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2026 Supreme(Bom) 314
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G.S.KULKARNI, AARTI SATHE, JJ.
President Trade And Exim Corporation - Petitioner
Versus
The State of Maharashtra, Through Government Pleader - Respondent
Writ Petition No. 5048 of 2025
Decided On : 12-03-2026
For the Petitioner: Mr. Manohar Samal a/w. Ms. Ruchi Rathod and Ms. Aishwarya Jain i/b. Mr. Ratan Samal.
For the Respondent: Ms. Naira Jeejeebhoy, Spl.Counsel a/w. Ms. Jyoti Chavan, Addl.G.P. and Mr. Amar Mishra, AGP.
Important Points
Subject
Tax Law - Value Added Tax
Act Referred
MAHARASHTRA VALUE ADDED TAX ACT : S.50, S.50(1)
BOMBAY HIGH COURT ORIGINAL SIDE RULES : R.986
MAHARASHTRA VALUE ADDED TAX RULES : R.60
Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Act : S.12, S.13(2), S.15, S.16, S.17, S.18, S.2(g), S.2(q)
Headnote
(B) Settlement schemes - Purpose - To unlock dues, reduce litigation; cannot defeat by post-payment adjustments defeating waiver benefits and adding disputes. (Paras 13, 14, 18)
Facts of the case:
Petitioner, registered dealer, entitled to refund of Rs.33,29,000/- for 2007-08 post-appellate order; applied under Settlement Act for 2008-09 (outstanding Rs.45,64,433/-, paid 20% Rs.9,12,887/- under one-time option, acknowledgment issued); no defect notice; settlement order erroneously adjusted 2007-08 refund against 2008-09 before finalizing settlement.
Findings of Court:
Impugned settlement order quashed; settlement application for 2008-09 accepted without refund adjustment; refund of Rs.33,29,000/- for 2007-08 with interest directed within 2 weeks.
Issues: Whether settlement authority could adjust refund of prior period against post-settlement dues of subsequent period invoking MVAT section 50; whether Settlement Act overrides MVAT for adjustments post-payment; violation of natural justice.
Ratio Decidendi: Settlement Act self-contained; arrears calculated per period independently on application date; payment extinguishes dues entitling waiver; no inter-period adjustment absent specific provision or prior MVAT order; adjustment defeats scheme's amnesty intent.
Result: Writ petition allowed.
| Table of Content |
|---|
| 1. tax disputes history, assessments, refunds, settlement applications (Para 1 , 2 , 3 , 4) |
| 2. issue and parties' contentions on refund adjustment (Para 5 , 6 , 7 , 8 , 9) |
| 3. settlement act and mvat act key provisions (Para 10 , 11 , 12) |
| 4. settlement act self-contained amnesty scheme (Para 13 , 14 , 15 , 16) |
| 5. prohibits refund adjustment against settled dues (Para 17 , 18 , 19 , 20 , 21) |
| 6. precedents bar mvat adjustment post-settlement (Para 22 , 23) |
| 7. violates natural justice; precedents applicable (Para 24 , 25) |
| 8. quashes order; directs refund payment (Para 26) |
JUDGMENT :
AARTI SATHE, J.
1. Rule. Rule made returnable forthwith. By consent of the parties, taken up for final hearing at the stage of admission.
2. By this Petition under Article 226 of the Constitution of India, the Petitioner seeks to challenge the settlement order dated 18th April 2024 passed by Respondent No. 2 whereby the refund for the tax period 2007-08 has been adjusted against the tax demand for the tax period 2008–09. According to the Petitioner, such adjustment has been made despite there being no pending dues for recovery, by invocation of the proviso to Section 50(1) of the Maharashtra Value Added Tax Act, 2002 (“MVAT Act”) which is wholly unjustified.
3. It would be convenient to reproduce the prayers as sought for in the present the Petition :
“a. This Hon'ble Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ or direction in the nature of Mandamus under Article 226 of the Constitution of India, setting- aside and annulling the Settlement Order which was issued after the adjustment of refund for Tax Period: 2007-08 against Tax Period:2008-09 ignoring the fact that there were no pending" dues for recovery' so as to justify invocation of refund adjustment under the Proviso appended to Section 50(1) of the MVAT Act, 2002 as the Petitioner had already made an application for availing benefits under the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fees Act, 2023 before issuance of the refund adjustment order.
b. This Hon'ble Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ or direction in the nature of Mandamus under Article 226 of the Constitution of India, setting- aside and annulling the setting- aside and annulling the Settlement Order which was issued after the adjustment of refund for Tax Period: 2007-08 against Tax Period: 2008-09 without issuance of any defect notice and after the Petitioner had already made an application and had also paid the settlement dues under the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fees Act, 2023 as per instructions received in the Courtesy Letter issued by Respondent No. 2.
c. This Hon'ble Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ or direction in the nature of Mandamus under Article 226 of the Constitution of India, setting-aside and annulling the setting- aside and annulling the Settlement Order which was issued after the adjustment of refund for Tax Period:2007-08 against Tax Period: 2008-09 ignoring that the provisions of the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fees Act, 2023 would override the provisions of the MVAT Act, 2002 once an application has been made under the Scheme and no deficiency by way of Defect Notice has been issued.
d. This Hon'ble Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ or direction in the nature of Mandamus under Article 226 of the Constitution of India, setting-aside and annulling the Settlement Order which was issued after the adjustment of refund for Tax Period: 2007-08 against Tax Period:2008-09 without providing a reasonable opportunity of being heard resulting in grave violation of principles of natural justice.
e. This Hon'ble Court may be pleased to issue a Writ of Mandamus or any other appropriate Writ or direction in the nature of Mandamus under Article 226 of the Con
