Salient Features of Maharashtra Settlement of arrears in Dispute act 2016


Complicated and confusing Tax laws and it’s shoddy implementation is cause of large scale litigation. As per economic survey the unrealised/disputed amount under sales tax up to the year 2013-14 in Maharashtra was about Rs. 40,000 crores. Today it must be much more than that. Also the number of pending appeals has gone up during last couple of years. At current rate of disposal it will take 10/15 years to dispose of such huge number of appeals. The Government has therefore decided to reduce the number of appeals by giving opportunity to settle the arrears in dispute under various laws administered by sales tax department.

Salient Features of the Settlement act are as follows :

A. Acts eligible for the settlement of disputed arrears :

  1. The Central Sales Tax Act 1956.
  2. The Bombay Sales of Motor Sprit Taxation Act 1958.
  3. The Bombay Sales Tax Act,1959.
  4. The Maharashtra Purchase Tax on Sugarcane Act,1962.
  5. The Maharashtra State Tax on Profession, Trades, Callings and Employment Act,1975.
  6. The Maharashtra Sales Tax on the Transfer of the Right to use any Goods for any Purpose Act, 1985.
  7. The Maharashtra Tax on Entry of Motor Vehicles into Local Areas Act, 1987.
  8. The Maharashtra Tax on Luxuries Act, 1987.
  9. The Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contract (Re-enacted) Act, 1989.
  10. The Maharashtra Tax on Entry of Goods into Local Areas Act,2002.
  11. The Maharashtra Value Added Tax Act, 2002.

B) Time Limit to make application :

The correct and complete application along with relevant documents shall be submitted to the concerned Nodal Officer on or before 30 th September 2016 in Form – I as specified in the order dated by the Commissioner u/s.12(2) of the Settlement Act.

The applicant who desires to avail the settlement under this Act for arrears under the Profession Tax Act, 1975, shall apply to the concerned Profession Tax Officer.

C. Conditions :

  1. Settlement can be made only in respect of any period prior to 31 st March 2012.
  2. The applicant must have filed appeal and secured stay against recovery of dues.
  3. In case applicant desires to settle disputed dues in respect of some points and carry on appeal on other points it is allowed. In such case of partial withdrawal of appeal, the applicant shall specify the details of such issues in the application.
  4. The applicant shall produce the proof of withdrawal of appeal or any proceeding pending before the Tribunal or Court.
  5. The applicant shall pay the requisite amount & amount of undisputed arrears on or before 30 th September 2016.
  6. Separate application shall be made by an applicant for each law.

D. Requisite amount for settlement :

  1. If the arrears in disputes relate to any assessment period prior to 31 st March 2005, then the assesses paying tax will get waiver of interest and penalty,
  2. If the arrears in disputes pertain to any assessment period after 1 st April 2005 and before 31 st March 2012 then he will have to pay whole amount of tax and 25% of interest. Assessee will be entitled for waiver of 75% of interest and 100% penalty.

E. Payment of disputed amount :

  1. Part payment made in appeal shall be apportioned first towards tax, then towards interest and towards penalty as provided in the settlement Act.
  2. Payment made before filing appeal.
  3. After considering above balance disputed tax and interest shall be paid before 30 th Sept 2016.

F. Procedure :

  1. The applicant shall file application in the Form- I alongwith order for withdrawl of appeal, copy of statutory order, stay order, and chalan in proof of payment of disputed arrears
  2. The designated officer shall verify the application. If it is in order then he shall pass order of settlement.
  3. If the application is incomplete or incorrect then the Nodal Officer may within seven days from the receipt of application issue a defect notice in Form –II
  4. If the applicant complies with the defect notice within fifteen days then the Nodal officer shall pass the settlement order within thirty days from the date of compliance of the defects. The order of settlement shall be in Form-IV.

There is provision for rectification as well as appeal in the said Act. It may be noted that under no circumstances the applicant will be entitled for refund.

The Act raised many questions. After considering various representations the Commissioner of Sales Tax has issued circular and answered many questions in the form of FAQ. The explanations raise further queries. If one looks at it minutely it really is not settlement. The appellant has to deposit the entire amount of tax. Waiver is only in respect of interest and penalty. In case of genuine dispute, debatable issues the appellant did not get the opportunity to settle the dispute.
Considering the tedious procedure the time limit needs to be extended upto 31 st March 2017. Full machinery of Sales Tax department may be used with honest intention of reducing the arrears of tax and disputes, before we migrate to GST regime.

By Adv.G.Y.Patwardhan, Pune
Mobile : 9822048810
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