Ahead of GST, West Bengal tries to settle disputed taxes

State govt has given a one-time settlement offer to clear dues at 50% discount on accumulated tax

Just before the states are preparing themselves to meet the July 1 deadline of the GST rollout, the West Bengal government on Wednesday amended the state's taxation laws, offering the hotels, restaurants, bars and cable operators a one-time settlement window to clear their disputed dues at a discount rate of 50 per cent on the accumulated arrear tax amount.

The West Bengal Taxation Laws (Amendment) Bill, 2017, brought in by the government, will amend the Bengal Amusements Tax Act of 1922, the West Bengal Entertainments and Luxuries (Hotel and Restaurants) Tax Act, 1972, the West Bengal Entertainment-cum-Amusement Tax Act, 1982 and the West Bengal Sales Tax (Settlement of Disputes) Act of 1999.

With the amendment, the government will offer waiver on penalty and interest of the accumulated amount.

The move comes after Union Finance Minister Arun Jaitley and a majority of state finance ministers agreed upon the July 1 rollout date of the new tax regime followin which indirect tax collected by the state such as the value added tax, sales tax and the entertainment and luxury tax, among others will be abolished.

West Bengal's finance minister, Amit Mitra, who is not happy with the GST rollout date, has however, written to Jaitley, asking for postponement of the date. His argument is that small and medium sectors may be hit as they are still unprepared to function under the new tax regime.

However, the ongoing litigations over disputed tax amounts on the specified categories will go on even after the rollout date and will not be written off under the new tax regime.

As per the state government, the amendment "seeks to provide relief to the taxpayers by introduction of settlement of disputes scheme for arrear tax or penalty in cases pending in appeal or revision or under litigation." Disputed amount will be waived off upon payment of 50 per cent of the arrear tax, added the state.

The exact figure of pending and disputed arrear amount is yet to be known.

However, this is not the first instance wherein the state government has resorted to amending laws to offer a one-time settlement of dues for cases under litigation.

In December, 2016, the state government amended the West Bengal Taxation Laws (Amendment) Bill, 2016, and The Bengal Excise (Amendment) Bill, 2016, which sought to provide a one-time settlement of disputed sales tax and excise duty for the liquor sector.

Under that scheme, disputes could be settled by paying 30 per cent of the arrear tax in cases related to disallowance of any claim of input tax credit assessment. For other cases involving disputes related to turnover upon assessment, application of higher rate of tax and others, a settlement involving payment of 60 per cent of the arrear tax amount was suggested.