2022 (8) TMI 1053 - HC - Service Tax

Refusal on the part of respondents to issue discharge certificate - tax dues covered by the declaration in Form 1 under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - payment of amount indicated in accordance with the SVLDRS made within the permitted time but still the discharge certificate is not being issued - HELD THAT - The circular dated 24th June 2019 has been issued prior to the Finance Act, 2019 came into force. There is no similar circular issued after the Finance Act, 2019 came into force. There is nothing to indicate what the definition of pay electronically or through internet banking . Admittedly, the amount has been paid by electronic cash ledger maintained by petitioner under the CGST Act. Therefore, the fact that the Government of India has received the amount of Rs.2,89,15,115/- cannot be disputed. SVLDRS is a statutory scheme, that provides some reliefs to the assessee in varying degrees. There is force in the submission of Mr. Nankani that the scheme in question, being for the benefit of assessees needs to be construed liberally to effectuate the purpose. There is no dispute that the SVLDRS Scheme was introduced by Finance (no.2) Act, 2019 and notified in the Gazette of India Extra-ordinary on 01.08.2019. SVLDRS was introduced by the Union of India to provide relief to tax payers in the form of both dispute resolution as well as amnesty - Respondents should adopt a reasonable and pragmatic approach so that a declarant can avail the benefits of the scheme and a declarant like petitioner cannot be put in a worse off condition than he was before making declaration under the Scheme. Here, petitioner has scrupulously abided by all the terms and conditions of the scheme. In the absence of any definition as to what amounts to pay electronically through internet banking , even payment made by electronic cash ledger maintained by petitioner under the CGST Act also amounts to payment through internet banking - Respondent No.4 is directed to issue within four weeks discharge certificate in Form SVLDRS 4 through electronic form and if it cannot then it be issued in physical form. Petition disposed off.

Summary

Issues:
Refusal to issue discharge certificate under Sabka Vishwas Scheme, 2019 for tax dues, Payment method under SVLDRS, Interpretation of Finance Act, 2019 regarding payment mode, Liberal interpretation of SVLDRS, Compliance with SVLDRS terms and conditions.

Refusal to issue discharge certificate under Sabka Vishwas Scheme, 2019 for tax dues:
The petitioner, registered under the Service Tax Rules, faced refusal from respondents to issue a discharge certificate under the SVLDRS for tax dues. The petitioner declared and paid the amount under the scheme but faced delays in receiving the discharge certificate. The petition focused on tax dues for the period October 2011 to June 2017, with a specific show cause notice issued in April 2017 demanding a substantial sum. Another notice for the period October 2011 to December 2016 had been settled earlier, with a discharge certificate issued. The main issue revolved around the delay in issuing the discharge certificate despite payment under the SVLDRS.

Payment method under SVLDRS:
The petitioner utilized an amount from its electronic cash ledger to pay the estimated amount determined under the SVLDRS Form No.3. Despite facing a severe liquidity crunch, the petitioner made the payment within the prescribed time frame. The respondents contended that the payment should have been made electronically through internet banking as per Section 127(5) of the Finance Act, 2019. The petitioner's chosen method of payment was not the usual mode prescribed, leading to a dispute regarding compliance with the payment method under the SVLDRS.

Interpretation of Finance Act, 2019 regarding payment mode:
The respondents argued for strict compliance with the prescribed payment method under the Finance Act, 2019, emphasizing that the scheme did not allow for any other mode of payment except electronically through internet banking. The petitioner's payment through the electronic cash ledger was deemed non-compliant with the prescribed method, raising questions about the validity of the payment made and the eligibility for benefits under the SVLDRS.

Liberal interpretation of SVLDRS:
The court highlighted the need for a liberal interpretation of the SVLDRS, considering it as a beneficial scheme introduced to provide relief to taxpayers by resolving disputes and granting amnesty. The court criticized the narrow interpretation adopted by the respondents, urging a reasonable and pragmatic approach to ensure declarants could avail the scheme's benefits without being disadvantaged. The court emphasized the importance of construing the scheme liberally to fulfill its intended purpose of unloading legacy disputes and aiding businesses.

Compliance with SVLDRS terms and conditions:
The court analyzed the petitioner's compliance with all terms and conditions of the SVLDRS, noting that the petitioner had adhered to the scheme's requirements. Despite the absence of a clear definition of "pay electronically through internet banking," the court deemed the payment made by the petitioner through its electronic cash ledger as compliant with the payment mode. The court invoked the principle of justice in favor of the petitioner and directed the issuance of the discharge certificate under the SVLDRS within four weeks.

This judgment underscores the importance of a liberal interpretation of statutory schemes like the SVLDRS to facilitate the resolution of tax disputes and provide relief to taxpayers. It also highlights the significance of complying with prescribed payment methods and terms of such schemes to avail the intended benefits effectively.