2025 (1) TMI 789 - HC - Service Tax

Validity of payment under the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS), 2019, made after the due date - attachment of the petitioner's property - HELD THAT - As per the SVLDRS 2019, the petitioner filed Sabka Vishwas Scheme application on 02.10.2019 and subsequently SVLDRS Form-3 was issued by the designated committee for payment. The petitioner had to pay an amount of Rs. 35,23,866/- by the due date i.e. by 30.06.2020. But he failed to pay the said amount by the said date. The plea taken by the petitioner was that due to COVID-19 pandemic, as the business was completely closed, they could not generate any funds, could not make payment within the said time. However, as per the petitioners they accumulated funds and paid a sum of Rs. 15,00,000/- on 07.01.2021 and Rs. 20,23,866/- on 01.03.2021 and completed the payment of balance amount. Thus, the amounts recovered were not payments made by the petitioner within the stipulated period, but subsequently by the Department in the process of recovery of arrears. As the petitioner could not comply the terms as mentioned in the scheme and had not made the payments within the stipulated period, the petitioner could not avail the benefit offered under the said scheme. The petitioner was required to follow the provisions of the scheme in toto and to pay the amount determined under SVLDRS Form-3 within the stipulated time in terms of Section 127 (4) of the Finance Act, 1994. The recovery made by the Department under Section 87 of the Finance Act, 1994 could not be considered as payment made by the petitioner under SVLDRS scheme. Since there was a legal impediment because of which the petitioner therein could not comply with the requirement, interference was made. This is trite that a singular different fact/point may change the precedential value of a judgment. Conclusion - As the petitioner was having interest in the firm and became Managing Partner of the firm after entering the reconstituted partnership deed dated 26.09.2015, there is no need to interfere with the attachment order passed by the Department against the petitioner. As such, there are no merit in the contention of the learned Senior Counsel for the petitioner to raise the attachment order and to allow the petition. Petition dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the petitioner's payment under the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS), 2019, made after the due date, can be accepted as valid under the scheme.
Whether the attachment of the petitioner's property by the respondents was lawful and justified.
Whether the petitioner is entitled to relief due to the delay in payment caused by the COVID-19 pandemic.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Late Payment under SVLDRS

Relevant Legal Framework and Precedents: The SVLDRS, 2019, provides a mechanism for settling legacy disputes related to indirect taxes. Under the scheme, the declarant must make payment by the due date specified in the SVLDRS Form-3. The Finance Act, 1994, and the Finance Act, 2019, outline the procedures and deadlines for compliance.
Court's Interpretation and Reasoning: The court noted that the petitioner failed to make the payment by the due date of 30.06.2020. The payment was made only after the initiation of recovery proceedings, which does not qualify as compliance under the scheme.
Key Evidence and Findings: The petitioner made payments via demand drafts on 07.01.2021 and 01.03.2021, which were recovered by the Department under Section 87 of the Finance Act, 1994.
Application of Law to Facts: The court applied the provisions of SVLDRS and the Finance Act, concluding that the petitioner's late payment did not meet the scheme's requirements.
Treatment of Competing Arguments: The petitioner argued for leniency due to financial difficulties caused by COVID-19. The respondents maintained that the petitioner failed to comply with the scheme's deadlines.
Conclusions: The court held that the petitioner did not qualify for the benefits of the SVLDRS, as the payment was not made within the stipulated period.

Issue 2: Lawfulness of Property Attachment

Relevant Legal Framework and Precedents: Section 87 of the Finance Act, 1994, allows for recovery proceedings, including property attachment, for unpaid dues.
Court's Interpretation and Reasoning: The court found that the attachment was justified as the petitioner failed to pay the dues within the scheme's timeframe.
Key Evidence and Findings: The respondents initiated recovery proceedings and attached the petitioner's property following non-compliance with the payment deadline.
Application of Law to Facts: The court determined that the attachment was in accordance with the law since the petitioner did not fulfill the scheme's requirements.
Treatment of Competing Arguments: The petitioner contested the attachment, citing financial hardship. The respondents argued that recovery actions were necessary due to non-payment.
Conclusions: The court upheld the property attachment as a lawful recovery action.

Issue 3: Relief Due to COVID-19 Pandemic

Relevant Legal Framework and Precedents: The petitioner cited the pandemic as a reason for delayed payment, seeking relief based on the Apex Court's judgment in M/s. Shekhar Resorts Limited.
Court's Interpretation and Reasoning: The court distinguished the present case from the cited precedent, noting that the delay was not due to a legal impediment, unlike in M/s. Shekhar Resorts Limited.
Key Evidence and Findings: The petitioner's business was affected by COVID-19, but this did not constitute a legal barrier to payment.
Application of Law to Facts: The court found no basis for granting relief due to the pandemic, as the petitioner did not face a legal prohibition on payment.
Treatment of Competing Arguments: The petitioner argued for an extension due to pandemic-related hardships. The respondents maintained that the scheme's deadlines were not met.
Conclusions: The court denied relief based on the pandemic, emphasizing the importance of adhering to statutory deadlines.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "As the petitioner could not comply the terms as mentioned in the scheme and had not made the payments within the stipulated period, the petitioner could not avail the benefit offered under the said scheme."
Core Principles Established: Compliance with statutory deadlines is crucial for availing benefits under schemes like SVLDRS. Financial hardship, unless legally prohibitive, does not excuse non-compliance.
Final Determinations on Each Issue: The court dismissed the writ petition, upholding the respondents' actions and denying the petitioner relief under the SVLDRS.

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