2026 Supreme(Raj) 288

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
Arun Monga, Sunil Beniwal, JJ.
Commissioner of Income Tax, Udaipur - Appellant
Versus
M/s Hindustan Zinc Ltd., Yashad Bhawan, Udaipur - Respondent
D.B. Income Tax Appeal No. 96 of 2008, D.B. Income Tax Appeal No. 161 of 2008
Decided On : 18-04-2026

A settlement certificate under a tax scheme is conclusive regarding the matters stated therein. Once tax arrears reach a full and final settlement, an assessee cannot retrospectively claim refunds on portions of that income, as this violates the finality and integrity of the statutory agreement.

Headnote:(A) Finance (No. 2) Act, 1998 - Sections 88, 90, 91 and 93 - Statutory Settlement Scheme - Determination of tax arrears - Conclusiveness of findings - Assessee seeking refund on tax after availing settlement - Permissibility.

(B) Tax Settlement - Finality of certificates - An order determining the sum payable under the statutory scheme is conclusive regarding matters stated therein - Reopening of settled matters for potential refunds on carried-forward losses is impermissible once the certificate has been issued covering the disputed assessment income - Assessee cannot selectively seek refunds on items included in the final settlement amount, as doing so would violate the statutory bar on refundability and undermine the integrity of the settlement. (Paras 10, 11, 26, 27)

Facts of the case:
The taxpayer opted for a statutory settlement scheme for two separate assessment years. Certificates were issued by the designated authority determining the amounts payable for full and final settlement of tax arrears. Following subsequent adjustments to the assessment due to the set-off of losses from prior years, the taxpayer claimed a refund of tax on the reduced income. Revenue authorities opposed this, citing the finality of the settlement certificates and the statutory bar on refunds for amounts paid under the scheme.

Findings of Court:
The court distinguished between the two assessment years. For the first assessment year, since the settlement certificate specifically addressed only interest and excluded the underlying tax liability, a refund related to loss adjustments was permissible. However, for the second assessment year, because the certificate explicitly included tax arrears within the settlement, the court held that any subsequent refund would result in a prohibited reopening of the resolved tax demand.

Issues: Whether a taxpayer is entitled to a tax refund on carried-forward losses after participating in a statutory settlement scheme, and whether such an adjustment violates the legal finality of a settlement certificate.

Ratio Decidendi: The settlement certificate acts as a conclusive record of the tax arrears settled under the statutory framework. While matters explicitly excluded from the declaration may remain subject to regular proceedings, issues inherently settled within the certificate cannot be re-litigated or unbundled. Permitting a refund in such cases would confer an unfair benefit and breach the statutory mandate that renders the settlement order final and non-reopenable.

Result: The appeal regarding the first assessment year is dismissed, confirming the allowance of the refund. The appeal regarding the second assessment year is allowed, denying the refund claim.