Kar Samadhan Yojna- Here’s all you need to know about settling your pending tax-related disputes

EXPERT OPINION: Rajiv Agarwal, Advocate and Tax Practitioner

The Government of Jharkhand launched the Jharkhand Amnesty Scheme 2022 on the 1st of February 2023. The Act is known as the “Jharkhand Karadhan Adhiniyamon ki Bakaya Rashi ka Samadhan Act, 2022” (in short Kar Samadhan Yojna 2022).

There are around 5000 cases pending in Jharkhand and the total tax due including interest and penalties in these cases are roughly Rs. 3,690 Crores. The State Government aims to collect Rs 500 Crores in three months through this scheme.

Kar Samadhan Yojna gives an opportunity to all dealers registered under various acts to clear disputes.

The Acts which are covered under this scheme are:-

1. The Bihar Finance Act, 1981(Bihar Act 5 of 1981) and The Bihar Finance Act, 1981 as adopted in the State of Jharkhand
2. The Central Sales Tax Act 1956 (Act74 of 1956)
3. Jharkhand Value Added Tax Act, 2005 (Act 05 of 2006)
4. Adopted and amended the Bihar Electricity Duty Act, 1948 (Bihar Act 36 of 1948) and amended Act 10 of 2011 by Jharkhand
5. Jharkhand Taxation on Luxuries in Hotels Act, 2011 (Jharkhand Act 21 of 2011
6. Jharkhand Advertisement Act 2012 (Jharkhand Act 14 of 2012)
7. Jharkhand Tax on Professions, Trades, Calling and Employment Act, 2011
8. Jharkhand Entertainment Tax Act, 2012(Jharkhand Act 13 of 2012)
9. The Bihar Tax on Entry of Goods Act, 1993 (Bihar Act 16, 1993) and Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011(Jharkhand Act No. 11, 2011)

Kar Samadhan Yojna 2022 gives a great opportunity to all dealers registered under the various acts to avail the scheme as follows related to the disputes , the types of disputes and the warranty under the schemes are :-

1. Arrear of admitted tax – 100 % Payment
2. Arrear amount of assessed tax upto Financial year 2017-18. :- 40% of the difference between the tax component of assessed tax and the amount of tax already paid (60% waiver)
3. Arrear amount related to statutory declarations/Forms/ certificates upto Financial Year 2017-18 :- 50% of the unpaid amount of tax calculated after the deduction of (50% waiver)
4. Any arrear in dispute other than mentioned in Sl. No. 1, 2 and 3 40% of tax in dispute provided the same has not been decleared/considered in any order/assessment/reassessment (60% waiver)
5. The most impornat is to pay only 10% of the unpaid amount of interest and penalty as per statutory order (90% waiver)

All applications under the scheme can be made ONLINE through the VAT portal of the Government of Jharkhand with the dealers old ID and Password. In case the ID and password is lost the same can be regenerated online.

The Scheme mandates that the applications for the settlement has to be made within 90 days from the date of this Act coming into force, ie. 1st of February 2023. However, the Commissioner may extend the said period for filing the application for a further period (not exceeding thirty days).

While filing the online application the applicant needs to make disclosure about any pending appeal, revision or any petition before any Authority or Forum with respect to such arrear in dispute under relevant Act.

An undertaking needs be furnished along with the application and copy of undertaking shall be forwarded to the Forum, before which such dispute is pending.

The application will fall under various officers as per their Jurisdiction for settlement of dispute as per the following limits of old arrears:

(i)            Commercial Taxes/ State Tax Officer for the amount not exceeding Rs 5 lakh;

(ii)           Assistant Commissioner of Commercial Taxes/ State Tax not exceeding Rs 10 lakh;

(iii)          Deputy Commissioner of Commercial Taxes / State Tax not exceeding Rs 50 Lakhs;

(iv)         Joint Commissioner of Commercial Taxes / State Tax for more than Rs 50 Lakhs;

However, the Commissioner may transfer any application from one prescribed authority to another for disposal.

After the application is made online, the hard copy of the application has to be filed manually. The prescribed authority will scrutinize the application filed and if it is found correct and complete, will pass settlement order in the manner as prescribed.

If the application is found incomplete or incorrect in any manner, a notice shall be issued to the applicant within 15 days, intimating deficiency to rectify the same within 15 days from the date of service of such notice;

Provided that where the applicant fails to comply the notice or fails to submit the required documents within 15 days of service of such notice, the prescribed authority may process or reject the application.

The prescribed authority shall, on being satisfied about the fulfillment and correctness, pass the order of settlement, within 30 days from the date of submission of complete Application, for each separately, specifying therein the amount of settlement to be paid and intimate the applicant in the manner prescribed.

There is a provision of rectification or revocation of the order of settlement in case there is an error committed by the officers or if any wrong orders are passed, but the same can only be done after giving a reasonable opportunity of hearing to the applicant.

The Commissioner of Commercial /State Tax is also given the power to transfer the applications filed from one officer to another in case he feels it necessary to do so in the interest of the disposal of the matters.

There is a provision of Appeals in case the applicant feels that his application filed for settlement is not as per his expectations or if the same is rejected without affording opportunity of hearing.

An appeal against the order of settlement passed by the Prescribed Authority, shall be filed before the Additional/Joint commissioner (Appeal) of the Division, having jurisdiction as specified in sub- section (2) of Section 4 of the Jharkhand Value Added Tax Act, 2005 within 30 days from the date of service of such order.

The Appellate authority shall pass an order, after giving opportunity of hearing, within 60 days of filing of such application of appeal. While disposing off the appeal, the appellate authority may wither set aside the order of settlement and remand the same, reject the appeal. That the Orders being passed by Appellate Authority shall be final.

The Rules are yet to be declared and soon the website will also be ready to help all dealers file the applications online.

(Rajiv Agrawal is an expert in Taxation Laws and has been practicing in Jamshedpur and Ranchi for more than 22 years. He has been active in various organisations like Rotary Club  and actively works  with Singhbhum Chamber of Commerce and Industries as a co-opted member. He is also associated with various NGO specially MRA Initiatives of Change, Panchgani)