One Time Settlement Scheme under Punjab VAT Act & CST Act

With the advent of GST and dawn of old indirect tax regime in the form of  VAT, service tax and central excise etc, the State and Central Governments are looking forward to bring an end to the litigation in the older regime and in consequence thereof we are witnessing lot of dispute resolution schemes introduced by Central and State Governments.

The Punjab Government, Department of Excise and Taxation has also introduced a one time settlement scheme for outstanding dues under Punjab VAT Act , 2005 and CST Act, 1956 (hereinafter called as relevant Acts) on 18.01.2021 and implemented wef 15.01.2021. The scheme aims at giving relief to the small taxpayers in the form of waiver from interest penalties and partial waiver from tax already due in the assessments. The various features of the scheme are as under:

1. Applicability: The scheme is applicable for all the outstanding dues created in assessments completed till 31^st December 2020 under the Punjab VAT Act, 2005 and CST Act, 1956. One has to apply under the scheme by 30^th April 2021.

2. Who can apply: Any persons whose assessment has been made under the relevant Act till 31^st December 2020 is eligible to apply under the scheme. Scheme is not applicable for those persons on whom penalty or other demand has been imposed/raised without assessment, for example scheme is not applicable for road side penalty u/s 51 of the Punjab VAT Act, 2005.

3. Procedure:

(a) A person seeking to apply under the scheme has to file an application in form OTS-1.

(b) Additional statutory forms  for example C, F, H , I etc  if any, which could not be produced at the time of assessment  can also be submitted along with application for further reduction in additional demand.

(c) Along with the application proof of payment of tax determined under the scheme after waiver has also to be submitted.

(d) Once application is submitted an acknowledgement in form OTS-2 shall be issued.

(e) If all the tax determined and deposited is found to be correct along with other particulars required to be mentioned in the application, an order of settlement in form OTS-4 shall be passed or

(f) If there is any deficiency the a notice in OTS-3 will be issued to complete the same within 7 days.

4. Appeal cases: The scheme is also applicable for appeal cases i.e cases where appeal is pending before any of the appellate authorities i.e the Deputy Excise and taxation commissioner (Appeals) or Tribunal or High Court or Supreme court. However in appeal cases a declaration shall be submitted that once the dues are settled under the scheme , the applicant shall withdraw such appeal within a period of seven days from the date of communication of order of settlement and the proof thereof shall be submitted to the concerned officer.

5. Extent of waiver: The scheme provides for waiver of 100% of interest and penalty upto an additional demand of Rs. 500000/- and additional 90% waiver from tax in case where additional demand is upto Rs. 100000/-. There is no relief to taxpayers whose additional demand is more than Rs. 5 lakh. It is pertinent to mention here that additional demand is ussualy the sum total of tax interest and penalty imposed in the assessment order.

The slab of additional demand has to be calculated (so far CST Act is concerned ) after reduction on account of additional statutory declaration forms.

It can be explained with the help of an example as follows:

Now in above example although additional demand as per assessment order is 150000/- but after submission of additional statutory forms if the reduction in tax and interest comes to Rs. 50000/- then the slab for giving waiver under the scheme would be Rs. 100000/- and thus there will be waiver from tax element  left after reduction  @ 90% apart from 100% waiver from interest and penalty.

In case of appeal where 25% of additional demand is already deposited which was a pre-requisite for entertaining an appeal on merits u/s 62(5) of Punjab VAT Act, 2005, the waiver will be such 25% of additional demand or the amount of waiver as per scheme as discussed above whichever is higher.

Certain terms and conditions:

(a) Application in form OTS-1 has to be filed saperately for every assessment year and accordingly order of settlement shall be issued under the relevant Act.

(b) No refund shall be given in respect of 25% deposited of additional demand in appeal cases.

(c) In appeal casee appeal has to be withdrawn within 7 days from the communication of order of settlement otherwise the order stands cancelled.

(d) An order of settlement shall not be reopened in any proceedings by way of review or revision or any other proceedings under the relevant Act.

(e) Any determined amount paid undrer the scheme shall not be refundable.

(f) No appeals against the settlement order shall lie before any of the appellate authorities

(g) Any tax shown as paid in the assessment order if is later found to be actually unpaid, then the same shall be recoverable along with applicable interest and penalty, if any, under the relevant provisions of the Act, notwithstanding with the scheme.

Table of waiver