The Madhya Pradesh High Court has ruled that taxpayers with ongoing appeals are entitled to 50% relief under the Madhya Pradesh Karadhan Adhiniyamon Ki Puranee Bakaya Rashi Ka Samadhan Adhyadesh, 2020 — commonly referred to as the 2020 Samadhan Scheme.
The division bench of Justice Vivek Rusia and Justice Binod Kumar Dwivedi made this observation while hearing the case of M/s Hindustan Equipment Pvt. Ltd. The petitioner is a manufacturer of machinery equipment based in Indore, Madhya Pradesh.
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The assessment for the financial year 2012-2013 under the Central Sales Tax Act had led to an additional demand of ₹20,88,443 against the petitioner due to the non-submission of Form-C certificates. The petitioner challenged the assessment before the Deputy Commissioner of Commercial Tax by depositing ₹5,24,000. The appellate authority granted relief of ₹5,04,362 and reduced the demand to ₹10,60,081.
Further challenging the revised order, the petitioner approached the Madhya Pradesh Commercial Tax Appellate Board (MPCTAB), depositing 20% of the balance. While the appeal was still pending, the 2020 Ordinance came into effect, aiming to resolve old tax dues.
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According to the petitioner, under Clause ‘f’ of Section 2(1) of the Ordinance, a disputed amount includes any tax demand involved in ongoing litigation before an appellate authority. Based on this definition, the petitioner deposited ₹3,17,622 — equivalent to 50% of the demand, seeking settlement under Category 3 of Section 4(1) which deals with disputed amounts.
However, the tax department rejected this application, classifying the case under Category 1 — which pertains to tax demands related to missing statutory certificates or declarations like Form-C. This would have required the petitioner to pay the full balance amount of ₹5,29,475.
The petitioner argued that the demand amount was already under appeal before the appellate board and should be treated as a disputed amount. The department, however, maintained that since the demand originated due to non-submission of Form-C, it falls under the statutory certificate category.
The court closely examined the details and clarified:
“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 court acknowledged that the petitioner submitted Form-C valued at ₹46,76,808 during the appeal, and the relief granted by the appellate authority reduced the demand to ₹15,84,081 — which qualifies as a disputed amount.
Therefore, the High Court directed that:
“The petitioner’s case is pending before the appellate authority, as per the definition of Clause 2(f). The settlement amount is liable to be calculated on the basis of the disputed amount.”
Accordingly, the court quashed the tax department’s earlier orders and directed the petitioner’s case to be considered under Category 3 of Section 4(1) of the Ordinance.
Case Title:
M/s Hindustan Equipment Pvt. Ltd. (Unit 1) vs. State of Madhya Pradesh & Others
Writ Petition No. 12770 of 2021