Analysis of provisions of appeal under Maharashtra settlement of arrears of Tax, interest and penalty Act 2022
1. Introduction
Goods and service tax act came in to force wef 01-07-2017. Prior to implementation of said act in a states various tax laws were in existence. Some of the tax laws have been repealed and subsumed in GST. A large number of cases involving outstanding dues and litigations are pending. In this background and with intention to unlock the amount involved in the outstanding dues and to reduce old pending litigations, Government of Maharashtra has introduced scheme for settlement of dues under MVAT act, CST act and other nine relevant acts in respect of period prior to 30-06-2017 by enacting Maharashtra Settlement of Arrears of Tax, Interest and Penalty act 2022. Under the scheme it is proposed to write off arrears of rupees ten thousand or less as per statutory order per financial year under relevant acts in respect of specified period ( up to 30-06-2017 ). Scheme provides for partial waiver of disputed tax, interest, penalty and late fee, on payment of requisite amount and filing of an application within prescribed period and subject to compliance of prescribed conditions. Duration of scheme is 1-04-2022 to 30-09-2022. One time payment option and instalment option( only for arrears fifty lakh and above per order) is available for payment of requisite amount. Applicants are required to make payment of prescribed requisite amount within specified time and thereafter eligible for partial waiver of arrears as per Annexure A or Annexure B appended to the act. Special optional scheme is also provided for settlement of arrears by making lump sum payment of twenty percent of arrears under one time payment option, where arrears per statutory order is ten lakh or less. After examining an application if the designated authority is satisfied that the applicant has paid the requisite amount determined in accordance with sections 8 and 9, and satisfied other prescribed conditions the designated authority shall pass an order such applicant shall be discharged of his liability to the extent of the amount of waived in the order of settlement. After perusal of order of settlement, if the applicant has noticed error which is apparent from the record, application for rectification of error may be filed within sixty days from the date of service of order of settlement. However, sometimes there is rejection of an application for settlement or reduction in amount of waiver or incorrect grant of proportionate amount of waiver. Keeping in view such contingencies and in the interest of justice the settlement act provides for filing of appeal against the order of settlement.
Order of settlement / rejection under section 13 of the act.
2. Upon satisfaction of correctness and completeness of an application and considering compliance of defect notice if issued, If the designated authority is satisfied that the applicant has paid the requisite amount as determined in accordance with sections 8 and 9, the designated authority shall pass an order under section 13 of the act and provide the copy of the said order to the applicant within three month and thereupon, notwithstanding anything contained in 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. Where, the application for settlement of arrears of tax, interest, penalty or late fee is not in accordance with the provisions of this Act, and applicant failed to pay additional amount or to correct defect so communicated by way of defect notice then the designated authority may 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.
In view of provision of section 8 (6) of the act, where the applicant has made the payment which is less than the requisite amount as determined under this section then, the designated authority shall compute the proportionate amount of waiver admissible under the option opted by the applicant in proportion to the requisite amount paid by the applicant. Further provided that the amount so paid shall first be adjusted towards the un-disputed tax and the amount remaining, if any after such adjustment shall then be adjusted towards the disputed tax, interest, penalty and late fee, proportionately.
It is further provided in section 8(7) that no application shall be rejected merely on the ground that the payment made by the applicant during the period as per option opted by the applicant under this Act is less than the requisite amount. In such case proportionate benefit of waiver required to be granted.
Rectification of error in order of settlement or rejection.
3. Section 13 provides for rectification of errors which are apparent from the record. Designated authority and applicant both have power of rectifying mistakes in the order. Mistake of law and mistake of facts both can be rectified if are apparent from record. Such orders are to be passed within six months from the date of receipt of order. For that purpose application should be filed within 60 days from the date of receipt of the order. It is clearly provided that no order under this section which adversely affect the dealer shall be passed without giving an opportunity of hearing. It is pertinent to note that only the designated has power to rectify the error in order of settlement or rejection. Neither appellate nor reviewing authority can exercise such power to rectify errors in the order passed by them u/s 14 and 15 respectively.
Review of order of settlement/ appeal order
4. Section 15 provides for review of any orders passed under the act. Accordingly, where on scrutiny of record of order Commissioner has noticed that there is excess waiver of arrears which result in prejuidicial to the revenue, it may initiate review proceeding under said section and pass order within 12 months from the date of service of order. Thus, order of settlement and appeal orders are subject to review u/s 15 of the act. These powers are available to the department only and applicant has no right to apply to reviewing authority if aggrieved by the such order.
Appeal against order passed under any order under the act..
5. There is provision in section 14 for filing of appeal against any order passed by designated authority under this act. Being aggrieved by such order dealer may prefer appeal if it does not cover under scope of rectification. As per section 2(1) (b) of the act Appellate authority means the authority specified in sub section 1 of section 14 . Appeal against any order passed u/s 14 of the act shall lie to the following authorities.
Deputy commissioner of state tax (Administration) if the order is passed by Sales Tax Officer or Assistant Commissioner.
Joint commissioner of state tax (administration) if the order is passed by the Deputy Commissioner of state tax.
Additional commissioner of state tax if order is passed by Joint commissioner of state tax.
Thus, appeal may be filed against order of settlement, order of rejection, order of rectification or order of review.
Common grounds for filing of appeal.
6. Eligibility of arrears for settlement.
Dispute regarding category of arrears.
Incorrect determination of proportionate waiver of amount.
Dispute regarding whether tax is disputed tax or undisputed tax.
Incorrect determination of requisite amount.
Incorrect determination of amount of waiver.
Order passed without issue and service of defect notice.
No opportunity of being heard given before rejection of application or proportionate waiver of amount.
Appeal form.
7. Settlement act and rules does not provides any prescribed form for filing of an appeal. Therefore, an appeal may filed on plain papers, containing details of order, period of order, dates of order, date of service of order, designation of authority who have passed order, details of disputed amount of outstanding arrears, amount of requisite amount payable and paid and amount waiver sought and waived, issue of dispute and facts of case and grounds of appeal and prayer.
Appeal fee.
8. It is seen from provisions of the act, rule and circular instructions that no appeal fee is required to be paid while filing of appeal.
Time limit to file appeal.
9. As per provision of section 14 of the act an appeal shall be filed within sixty days from the date of the receipt of order. Therefore, it necessary to file an appeal within time.
Condonation of delay in filing of appeal.
10. Settlement act does not provide for condonation of delay in filing of appeal. Under the provisions of earlier settlement act 2019 there was specific provision provisions to condone delay. Therefore, it is important to note that appeal should be filed within 60 days from the date of the receipt of the order.
Requirement of part payment.
11. Settlement order does not create any new demand of tax interest or penalty. On the contrary it reduces such demand which is outstanding as per statutory orders by way of granting waiver of amounts. Hence, no part payment is necessary while filing of an appeal.
Appeal procedure.
12. No specific appeal procedure has been prescribed in the act, rule or circular. This act is independent act therefore provisions of any other acts are not applicable. In such situation settled procedure by court decisions be adopted. Principle of natural justice must be followed by giving sufficient of being heard and reasonable time must be given to the appellant to submit say and documentary evidences during the course of final hearing of appeal.
Powers of the appellate authority.
13. As per section 14 (3) of the act the appellate authority has power to pass such order, as it think just and proper after making such further enquiry,as may be necessary. It now well settled principle that the appellate authority under any taxation statute has inherent powers, to pass such order as it think just and proper, confirming, modifiying, or annulling of order appealed against. Powers of appellate authority is co-terminus with that of original authority which passed order. He can do what the latter could do. He can also do what latter failed to do.Thus, it is seen that appellate authority has wide powers to decide appeal and to pass judicious order.
Appeal order.
14. No Appeal order form has been prescribed in the act and rules. Therefore, appeal order shall be passed in writing on plain paper, stating therein points of determination, decision thereon and reasons for such decision. It is expected that appeal order must be speaking and well reasoned.
15. Restoration of appeal.
16. Under the Mvat act there was provision of restoration of appeal, where appeal is decided ex party for non attendance subject to sufficient cause for non attendance. In such cases appellant could file application for restoration of appeal. However, no such provision are present in this act and provisions of Mvat act are not applicable being independent act. Therefore, an appellant should be very punctual and sincere in attending the proceeding and in making detailed submission along with relevant documentary evidences. He must not forget that this is first and last appeal and also no provision for restoration of appeal if dismissed for non attendance.
No provision of second appeal.
17. Under the relevant acts there was provision to file second appeal to the Tribunal against the first appeal order. There is no such provision in this act for filing of second appeal against the appeal order. Thus, it is seen that only one appeal is permissible and it is first and final appeal against order of settlement.
Whether review application can be filed against appeal order.
18. Section 15 of the act provides for review by superior authority of any order passed under the act by lower authority, where on examination of records noticed that order is prejudicial to the interest of revenue. Appeal orders are subject to review. However, there is no provision in the section to review the order where it is prejudicial to the interest of the dealer. This act does not provide any other legal remedy when appellant is not satisfied with the appeal order. It is pertinent to note that act does not provide for rectification of appeal order even error apparent from record.
Conclusion.
19. Act provides for appeal against order passed u/s 13 of the act. However, there is no provision to file second appeal against appeal order. There is also no provision in the act to rectify any error in appeal order. There may be certain disputes remained in appeal order due to difference of opinion or certain errors. In such cases aggrieved appellant has no legal remedy except to file writ in High Court. However, it is not feasible and possible to every dealer considering nature of dispute and quantum involved. In this background, if any legal remedy is provided to the dealers who are not satisfied by appeal order, by way of review/rectification of appeal order on application, will serve the intent of Settlement act and would get justice to such aggrieved dealers.
Author can be reached via email at momakanadje@gmail.com.
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