You must apply or lose preference points. If you draw the general tag, you will be entered into the permit draw.
If you don't draw the permit, you can turn in the general tag, but lose some money and your preference points. Then your back to trying to draw the general tag with one point to be entered into the permit drawing again.
It's a screwed up way to draw.
I think a better way would be to attach a general tag to the permit and make a hunter choose to go all in on the permit tag but have no chance to still hunt general if they fail to draw. This would anger some guys but would make a guy commit fully to if he really wants the special permit tag.
It would clean up some of the competition for the special area tags in my opinion.