The objective of the present study is to assess the Scheme for Liquidation of Arrear Tax Dues introduced by the State of Assam under the Assam Taxation (Liquidation of Arrear Dues) Act, 2005. The present study attempts to analyse and uncover the status of administration of tax and its recovery by the Tax Officials. Study is based on secondary data collected from Taxation Department of Assam as well as primary data collected as close participant observer from Tax Officials, subject experts, tax law practitioners and other stake holders. It was found that the collection of substantial arrear revenue was achieved under the Liquidation Scheme only as a result of the recent verdict pronounced by the Supreme Court of India in the case of Jindal Stainless Ltd. & Anr. vs. State of Haryana & Ors., on the constitutional validity of the levy of Entry Tax. Introduction of the liquidation scheme time and again for liquidation of outstanding dues of tax, interest and penalty and huge waiver of interest and penalty extended, reflects the inadequate performance of and non-effectiveness of the recovery proceedings. Waiver of penalty which was imposed on the taxpayers during assessment for contravention of the provisions of the tax statute or for failure to comply with such provisions, have rendered the imposition of penalty and its provisions completely meaningless. Thus, the waiver clause cannot be a regular phenomenon as it will create propensity in the mind of taxpayers to delay and defer the tax in order to get benefit of waiver and the honest taxpayers will be at the brunt of dishonest taxpayer. 

KEYWORDS: Arrear Tax, Liquidation of Arrear Dues, Waiver of Arrear Tax Dues