The Directorate of Commercial Taxes, Government of West Bengal, has issued Trade Circular No. 01/2025 on August 4, 2025, detailing the rollout of the West Bengal Sales Tax (Settlement of Dispute) Act, 2025 (SOD 2025). This initiative aims to provide taxpayers relief by facilitating the settlement of legacy tax disputes under various sales tax laws applicable in the state prior to the implementation of GST.
Key Highlights of the Circular:
- Effective Date: The new Act came into force on 18 July 2025 following amendments to the 1999 legislation and its Rules through various state notifications.
- Eligible Disputes: Taxpayers can settle cases pending as of 31 March 2025, relating to tax periods ending on or before 30 June 2017, under Acts including:
- West Bengal VAT Act, 2003
- West Bengal Sales Tax Act, 1994
- Central Sales Tax Act, 1956
- Other legacy state tax laws
- Scope of Settlement: Includes arrears related to tax, penalty, late fees, and interest, reduced by any prior deposits or recoveries. The scheme applies to cases pending before authorities, tribunals, and even courts, subject to conditions.
- Substantial Relief Offered:
- 15% of disputed tax needs to be paid in most cases (excluding Entry Tax).
- Entry Tax disputes require payment of 75% of the disputed amount.
- No payment required for related interest, late fee, or penalties (except minimal penalty in specific cases).
- Maximum penalty settlement capped at 2% or ₹15,000, whichever is lower.
- Settlement Process:
- Applications to be submitted manually in Form 1 by 30 September 2025.
- Payment must be made online via GRIPS before submission.
- Acknowledgment and case-specific reference numbers are to be generated online.
- One Form 1 per case; multiple cases require separate applications.
- Designated Authorities: The circular clearly outlines the responsible officers for each type of case (Circle, Range, Bureau of Investigation, etc.) based on the nature and stage of the dispute.
- Certification Timeline:
- Provisional certificate (Form 2) within 15 working days.
- Finalization or issuance of notice for discrepancies (Form 3) within 3 months.
- Settlement certificate (Form 3A) concludes the process; failure to comply leads to application rejection and refund of the amount paid.
- Special Provision for Pending Court Cases: Taxpayers must obtain leave from the Tribunal or Court and submit it within 2 months of application or as extended.
The Trade Notice can be accessed at: https://a2ztaxcorp.com/wp-content/uploads/2025/08/WB-Settlement-of-Dispute-2025.pdf
