Requirement of statutory order to settle return dues under payment of lump sum amount option under Maharashtra Settlement of Arrears of Tax, Interest and Penalty act 2022.

In this article issue, whether return dues eligible for payment of lump sum amount option under Maharashtra Settlement of Arrears of Tax, Interest and Penalty act 2022 is discussed.

Introduction

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.One time payment option and instalment option( only for arrears fifty lakh and above per order) is available for payment of requisite amount. 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. Duration of scheme is 1-04-2022 to 30-09-2022.

Provision of payment of lump sum amount

Section 8(1) (b) and Annexure A of the settlement act provides that, where amount of outstanding arrears as on 1-04-2022, as per any statutory order is Rs Ten lakh or less, the applicant may opt for payment of lump sum amount 20 % of such arrears for waiver of remaining arrears. In such cases applicant is not require to pay requisite amount as per Sr no 1 to 5 of Annexure A or B of the settlement act.

Section 8(1) (b) of the settlement act.

notwithstanding anything contained in this section and section 9, where arrears determined as per section 6, of tax, interest, penalty or late fee as per any statutory order is of rupees ten lakh or less and if, the applicant opts for payment of a lump sum amount under One Time Payment option, then the extent of lump sum payment and applicable waiver shall be as specified in Annexure-A or Annexure-B, as the case may be

Plain reading of section 8(1)(b) and Annexure A/B indicate that if the amount of arrears outstanding as on 1-04-2022, after adjustment of payments made before 31-03-2022, is Rs Ten lakh or less then the applicant will be eligible to avail benefit of settlement of arrears by making payment of 20 % of such arrears under payment of lump sum amount .

Eligibility conditions for payment of lump sum amount.

Outstanding arrears as on 1-04-2022 should not exceed Rs Ten lakh .

Such arrears should be as per statutory order.

Return dues or ask to pay dues as per Audit report 704 are not eligible.

Relevant definition – “ arrears” ,“ statutory order” and “return dues”

Section 2 (1) )(d) – arrears” means the outstanding amount of tax, interest, penalty or late fee, as the case may be,-

(i) payable by an assessee as per any statutory order under the Relevant Act; or

(ii) admitted in the return or, as the case may be, the revised return filed under the Relevant Act and which has not been paid either wholly or partly; or

(iii) determined and recommended to be payable by the auditor, in the audit report submitted as per section 61 of the Value Added Tax Act, whether the notice under section 32 or 32A of the Value Added Tax Act,

“statutory orderunder section 2(1)(o) of the act. means any order passed under the Relevant Act, raising the demand of tax, interest, penalty or late fee payable by the applicant

2(1)(m) “return dues

means the amount of tax, interest or late fee, admitted in the return or the revised return filed under the Relevant Act in respect of the specified period but which has remained un-paid either wholly or partly at any time on or before the 1st April 2022 .

In view of provisions of section 8(1)(b),2(1)(d) and 2(1) (o) of the act, it s clear that outstanding amount of tax , interest and penalty admitted in the return, for which no statutory order has been passed , is not eligible for benefit of payment of lump sum amount of 20% even amount of arrears are less than Rs Ten lakh.

The Commissioner of State Tax vide Trade circular no 1/2022 in para 3.5 has clarified that payment of lump sum amount option would not be available to settle return dues.

Similarly ask to pay amount i.e. outstanding amount of tax, interest and penalty determined and recommended to be payable by the auditor, in the audit report submitted as per section 61 of the Value Added Tax Act, whether the notice under section 32 or 32A of the Value Added Tax Act, has been issued or not, is not eligible for benefit of lump sum payment of 20% even amount of arrears are less than Rs Ten lakh ,as no statutory order is passed.

Conclusion

In view of the above it appears that return dues are not eligible to settle under payment of lump sum amount option under Maharashtra Settlement of Arrears of Tax, Interest and Penalty act 2022 , even though the amount of arrears is less than Rs Ten lakh.

M M Kanadje Author can be reached via Email momakanadje@gmail.com

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