-CA Jayesh Gogri
-CA Nirav Nisar
The Government of Maharashtra has proposed to introduce an amnesty scheme to be called as “Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee 2022” (hereinafter referred to as “the Scheme”). In this article, an attempt has been made to cover Frequently Asked Questions about the Scheme.
1. What is the objective of the proposed Scheme?
Ans: In view of the Covid-19 pandemic, small industries, traders and other dealers have undergone a lot of financial stress. A large number of cases involving outstanding dues and litigation were pending under various Tax laws that have been repealed and subsumed into the Goods and Services Tax. In order to unlock the amount involved in the outstanding dues and reduce the old pending litigations, Government has introduced the Scheme.
2. Which are the laws proposed to be covered under the Scheme?
Ans.: Following laws are covered under the Scheme :
i. Maharashtra Value Added Tax Act, 2002
ii. Central Sales Tax Act, 1956
iii. Bombay Sales of Motor Spirit Taxation Act, 1958
iv. Bombay Sales Tax Act, 1959
v. Maharashtra Purchase Tax on Sugarcane Act, 1962
vi. Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975
vii. Maharashtra Sales Tax on the Transfer of Right to use any Goods for any Purpose Act, 1985
viii. Maharashtra Tax on Entry of Motor Vehicles into Local Areas Act, 1987
ix. Maharashtra Tax on Luxuries Act, 1987
x. Maharashtra Sales Tax on the Transfer of Property in Goods involved in the Execution of Works Contract (Re-enacted) Act, 1989
xi. Maharashtra Tax on the Entry of Goods into Local Areas Act, 2002
It may be noted that State Excise is not covered under the Scheme.
3. Whether the benefit under Scheme is proposed only for penalties? Is there any waiver for tax and interest?
Ans: Besides penalties, the benefit of Scheme is extended to arrears of tax, interest and late fees.
4. Who is eligible to file application under the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Scheme-2022?
Ans: Any person, whether registered or not, is eligible to make an application for settlement of arrears of tax, interest, penalty or late fee in respect of any period upto 30th June 2017.
5. Is a person eligible for the Scheme who had previously availed the benefit under Maharashtra Settlement of Arrears in Disputes Act, 2016 or Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Act, 2019?
Ans: Yes, it is specifically provided in Clause 4 of the Scheme that a person is eligible for the Scheme even if he has already availed benefit under Maharashtra Settlement of Arrears in Disputes Act, 2016 or Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Act, 2019.
6. A person has a liability of more than Rs. 10 lacs. Can he avail the benefit of this scheme?
Ans: Yes, there is no limit for being eligible to opt for the scheme.
7. A person has a liability of tax which is not yet disputed by him. Can he opt for the scheme?
Ans: Yes, as per Clause 4(1) of the Scheme, even for the arrears which are not disputed, a person can opt for the Scheme for waiver of interest and late fees. However, no relief will be available for tax component.
8. A person has disclosed certain tax liabilities in his return. However, due to financial issues, he could not discharge the liability. Can he opt for the scheme?
Ans: Yes, he can opt for the scheme for availing the waiver of interest, penalties and late fees. However, no waiver will be available in respect of tax liability disclosed in the returns.
9. A bank has a borrower, who has a huge liability of taxes. Can the bank opt for the scheme on behalf of the borrower to save borrower’s liability in order to protect its own interest ?
Ans: It appears that the financial institutions are also eligible to be called as “applicant” as defined under Clause 2(1)(c) of the Scheme. However, the scheme does not provide adequate clarification in respect of this situation. A suitable clarification is awaited from the Government.
10. A person had enrolled under the profession tax . But he forgot to pay the same for many years. Can he avail the scheme?
Ans: Yes, he can avail the benefit of the Scheme in respect of interest and penalties only and not in respect of tax. Clause 2(1)(q) which defines ‘un-disputed tax’ covers the tax payable by the enrollment certificate holder. Since, it is un-disputed tax, no waiver would be available in respect of such un-disputed tax.
11. How much relief is available under the Scheme?
Ans: Complete waiver of the arrears upto Rs. 10,000 per financial year as per any statutory order as on 01st April 2022 will be available under the Scheme.
In respect of other cases, the following benefits are available:
| Sr. No. | Particulars | Amount of waiver for the periods commencing on or after 1st April 2005 and ending on or before 30th June 2017 | Amount of waiver for the periods ending on or before 31st March 2005 | ||
| One-time payment option | Installment Option | One-time payment option | Installment Option | ||
| 1 | Un-disputed tax | Nil | |||
| 2 | Disputed Tax* | 50% | 44% | 70% | 66% |
| 3 | Interest* | 85% | 90% | ||
| 4 | Outstanding penalty* | 95% | |||
| 5 | Post-assessment interest or penalty not levied | 100% | |||
| 6 | Late-fee in respect of return filed on or before 31st March 2022* | 95% | Not applicable | ||
*In case the amount of arrears is upto Rs. 10 lakhs as per statutory order, an applicant may opt to pay for lump sum payment of 20% and avail 80% waiver.
12. Post receipt of settlement order under the Scheme, whether other proceedings like prosecution, etc. can still be launched?
Ans: As per Clause 13(1) of the Scheme, an applicant shall be discharged of his liabilities to the extent of amount of waiver specified in the order. However, there is no clarity in the Scheme in respect of closure of other proceedings like prosecution.
13. What is the procedure to claim the benefit under the Scheme?
Ans: A person is required to file an application.
An applicant is required to make full payment under One Time Payment Option before making the application. However, in case the tax arrears are in excess of Rs. 50 lakhs, then an applicant has option to select the payment in installments. In such a case, he has to pay minimum 25% before making the application. The payment shall be made in challan prescribed under the Relevant Act or in MTR-6 challan.
Pursuant to such application, if Designated Committee is satisfied with the application and payment, Designated Committee shall pass an order and thereupon, applicant shall be discharged of his liability to the extent of waiver specified in the order of settlement.
If the application is not in accordance with the provisions of the Scheme, Designated Committee can reject the application by passing an order in writing after providing an opportunity of being heard to the applicant. However, per clause 8(7), in no case any application will be rejected merely on the ground of payment made is less than the requisite amount.
14. How many applications are required to be filed by the applicant?
Ans: An applicant is required to file separate application for each of the following type of arrears. Arrears means outstanding amount of tax, interest, penalty or late fee under Relevant Act:
i. payable as per statutory order, or
ii. admitted in the returns/revised return but not paid, or
iii. determined/recommended as payable by the Auditor
All the applications will be required to be filed separately for each Financial Year.
15. What is the time limit to file an application under the Scheme?
Ans: The time limit for filing an application under the scheme is from 1st April 2022 to 14th October 2022. However, the payment of arrears is a pre-requisite to file an application. In case, a person has opted for payment in instalments, minimum 25% of arrears should have been paid prior to making the application.
16. What if an applicant is unable to file the application within time limit?
Ans: If an application is not filed within the specified time limit, then a delay upto 30 days may be condoned by the Designated Committee subject to payment of requisite amount within time limit.
17. What is the time limit to make payment under the Scheme?
Ans: The time limits for making payment of requisite amounts under the Scheme are as follows:
| Option 1: One-time Payment Option | Option 2: Instalment Option |
| From 1st April 2022 to 30th September 2022 |
• 1st installment shall be atleast 25% and payable from 1st April 2022 to 30th September 2022. • Remaining amount is payable in three equal quarterly installments from the date of application. All installments shall be paid within 9 months from the date of application |
18. What if an applicant is unable to make payment of requisite amount within time limit?
Ans: Since the application cannot be made without payment of taxes, therefore, failure to make payment within time limit can arise only in case of Instalment option in respect of installments. In such a situation, interest will be applicable at the rate of 12% per annum on the amount of installments which are not paid within the time limit.
It is important to note, if all the 3 installments are not paid within 9 months from the date of application, then the Designated Committee shall compute the amount of waiver in proportion to the amount paid by applicant.
19. Can the application under the Scheme be rejected?
Ans: If the application is not in accordance with the provisions of the Scheme, then Designated Committee can reject the application by passing an order in writing after providing an opportunity of being heard to the applicant.
20. What happens to the payment already made under the scheme, if the application is rejected?
Ans: It appears from the proviso to Clause 18 of the Scheme that an applicant is not entitled to get the refund of any amount paid under the Scheme. However, such amount shall be appropriated against the arrears of the relevant Act and the balance liability shall continue to be payable.
21. Can appeal be kept live until the applicant gets the final acceptance order of an application under the scheme?
Ans: No, as per conditions of applying for the Scheme, an appeal is required to be withdrawn fully and un-conditionally by the applicant.
22. What will happen to appeal if the application under the scheme is rejected? Will there be any requirement of making any fresh appeal?
Ans: If an applicant has withdrawn the appeal in order to become eligible to apply under the scheme, then, on rejection of the application, such appeal can be reinstated by making an application to the Appellate Authority.
23. Will there be any requirement of making a pre-deposit once again in case of re-instatement of appeal?
Ans: Pre-deposit paid at the time of filing original appeal, would continue to serve as a pre-deposit for the reinstated Appeal.
24. Can an applicant file an appeal against the order rejecting application passed by Designated Committee?
Ans: Yes, if an application is rejected by the Designated Committee, an applicant can file an appeal against the rejection order within 60 days from the date of receipt of such rejection order.
25. Is there any second appeal?
Ans: No, there is no option to file second appeal in respect of rejection of application.
26. Can the order under the Scheme be reviewed?
Ans: Yes, the settlement order can be reviewed by the Commissioner within 12 months from the date of service of such order.
27. Can the order under the Scheme be revoked?
Ans: Yes, the order under the scheme can be revoked within 2 years from the end of financial year in which such order of settlement is served, if it appears to the Designated Committee that the applicant has obtained the benefit of settlement, by suppressing any material information or particulars or by furnishing any incorrect or false information.
28. What happens to the assessment, re-assessment, rectification, revision, review or appeal if the order under the Scheme is revoked?
Ans: If an order under the Scheme is revoked then the assessment, re-assessment, rectification, revision, review or appeal, covered by such order shall stand revived and reinstated immediately upon such revocation as if no settlement order under the Scheme was passed.
Also, if the time limit to conclude assessment, re-assessment, rectification, revision or review is expiring within 2 years from the date of settlement order then respective authorities shall have a period of 2 years from the date of revocation of order under the Scheme to conclude such assessment, re-assessment, rectification, revision or review.
Conclusion: It’s really a good initiative by the Government of Maharashtra to reduce on-going litigation after advent of GST and Covid-19 pandemic. However, it is recommended that the payment of arrears thru instalment option should have been made available to all the taxpayers including taxpayers having arrears less than Rs. 50 lakhs. Also, it is imperative that the Government should bring a clarificatory Circular for clarifying certain doubts pointed out in the article.
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