The high court, on a writ filed by the All India Federation of Tax Practitioners (AIFTP), struck down the proviso to Section 92 of the Finance Act 1998 as ultravires of article 14 of the Constitution for creating two artificial classes between the same set of assessees namely `litigating assessees in arrears.'

The court has further held that the definition of "tax arrears" in clause (m) of section 87 should be so read as to mean the amount of tax, penalty or interest determined by any competent authority on or before March 31, 1998 through such determination might have been set aside has not been accepted by the income tax department and continues to be pending under challenge before a court or tribunal.

The high court, however, upheld the rest of the scheme and other provisions of the Act relating thereto asintra-vires.

According to senior advocate G C Sharma, "in substance the petition has been allowed in part in as much as the proviso to section 92 of the Finance Act is struck down as violative of the Constitution of India and further the definition of tax arrears is to be read as indicated by the court."

The high court announced in decision in a public interest litigation filed by the Federation challenging the constitutional validity of certain provisions of the Finance Act (section 87 to 106) introducing a scheme for speedy resolution of tax disputes and realisation of tax arrears therein.

G C Sharma and P S Sarin appeared on behalf of the petitioners. Those who appeared for respondents included Madan Lokur, additional solicitor general and R C Pandey, standing counsel for the income tax department.

Our Mumbai Bureau adds: The decision of the Delhi High Court to struck down section 92 of the Samadhan scheme will throw open doors for many tax assessees to come under the scheme.

The court hassaid that those assessees against whom the revenue department has gone into appeal should be allowed to come under Samadhan. "The doors should not be shut on the persons against whom the department has gone into appeal", said K Shivaram, vice-president, AIFTP.

In effect, the court has also tried to remove the discrimination between the assessee and the department so far as the right to come under the scheme is concerned.

Unfortunately, the revenue department is likely to file a special leave petition against the Delhi high court judgment. "We will be filing a caveat on Wednesday so that the ex-parte stay is not granted to the department", said Sarin.