Despite Bihar Settlement Act’s Expiry, Amara Raja Can Secure Tax Settlement By Paying Entry-Tax Set-Off Shortfall Within 2 Weeks: Patna HC

The petitioner, a battery manufacturer, sought settlement under the Bihar Settlement of Taxation Disputes Act, 2024, of disputes for five tax periods: 2007–08, 2013–14, 2014–15, 2015–16 and 2017–18.

In its returns, it reported output tax and claimed set-off of Entry Tax paid; it maintained that the resulting admitted tax had been paid.

In assessments, the authorities allowed only part of the claimed set-off and raised additional demands.

The petitioner’s appeals were dismissed, and it later applied for settlement under the 2024 Act.

The prescribed authority treated amounts arising from the disallowed set-off as unpaid admitted tax, directed payment, and rejected the applications when payment was not made.

The petitioner challenged the rejection orders, contending that the additional liabilities were disputed amounts arising from assessment, not admitted tax.

Section 2(b) of the Bihar Settlement of Taxation Disputes Act, 2024 defines “admitted tax” as tax admitted as payable in the returns filed under the relevant law.

Sections 2(d) and 2(f) separately address arrears and disputed amounts determined pursuant to assessment or other orders, while Section 2(e) concerns disputes involving pending proceedings.

Section 3 provides for settlement of disputed tax at the prescribed percentage of the arrears in dispute or the amount already paid towards them, whichever is higher; Explanation 1 to Section 3(1) excludes admitted tax from the settlement amount and requires the party to deposit the total admitted tax separately.

Section 3(2) addresses amounts already deposited in respect of the dispute.

Rules 4(2), 4(5)–(8) of the Settlement Rules require verification and computation of disputed amounts and settlement payments, provide for the prescribed payment and settlement forms, and permit rejection in specified circumstances, including failure to pay the demanded balance settlement amount.

The Court distinguished tax admitted in the return from additional tax determined through assessment.

It held that the additional demand arising from disallowance of the Entry Tax set-off was not, merely by reason of its inclusion in the assessment order, admitted tax; it arose from the assessment determination and fell for consideration as a disputed amount.

However, the Act separately required payment of the full admitted tax.

For CWJC No. 9321 of 2025, the petitioner had claimed Entry Tax set-off of ₹91,51,103, while the assessing authority allowed ₹82,92,289.

Treating the resulting difference of ₹8,58,814 as arrears or short payment against admitted tax, the Court held that this amount had to be paid for settlement.

It extended the same liberty to the other four tax-period proceedings.

In CWJC No. 9321 of 2025, that amount was ₹8,58,814.

Upon timely payment, the respondents were directed to pass fresh settlement orders, notwithstanding that the Settlement Act’s tenure had ended; the same relief was extended to the other four cases.