Sigma Construction Co. Vs UOI (Madhya Pradesh High Court)
The issue whether in cases when tax dues have been paid in full, are eligible under SVLDRS, 2019 for waiver of interest or not. Hon’ble High Court directed CBIC to dwell upon the question and issue a clarificatory circular/instruction so that ambiguity prevailing in the field can be removed.
Read CBIC Circular : Assessee filed ST-3 return on or before 30.6.2019 and paid tax dues in full before filing application – SVLDR benefit eligible
FULL TEXT OF THE JUDGMENT/ORDER OF MADHYA PRADESH HIGH COURT
This petition under Article 226/227 of the Constitution of India by partnership firm engaged in Works Contract Service is aggrieved by Annexure P/9 by which the claim of the petitioner seeking benefit of waiver of the interest amount of Rs.4,77,847/- imposed for late deposit of tax dues, preferred under the SVLDRS [Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019] (for brevity “the Scheme of 2019”) has been rejected on the ground of ineligibility.
2. The sole question raised by learned counsel for the petitioner in the given facts and circumstances is as to whether the component of interest would be covered by the expression “amount of duty”/“amount in arrears” under the said Scheme of 2019 to extend the amnesty available under the scheme to the petitioner or not?
3. Without entering into the prolixity of factual matrix, this Court deems it appropriate to decide this matter based on earlier decision of Co-ordinate Bench of Allahabad High Court.
3.1 The Division Bench of Allahabad High Court in Beenu Gupta vs. Union of India and four others decided on 18th December, 2020 vide Annexure R/1 along with the counter reply, dealing with the issue of waiver of interest amount arising from late deposit of tax arrears rejected the petition of the assessee. The Division Bench of Allahabad High Court while rejecting the petition held thus:
“3. Learned counsel for the petitioner submits that the petitioner has deposited the amount along with returns belatedly and therefore arose some interest liability which the petitioner could not deposit, and therefore, the petitioner has filed a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinafter referred to as ‘SVLDR Scheme’) but the declaration has been wrongly rejected by the impugned orders.
4. We have perused the impugned orders and we find that the designated authority has rejected declaration on the ground that “as per report of the division vide letter dated 13.01.2020, no duty amount has been declared in return as payable but not paid. Hence not covered under the category of arrears.
11. Clause (d) of Section 123 provides that where the amount has been voluntarily disclosed by the declarant, then the total amount of duty as stated in the declaration shall be the tax dues. The words “amount of duty” has been defined in clause (d) of Section 121 which means the amount of central excise duty, the service tax and the cess payable under the direct tax enactment. The petitioner has deposited the amount of duty alongwith his regular returns under the service tax law but it was filed belatedly. Thus no amount of duty was payable under the service tax law, therefore, the provisions of clause (d) of Section 123 has no application on the facts of the present case.
13. The admitted facts of the present case are that the petitioner has filed return under the service tax law prior to 30th June, 2019 and deposited the amount of duty along with the returns which was filed belatedly. Therefore, clause (e) of Section 123 read with clause (c) of Section 121 of the SVLDR Scheme is not applicable on the facts of the present case. The circular relied by learned counsel for the petitioner has no application to the facts of the present case inasmuch as the circulars dated 25th September, 2019 and 29th October, 2019 relied by learned counsel for the petitioner is referable to sub-clause (iii) of clause (c) of Section 121 of the SVLDR Scheme.
15. Thus, perusal of the provisions of the Scheme briefly noted above, shows that the Scheme is a complete code in itself. In substance, it is a scheme for recovery of duty/indirect tax to unlock the frozen assets and to recover the tax arrears at a discounted amount. Thus, “Sabka Vishwas Scheme”, although a beneficial scheme for a declarant, is statutory in nature, which has been enacted with the object and purpose to minimize the litigation and to realize the arrears of tax by way of settlement at discounted amount in an expeditious manner. In other words, the scheme is a step towards the settlement of outstanding disputed tax liability.”
3.2 Per contra, learned counsel for the petitioner has placed reliance of the Division Bench judgment of Bombay High Court vide Annexure P/13 rendered on 27.10.2020 in W.P. No.871/2020 (Thought Blurb vs. Union of India and others). In the said decision of Bombay High Court, the question of interest being a part of the arrears of tax for the purpose of the Scheme of 2019 was not involved. The question before the Bombay High Court was as to whether despite the assessee therein being eligible under the scheme was entitled to an opportunity of being heard before the designated Committee under Clause 127 of the Scheme or not? Thus, the said decision of the Bombay High Court is of no avail to the petitioner.
4. However, learned counsel for the petitioner has also relied upon the decisions of High Court of Chhattisgarh dated 22.06.202 1 in WPT 89/202 1, the decision of the Division Bench of Ahmedabad High Court dated 27.02.2020 in R/Special Application No.21744/2019 where the component of interest is held to be a part of expression “amount in arrears” and “amount of duty” under the Scheme of 2019.
5. In view of the above conflicting views, it would be appropriate that the Competent Authority i.e. the respondent No.2 should apply its mind on the said issue as to whether component of interest levied due to late deposit of tax dues, can be waived under the Scheme of 2019 or not?
6. Consequently, this Court declining to take any view in the matter leaves it to the respondent No.2 to dwell upon the question as enumerated above.
7. Accordingly, petition stands disposed of with the following directions :-
(i) Respondent No.2 is directed to dwell upon the question as to whether the component of interest arising out of delayed payment of tax dues, can be waived under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 or not?
(ii) The aforesaid exercise be completed within a period of sixty days from the date of receipt of copy of this order and clarificatory circular/instruction be issued in clear terms so that ambiguity prevailing in the field can be removed once and forever.