2023 (1) TMI 939 - HC - Service Tax

Sabka Vishwas (Legacy Dispute Resolution) Scheme - declaration of the petitioners rejected by not issuing Discharge Certificate by the Designated Committee under SVLDRS - rejection on the ground that the petitioners did not make payment within the stipulated time as per Rule 7 of the Rules - HELD THAT - On perusal of the bank statement furnished by the petitioners, it clearly shows that amount of 1,51,15,378/- was debited from the account of the petitioners on 30.06.2020. Therefore, for all intent and purpose once bank account of the petitioners is debited, it amounts to making payment by the petitioners. Even the payment uploaded status provided by the ICICI bank of the petitioners shows that payment was uploaded by the bank on 30.06.2020 at 18 28 hours and 20 23 hours and file status also shows that the same was processed. Therefore, it cannot be said that the petitioners have failed to make payment of amount of Rs. 1,51,15,378/- as determined by the Designated Committee as per Rule 7 of the Rules. Therefore, the petitioners should have been granted benefit of the SVLDRS by the respondent authorities by issuing Discharge Certificate. The petitioners have filed Form SVLDRS-1 to avail the benefit of the scheme as per section 126 of the Finance (No.2) Act, 2019 with regard to the tax dues determined under section 123 to avail the relief as per section 124 of the Act. The Designated Committee after verification of the declaration under section 126(1) issued a statement under section 127 in Form SVLDRS-3 on 16.03.2020 determining the amount of tax payable by the petitioners of Rs. 1,51,15,378/-. Thus the petitioners were found eligible for the benefit of the scheme. Therefore, the petitioners were required to make the payment of Rs. 1,51,15,378/- within 30 days i.e on or before 16.04.2020 which was extended due to Covid-19 pandemic by the Government upto 30.06.2020. From the record, therefore, it emerges that the petitioners have paid the amount from its bank account on 30.06.2020. The petitioners are not at fault for amount not transferred in the account of the Government by the bank on the same day on 30.06.2020. The stand taken by the respondent authorities is therefore, not tenable as once the amount has been debited from the bank account of the petitioners on 30.06.2020, for all intent and purpose, it cannot be said that the petitioners have failed to deposit the amount as required under Rule 7 of the Rules. The respondent authorities ought to have issued the Discharge Certificate to the petitioners without raising any dispute - Petition allowed.

Summary

Issues Involved:
1. Whether the petitioners were justified in seeking a Discharge Certificate under the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS) despite the payment being credited to the Government account one day late due to technical issues.
2. Whether the respondents were justified in rejecting the petitioners' declaration under SVLDRS on the ground of delayed payment.

Issue-wise Detailed Analysis:

1. Justification for Seeking Discharge Certificate:
The petitioners filed a declaration under SVLDRS for settling outstanding service tax dues. The Designated Committee issued an estimate, and the petitioners were required to pay the determined amount by 30.06.2020. The petitioners generated a mandate challan on 29.06.2020 and attempted to transfer the amount on 29/30.06.2020. However, due to technical errors on the electronic portal, the payment was credited to the Government account on 1.07.2020. The petitioners promptly notified the authorities of the issue and provided evidence of the bank processing the payment on 30.06.2020. The Court noted that the petitioners' bank account was debited on 30.06.2020, which should be considered as the date of payment. The Court emphasized that SVLDRS is a beneficial scheme intended to resolve tax disputes and that the petitioners should not be penalized for technical glitches beyond their control.

2. Respondents' Rejection of Declaration:
The respondents argued that the petitioners were negligent in making the payment on the last date and that the payment was credited on 1.07.2020, beyond the stipulated deadline. They contended that the scheme's provisions and FAQs clearly stated that failure to pay within the specified time would render the declaration lapsed. The respondents also highlighted that many taxpayers successfully made payments on the due dates without issues. However, the Court found that the petitioners had taken all necessary steps to make the payment on time and that the delay was due to technical errors on the portal. The Court held that the respondents' rejection of the petitioners' declaration was contrary to the legislative intent of SVLDRS and that the petitioners were entitled to the benefits of the scheme.

Conclusion:
The Court allowed the petition, quashing the decision of the Designated Committee and directing the issuance of the Discharge Certificate. The Court emphasized that the petitioners' payment, debited on 30.06.2020 and credited on 1.07.2020, should be considered valid under Rule 7 of the SVLDRS Rules. The respondents were instructed to issue the Discharge Certificate within four weeks, recognizing the petitioners' efforts and the technical issues they faced. The rule was made absolute, and no costs were awarded.