The Bombay High Court ruled that absence of any allegation of falsity, misstatement, misdeclaration, suppression or the like in the voluntary disclosure made in the declaration filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS), renders demand of interest on delayed payments contrary to the provisions of Sections 124, 126 and 129 of the Finance Act, 2019.
Essentially, the Court clarified that when a discharge certificate for the settlement of all tax dues has been issued under the SVLDRS Scheme, the demands raised by the show cause notices would be ex facie contrary to law.
The Court also pointed out that in light of a clear statutory provisions under the Finance Act, 2019, the manufacturer/ supplier (petitioner) could not have been foisted with payment of any further amount to avail the benefit under the Scheme.
The Division Bench comprising Justice Advait M. Sethna and Justice M.S. Sonak observed that merely because the petitioner had incorrectly filed its declaration under arrears category and not under audit, enquiry, investigation category, it would not deprive the petitioner to claim relief which is available under the statutory framework of the Finance Act, 2019.
The Bench noted that quantification/determination of tax was done prior to the cut-off date of June 30, 2019, as stipulated under Section 125(1)(e) of the Finance Act, 2019, and thus, the petitioner was eligible to file such declaration claiming for the tax benefit under the SVLDRS.
The Bench also highlighted that when the petitioner being entitled for deduction, had deposited payment under the SVLDRS scheme, and was thereafter issued Form SVLDRS-3 and Form SVLDRS-4 i.e. Discharge Certificate, then it is conclusive of the full & final settlement of tax dues.
Accordingly, the Bench concluded that schemes as the SVLDRS are floated by the Government to strike a balance between amicable resolution of tax disputes and protecting revenue interest, is vital in contemporary times, and it encourage bona fide taxpayers to disclose unpaid taxes and bring a closure to the past disputes which ultimately result in a win-win situation for the stakeholders as also for the nation’s economy.
Briefly, an audit conducted at the petitioner company, which is engaged in providing advisory services, resulted in intimation of certain discrepancy. Pursuant thereto, the petitioner made payments of Rs. 25,294 and Rs. 24,738 in response to the audit findings. In the meantime, the Government proposed the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS). Pursuant to the same, the petitioner filed an electronic declaration on the website of Central Board of Excise and Customs (CBEC) under the SVLDRS, under the Arrears category and declared an amount of Rs. 21.03 lacs as the tax dues.
Later, the petitioner pointed out an inadvertent error in filing application under SVLDRS and claimed eligibility to file declaration under the “enquiry, investigation or audit” category for an amount of Rs. 41.91 lacs. Thereafter, the petitioner made payment of Rs. 8.41 lacs and received the Form SVLDRS-4 i.e. Discharge Certificate, certifying the full and final settlement of tax dues.
Thereafter, an SCN was issued calling upon the petitioner to pay interest on delayed payment of service tax, which was objected on the ground that the demand was made against the period, for which the liability of the petitioner was already discharged. As the objections were not heard of, the petitioner approached the High Court.
Appearances:
Advocates Bharat Raichandani and Pritesh Kumar, for the Petitioner/ Taxpayer
Advocates Subir Kumar and S. D. Deshpande, for the Respondent/ Revenue
