Taxpayers Under Litigation Eligible for 50% Settlement Under 2020 Samadhan Scheme, Not Full Payment: MP High Court
The Madhya Pradesh High Court has held that taxpayers whose demands are under litigation at the appellate stage are entitled to benefit from the concessional 50% tax settlement under the MP Karadhan Adhiniyamon Ki Purani Bakaya Rashi Ka Samadhan Adhyadesh, 2020 (commonly known as the Samadhan Scheme).
The bench of Justice Vivek Rusia and Justice Binod Kumar Dwivedi has observed that the demand had arisen due to the non-submission of Form-C, but the matter was already pending before appellate authorities, establishing it as a disputed amount. The authorities' insistence on full payment without considering the status of pending appeals was held to be illegal and contrary to the provisions of the Ordinance.
The bench clarified that categorization under the Samadhan Scheme must be determined by the procedural stage of the matter (i.e., pending litigation), and not merely by the reason for the tax demand.
The petitioner/assessee is engaged in the manufacturing of machinery types of equipment in its factory situated at Sanwer Road, Indore (M.P.). The petitioner’s assessment for the financial year 01.04.2012 to 31.03.2013 under the Central Sales Tax Act was completed and an additional demand of Rs.20,88,443/- was issued against the petitioner. The demand was calculated due to the non-submission of C-Forms.
The petitioner preferred an appeal before the Deputy Commissioner, Commercial Tax, Division-I by depositing the additional demand of Rs.5,24,000. The appellate authority granted the tax relief of Rs.5,04,362/-, therefore, as per the order of the First Appellate Authority, the demand was reduced to Rs.10,60,081.
The petitioner challenged the order of First Appellate Authority before the Madhya Pradesh Commercial Tax Appellate Board, Indore on 17.06.2016 by depositing 20% of the balance amount of Rs.2,12,021.
During the pendency of this appeal, the State Government came up with the ordinance in the name of The Madhya Pradesh Karadhan Adhiniyamon Ki Puranee Bakaya Rashi Ka Samadhan Adhyadesh, 2020. According to the petitioner, Clause ‘f’ of Section 2(1) defines the ‘disputed amount’.
According to this any demand against which the litigation has been filed before the appellate authority. Therefore, for the purpose of settlement under this Ordinance, the disputed amount will be the amount pending in the litigation before the MPCTAB. The petitioner applied in a prescribed form on 21.01.2021 to get the benefit of the Ordinance.
The petitioner deposited the amount of Rs.3,17,622/- which is a 50% amount of the demand of tax. Respondent rejected the claim of the petitioner in order to pay an extra amount to the tune of Rs.5,29,475/- which is equal to the 100% of the remaining balance amount of the arrears of tax.
The court held that had the petitioner submitted an application for settlement under the Ordinance during the pendency of the proceeding before the Assessment Officer, then certainly this case would have fallen under category 1, but now that stage has crossed. The petitioner’s case is pending before the appellate authority as per the definition of 2(f) the settlement amount is liable to be calculated on the basis of the disputed amount.
Case Details
Case No.: Writ Petition No. 12770 Of 2021
Date: 30.06.2025
Counsel For Petitioner: Harshvardhan Sharma – Advocate
Counsel For Respondent: Bhuwan Gautam – Govt. Advocate for the respondent / State
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
