The last few decades have witnessed a number of legislations introduced to close the gap between the revenue demands raised by various Governments and realisation of such demands by legal means. Audit exercise from time-to-time pointed out the huge gap between the two and legislatures in their turn became in fact more and more alert to the criticism by the opposition vociferously condemning the flaws in the process of realisation of the dues.

Another reason would motivate the Governments to focus on unrealised dues. A state suffering from resource crunch would try all possible means to augment the collection of revenue. In good old days financial crises were not so usual. And therefore focus on unrealised dues was rather little known.

The consideration behind greater amount of attention to revenue realisation is destined to be debated by the economists. Whether financial crises alone prompted the drives for greater collection of unrealised dues? Or they are actually people friendly measures as often claimed by Government department and agencies? We leave this debate to the academics for we know for certain there is no clear end of this debate in sight.

In the present article, I will take up a few important aspects of the Settlement of Dispute Act 2018 that has come into force in the State of West Bengal.

Basic features of the SOD

I would now briefly discuss the basic features of the Act considered by many as a very assessee friendly one compared to several of its earlier incarnations. It encompasses several Acts administered in the State of West Bengal and enlarged the scope of settlement of arrear tax, penalty, late fee or interest arising out of any proceeding including audit, special audit, assessment, appeal, revision, review or for recovery of arrear dues of the following Acts:

1. The West Bengal Value Added Tax Act, 2003

2. The West Bengal Sales Tax Act, 1994

3. The Central Sales Tax Act, 1956

4. The Bengal Finance (Sales Tax) Act, 1941

5. The Bengal Raw Jute Taxation Act, 1941

6. The West Bengal Sales Tax Act, 1954

7. The West Bengal Motor Spirit Sales Tax Act, 1974, and

8. The West Bengal Tax on Entry of Goods into Local Areas Act, 2012

For settlement of dispute, a “case pending” means a case which is pending as on the 31st day of October, 2018 under the aforesaid Acts, for which:

(i) An audit, special audit or assessment has been made; or

(ii) An appeal, revision or review petition has been filed; or

(iii) A revision or review proceeding has been initiated; or

(iv) A notice or order has been issued intimating the applicant for payment of tax, interest, late fee or penalty; or

(v) A notice has been issued in any proceedings under the above Acts proposing payment of tax, interest, late fee or penalty.

It may be mentioned here for the sake of clarity that arrear tax in dispute also includes such Entry Tax which is payable by a dealer/importer even if the applicant is not in possession of any notice/ order/ demand notice.

The dispute can be settled upon payment as shown in the table below:-

TABLE-1

Sl. No.	Dispute related to:	Amount to be paid for settlement:
1	Arrear tax for non furnishing/ non-production of statutory Certificates/ Declarations	100% of remaining balance amount of arrear tax in dispute after adjusting Certificates/ Declarations in possession of applicant till the date of application, or the amount already paid towards such arrear, whichever is higher;
2	Arrear entry tax*	100% of arrear tax in dispute or the amount already paid towards such arrear, whichever is higher;
3	Arrear tax otherwise admitted in returns furnished or in writing before any Authority	100% of arrear tax in dispute or the amount already paid towards such arrear, whichever is higher;
4	Any other arrear tax not covered by serial nos. 1, 2 and 3 above	Option for full payment at the time of application	Option for payment by Installment
		35% of arrear tax in dispute or the amount already paid towards such arrear, which- ever is higher;	40% of arrear tax in dispute or the amount already paid towards such arrear, which- ever is higher. (Proof of 15% of arrear tax in dispute and prayer for payment in installment to be furnished with application. Balance amount to be paid in maximum 3 installments from the month following the month when application made)
5	Any arrear interest related to arrear tax in dispute	Nil
6	Any arrear late fee	Nil
7	Any arrear penalty related to late payment or non-payment of any tax or for defaulting in furnishing return for the eligible period	Nil
8	Any arrear penalty not covered by serial no. 7	50% of arrear penalty in dispute or the amount already paid towards such arrear, whichever is higher;

Any application pending before the Hon’ble Supreme Court, Hon’ble High Court or Hon’ble West Bengal Taxation Tribunal can also be settled provided leave is sought from the respective Court or Tribunal and submitted before the Designated Authority on or after the date of submission of Form 1 but not later than 2 months from the date of application or such further time as may be allowed by Designated Authority upon prayer. Further, if a case was pending before the Hon’ble Supreme Court, Hon’ble High Court or Hon’ble West Bengal Taxation Tribunal on 31-10-2018 but final order is passed after 31-10-2018 but before the date of filing application for settlement, the copy of such order is to be furnished in lieu of order of granting leave.

A detailed discussion of the functioning of the Acts mentioned hereinabove and the way they would cope with the new SOD is not within the scope of this brief article. It might appear to be alluring to the assesses that merely a payment of 35% of the assessed dues would make an assessee eligible for the SOD, Further, the dealer won’t be required to pay the amount of interest imposed. As regards penalty imposed there is no silver lining however. If the assessee opts for payments in instalments he will have to pay his dues in three instalments at most. But payment in instalments will require the assessee to pay 45% of the assessed dues instead of the 35% prescribed for the onetime payment option.

Entry Tax assessees have however been dished out something unsavoury. Those opting for SOD are required to pay 100% of the assessed dues. They are not however supposed to pay interest or penalty. However, a dealer/importer is not liable to pay Entry Tax for any of the periods under settlement, if his turnover of import of specified goods does not exceed ₹ 5 lakh in a return period, subject to a maximum turnover of ₹ 20 lakhs in a year.

The assessees interested in the offer and willing to opt for SOD will have to apply in Form I to the appropriate designated Authority. A wide range of cases have been brought under the purview of the Act. Cases pending before the Hon’ble High Court and the Hon’ble West Bengal Taxation Tribunal as well as those before the Review and Revisional and Appellate Authority with relevant proceedings in relation to them being initiated have come under the umbrella of the SOD.

There is little doubt that many assessees will find the terms of SOD acceptable. But many others we know for certain will find no solution to their perennial problems like harsh assessments with little concern for the reality and astronomical demands arising out of such assessments. We know of assessees making no transactions in a given year but assessed to billions of rupees. The SOD will provide no relief for them. Payment of even 35% of such astronomical demand would simply be beyond reach of the hapless assessee and ruinous for his business enterprise.

We have in a nutshell considered the basic features of the SOD. What appears to be logical now is a demand for a little more justice from the relevant authorities; a little more caution and care that would eliminate the occurrences of astronomical demands of assessed dues every year bringing about ruins for hundreds of business enterprises all over India.

The last date for filing application for settlement of dispute in a case pending is 31st March, 2019.