Telangana Government issues OTS scheme to settle disputed tax under the legacy Acts

The Commercial Taxes department, the Government of Telangana has announced a one-time settlement (OTS) scheme vide G.O.Ms. No. 45 dated May 09, 2022 to settle disputed tax under the legacy Acts such as the Andhra Pradesh General Sales Tax Act (1957), the Telangana Value Added Tax Act (2005), the Central Sales Tax Act (1956), and the Telangana Entry of the Goods into Local Areas Act (2001) known as The Telangana State One-Time Settlement Scheme 2022.

According to the state’s commissioner of commercial taxes, arrears amount of around Rs 3000 crores are pending in various stages of litigation and that this amount is not readily recoverable. In similar context, the state Governments of Maharashtra, Karnataka, Kerala, Bihar and West Bengal have introduced One Time Settlement scheme for disputed taxes. Therefore, the Commissioner of Commercial Taxes, Telangana Hyderabad has proposed a One-Time Settlement Scheme of Tax Arrears to release this locked up revenue and requested the Government for necessary orders in the matter. 
The provisions of this scheme shall apply to all registered and unregistered dealers under the Andhra Pradesh General Sales Tax Act, 1957, the Telangana Value Added Tax Act, 2005, the Central Sales Tax Act, 1956 and the Telangana Entry of the Goods into Local Areas Act, 2001.

Provisions under the Telangana State One-Time Settlement Scheme 2022

For settlement of disputes under this Scheme, each year of assessment shall be a distinct unit.

A total of 100% of undisputed tax will be payable.

The following rates are applicable for disputed tax :

1. Under the Andhra Pradesh General Sales Tax, 40% of the balance tax will be collected from the dealer, while the remaining 60% of demand will be waived off

2. Under Value Added Tax & Central Sales Tax, 50% of the balance tax will be collected from the dealer and the remaining 50% of demand will be waived off

3. Entry tax on Motor Vehicle & Goods worth 60% of the balance tax will be collected from the dealer and the remaining 40% of demand will be waived off

For the dealers and/or people availing of the above scheme, the interest and the penalty shall be waived off. under this scheme.

No refunds are given under this scheme.

The timeframe under the One Time Settlement is as follows :

The procedure to avail this scheme is as follows:

i. The One-Time Settlement of Tax Arrears will be executed through an online module.

ii. The dealer shall apply for this scheme through an online application. Where the dealer is no more in business, he can apply offline in the respective jurisdictional Circle/STU.

iii. The application shall be scrutinized by a (3) member committee consisting of AC(ST) of Circle, DC(ST) and JC(ST) of the Division. The committee shall send a confirmation letter to the applicant by accepting/rejecting/modifying the proposal of the applicant.

iv. On receipt of the confirmation letter, the applicant will make the payment and submit the payment details along with necessary documents and the application for withdrawal of appeal (wherever applicable).

v. The proceedings for settlement of balance tax, penalty and/or interest will be issued after realization of the total tax payable and disposal of the case as withdrawn by the respective legal forum.

For the amounts payable higher than Rs 25 lakhs, an installment facility is provided without interest for up to 4 equal monthly installments. Bank interest rates will be applied to those seeking more installments. 

Notwithstanding anything contained in any provisions of the respective Acts, the appeal pending before the appellate authority or the Tribunal or the Court in respect of any order or notice, shall be withdrawn fully and un-conditionally by the applicant.

The Commissioner of Commercial Taxes, Hyderabad shall take necessary action accordingly.

The Federation of Telangana Chambers of Commerce and Industry (FTCCI) has thanked Telangana government for introducing One Time Settlement Scheme (OTS) 2022 under the legacy Acts such as Andhra Pradesh General Sales Tax Act, VAT Act, Central Sales Tax Act and Telangana Entry of the Goods into local areas Act.

“We are glad the long pending demand to address tax dispute that FTCCI has been raising on behalf of Telangana industry has been addressed by the State government,” president K. Bhasker Reddy said on Tuesday.