Earlier the Government of Punjab had introduced a scheme named the Punjab One Time Settlement of Outstanding Dues Scheme, 2021. The scheme provided for the waiver of outstanding dues of tax, interest, and penalty under the PVAT and CST and applied to assessments completed till 31st December 2020.

Now, in exercise of the powers conferred by section 29-A of the Punjab Value Added Tax Act, 2005 (Punjab Act No. 8 of 2005) read with sub-section (2) of section 9 of the Central Sales Tax Act, 1956 (Central Act No. 74 of 1956), and all other powers enabling him in this behalf, the Governor of Punjab, has introduced a scheme with similar provisions and purpose vide notification No. S.O. 142/P.A.8/2005/S.29-A/C.A.74/1956/S.9/2021 dated 17th December, 2021 i.e. Punjab One Time Settlement of Outstanding Dues (Second) Scheme, 2021, for settlement of unpaid tax.

This write-up, aims to apprise the readers / registered persons of the provisions and procedural aspects of the Scheme.

Applicability of the Scheme

• It shall only be applicable to the cases pertaining to the assessment years 2014-15 to 2017-18(Q1) which fall under criteria 3 of assessment policy approved vide letter no. 2/07/2015 ET.2(7)/8848, dated 15/09/2021 for the assessment years 2014-15 to 2016-17 and of assessment policy approved vide letter no. 2/07/2015 ET.2(7)/8849 dated 15/09/2021 for the assessment year 2017-18 (Q1) and have been assessed till 30th November 2021.
• In regard to cases pertaining to the assessment years 2015-16 to 2017-18 (Q1) which fall under the criteria 3 of the assessment policy approved vide letter no. 2/ 07/2015 ET.2(7)/8848, dated 15/09/2021 for assessment year 2014-15 to 2016-17 and of assessment policy approved vide letter no. 2/07/2015 ET.2(7)/8849, dated 15/09/2021 for assessment year 2017-18 (Q1), which are or will be assessed after 30th November 2021, the applicable dates of the scheme shall be notified later on.

Last date for filing application under the Scheme

As per Notification No S.O. 142/P.A.8/2005/S. 29-A/C.A. 74/1956/S. 9/2021 dated 17th December, 2021 ("Scheme Notification"), the application under sub-clause 4(ii) of clause 1 of the scheme could be filed up to 30th April, 2022 which now stands extended to 31st May, 2022 vide order of the Additional Chief Secretary Taxation, Punjab, bearing endorsement number 02/07/2015-ET-II (7)/3782 dated 02.05.2022.

Important definitions

1. Additional Demand: As per Para 2(b) of the Notification No. S.O. 142/P.A.8/2005/S.29-A/C.A.74/1956/S.9/2021 dated 17th December 2021, ("Scheme Notification"), "additional demand" means the additional demand including tax, interest and penalty, payable as a result of assessment order including any rectified or revised or amended order passed till 30.11.2021 for cases mentioned at clause 1(4)(i), or the date notified for cases mentioned at clause1(5), under the Punjab Value Added Tax Act, 2005 and the Central Sales Tax Act, 1956 after reduction of additional demand on account of submission of additional statutory forms along with application in Form OTS-1 only and not later;
2. Determined Amount: As per Para 2(b) of the Notification No. S.O. 142/P.A.8/2005/S.29-A/C.A.74/1956/S.9/2021 dated 17th December 2021, ("Scheme Notification"), "determined amount" means net amount of additional demand payable by the applicant as a result of settlement under the scheme, after availing 70% waiver of total additional demand;

Settlement of outstanding dues

(1) Any person whose assessment has been made under the relevant Act shall be eligible to apply and avail the benefits under this scheme, subject to the terms and conditions specified in this Scheme.

(2) The applicant shall be required to make an application in FORM OTS-1 along with the additional original statutory forms, if any, to the concerned Excise and Taxation Officer. No additional original statutory forms shall be entertained after the submission of the said application.

(3) The application shall be accompanied with the proof of payment of 20% of the determined amount under the relevant Act. The 20% of the determined amount shall be payable latest by 31st March 2022.

(4) On receipt of application, an acknowledgement in FORM OTS-2 shall be issued by the concerned Excise and Taxation Officer.

(5) On examination of the application, if the concerned Excise and Taxation Officer is satisfied with the self-assessed determined amount along with proof of payment of minimum 20% amount thereof and other particulars required to be mentioned in the application, an order of provisional settlement under the relevant Act(s) in FORM OTS-3 shall be passed by such officer.

(6) If there is any deficiency, the concerned Excise and Taxation Officer shall serve a deficiency notice in FORM OTS-4 on the applicant with the directions to complete the deficiencies within 7 working days from the date of service of notice. If the applicant fails to comply with the directions given in the notice, his application shall be rejected. The amount paid along with FORM OTS-1 shall be adjusted against the additional demand payable prior to the filing of application in FORM OTS-1. The balance additional demand after adjustment shall be recoverable as per the provisions of the relevant Act.

(7) The balance 80% of the determined amount shall be payable latest by 31st March, 2023.

(8) On receipt of 100% of the determined amount, an order of settlement in FORM OTS-5 shall be passed by such officer.

Terms and conditions.

(1) Any person, whether or not in appeal before any of the Appellate Authorities i.e. Deputy Excise and Taxation Commissioner (Appeals) or Tribunal or Hon'ble High Court or Hon'ble Supreme Court, shall be eligible to apply and avail benefits under this scheme; Provided that the applicant who is in appeal, shall submit a declaration that once the dues are settled under this scheme, the applicant shall withdraw such a case within a period of 7 working days from the date of communication of order of provisional settlement and shall submit the proof thereof to the notified authority-cum-Excise and Taxation Officer.
(2) In case of failure of the applicant to comply with the provisions of sub-clause (1), the order of provisional settlement shall stand cancelled.

(3) FORM OTS-1 shall be filed separately for each assessment year and accordingly, an order of provisional settlement and order of settlement shall be issued under the relevant Act.

(4) No appeal against the order of settlement shall lie before any of the Appellate Authorities i.e. the Deputy Excise and Taxation Commissioner (Appeals) or Tribunal or Hon'ble High Court or Hon'ble Supreme Court.

(5) If any tax shown as paid in the assessment order is later found to be actually unpaid, then the same shall be recoverable along with applicable interest and penalty if any, under the relevant provisions of the Act, notwithstanding the settlement order.

(6) In case, the applicant fails to comply with any of the terms and conditions of this scheme, the settlement including provisional settlement shall stand cancelled and any amount deposited by the applicant shall not be refunded but shall be adjusted against the additional demand payable prior to the filing of application in FORM OTS-1.

(7) The department may take application for settlement through online mode also and for this purpose, a suitable online mechanism may be devised.

Our Comments

1. In many cases, ex-parte orders for outstanding dues must have been passed against registered persons under PVAT Act, 2005, or CST Act, 1956. These ex-parte orders might not be in the knowledge of such registered persons, due to varied reasons such as a change in address of the registered person or failure of a person registered under VAT to migrate to GST and therefore remaining out of contact with the department. Registered persons under PVAT Act, 2005, or CST Act, 1956 in Punjab must verify from their jurisdictional officers about demand, if any, outstanding against them.
2. Further, in case Registered Persons could not submit the statutory forms under the Central Sales Tax Act, 1956 like Form C/F/G/H/E-1/E-2 at the time of assessment, they may avail benefit under this scheme by submitting these forms now under this scheme along with Form OTS-1.
3. It may be noted that additional demand also includes the additional demand including tax, interest and penalty, payable as a result of any rectified or revised or amended assessment order passed till 30th November 2021.
4. The benefit under this scheme shall also extend to cases pertaining to the assessment years 2015-16 to 2017-18 (Q1) which fall under the criteria 3 of the assessment policy approved vide letter no. 2/ 07/2015 ET.2(7)/8848, dated 15/09/2021 for assessment year 2014-15 to 2016-17 and of assessment policy approved vide letter no. 2/07/2015 ET.2(7)/8849, dated 15/09/2021 for assessment year 2017-18 (Q1), which are or will be assessed after 30th November 2021, the applicable dates of the scheme shall be notified later on.

Introduction of the OTS for settling VAT dues for all previous years is a commendable step by the state government, In fact a big relief to the taxpayers of Punjab.