court.
A Division Bench of Justices Anil Kumar Sinha and Vikash Kumar disposed of five petitions filed by Amara Raja Batteries Ltd., challenging the rejection of its settlement applications for failing to deposit the amount demanded under the scheme. The judges observed:
“The Legislature has, thus, maintained a distinction between the tax admitted in the return and the amount determined pursuant to an assessment order. The former is founded upon the return filed by the assessee; whereas the latter is referable to the determination made under the assessment proceedings. This distinction assumes significance in the present case.”
The dispute arose after the company sought to adjust Entry Tax already paid against its Value Added Tax (VAT) liability. The tax authorities disallowed part of the adjustment and raised an additional demand. The company contended that it had paid the tax admitted in its returns and that the additional demand constituted disputed tax.
Subsequently, it applied for settlement under the Bihar Settlement of Taxation Disputes Act, 2024. However, the authorities rejected the applications for non-payment of the amount required under the scheme.
Examining Section 2(b) of the Act, the Court noted that admitted tax refers to the amount shown as payable in the taxpayer's returns. It further considered Section 3(1), which requires payment of the entire admitted tax to avail the settlement benefit.
On examining the payments made by the company, the BEnch found that part of the Entry Tax adjustment claimed towards its admitted tax liability had been disallowed, resulting in a shortfall of Rs. 8,58,814. It held:
“On strict interpretation of Explanation to Section 3 (1) of the Settlement Act, I am of the considered view that the petitioner is required to make payment of Rs. 8,58,814/- against arrears/short payment of admitted tax for availment of settlement scheme.”
The judges granted the company two weeks to pay the outstanding admitted tax, holding that the expiry of the settlement scheme would not disentitle it from the benefit once the payment was made within the time granted by the Court.
Accordingly, the High Court disposed of all five petitions, directing the tax authorities to pass fresh settlement orders upon the company's payment of the outstanding amount.
For the Petitioner: Senior Advocate D.V. Pathy, along with Advocates P.K. Mishra, Sadashiv Tiwari, Shivani Dewalla and Hitesh Karan.
For the State: Government Pleader 7 Vivek Prasad.