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2025 (4) TMI 667 - HC - Service TaxEntitlement to settle tax liability under the SABKA VISHWAS (Legacy Dispute Resolution) Scheme 2019 particularly under the category of arrears of tax. - correct filing of declaration under the arrears category of the Scheme - entitlement to the benefits of the Scheme given the tax liability declared but not paid in the filed return - HELD THAT - Though there is an apparent contradiction between the relief that is available to a Declarant under Section 124(1)(c)(i) and an embargo under Section 125(1)(f)(ii) of the Scheme it has to be reconciled between those cases where Returns have been filed and those cases where no Returns have been filed - there is an embargo if a disclosure is made voluntarily where no Return is filed before 30.06.2019 no abatement/concession is permissible. However where Returns have been filed on or before 30.06.2019 and tax due i.e. amount of duty as defined in Section 121(d) of the Scheme has not been paid in terms of Section 123(e) of the Scheme. Thus the Petitioner was not entitled to file a Declaration in terms of Section 125(1)(f)(ii) of the Scheme. In this case the Petitioner has wrongly filed the Declaration in Form SVLDRS-1 under the arrears category and sub-category Declared in the Return but not paid . The Petitioner has deliberately filed the Declaration in Form SVLDRS-1 under the voluntary disclosure and thus misled the system. It is also incoceivable as to how both arrears category and the subcategory Declared in the Return but not paid can go together? There is no scope for alchemy between the two under the Scheme. As per Section 124(1)(c)(i) of the Scheme where the tax dues are relatable to an amount in arrears the relief available to a Declarant under the Scheme was to be calculated at 60% of the tax dues. In other words on 40% of amount in arrears as defined in Clause (c) to Section 121 of the Scheme was payable by a Declarant for settling the dispute under the Scheme - In this case no amount was paid by the petitioner at an earlier stage. If the Petitioner wanted to pay under arrears category the Petitioner was required to pay 40% of the tax amount declared in ST-3 Return filed on 05.06.2018 in terms of Section 124(1)(c)(i) of the Scheme. Thus the tax that was payable by the Petitioner under the Scheme would have been Rs. 74, 436.20/- being 40% of Rs. 1, 86, 158/- and not Rs. 29, 706/- on 40% of Rs. 74, 266/-. Since the Declaration that was filed in Form SVLDRS-1 is actually a Declaration filed on account of voluntary disclosure the Petitioner is neither entitled to any concession in terms of Section 125(1)(f)(ii) of the Scheme nor entitled to file such Declaration under Section 125(1)(f)(ii) of the Scheme - The declaration in Form SVLDRS-1 that was filed by the Petitioner in the arrears category is contrary to the tax admitted by the Petitioner in ST-3 Return filed on 05.06.2018 as the Petitioner had declared the tax due as Rs. 74, 266.72/-. It is contrary to the admitted tax liability of Rs. 1, 36, 158/- in the ST-3 Return filed on 05.06.2018. The fact that the Petitioner had resiled from the admitted liability in ST-3 Return dated 05.06.2018 while filing the Declaration in Form SVLDRS- 1 dated 13.01.2020 also indicates that the Petitioner was not entitled to any relief under the Scheme. Since the Form SVLDRS-1 was also actuated by incorrect materials furnished by the Petitioner in Form SVLDRS-1 dated 13.01.2020 the Respondents were entitled to conclude that the Declaration filed in Form SVLDRS-1 was under voluntary disclosure and therefore entitled to invoke the power under Section 129(2)(c) of the Scheme - Since the Petitioner has filed incorrect declaration in Form SVLDRS- 1 on 13.01.2020 which was acted upon and has resulted in issuance of an erroneous Discharge Certificate in Form SVLDRS-4 on 19.01.2020. The power to rectify the mistake need not be exercised by the Department as the Declaration filed by the Petitioner was contrary to admitted tax liability in ST-3 Return dated 05.06.2018. Thus the Discharge Certificate in Form SVLDRS- 4 dated 19.01.2020 cannot be said to have attained finality as the Declaration filed under the aforesaid Scheme was a Declaration filed under voluntary disclosure and not under arrears category . Since the incorrect particulars were furnished by the Petitioner in Form SVLDRS-1 dated 13.01.2020 and the Declaration filed was not to be entertained the Department was entitled to invoke power under Section 129(2)(c) of the Scheme as per which in case of a voluntary disclosure where any material particulars furnished in the Declaration is subsequently found to be false within a period of one year of issue of the Discharge Certificate it shall be presumed that the Declaration was never made and the proceeding under the applicable indirect tax enactment shall be instituted. Conclusion - The Petitioner s declaration under the Scheme was not valid under the arrears category. The Petitioner was not entitled to any relief under the Scheme due to the false particulars furnished in the declaration. The Discharge Certificate was not conclusive and the Respondents were entitled to proceed with recovery actions. Petition dismissed.
ISSUES PRESENTED and CONSIDERED
The primary legal issue considered in this judgment is whether the Petitioner was entitled to settle their tax liability under the SABKA VISHWAS (Legacy Dispute Resolution) Scheme, 2019, particularly under the category of "arrears of tax." The core questions include:
ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The SABKA VISHWAS (Legacy Dispute Resolution) Scheme, 2019, is governed by Chapter V, Sections 120 to 135 of the Finance Act (No.2) Act, 2019. Key provisions include:
Court's Interpretation and Reasoning The Court interpreted the Scheme's provisions, emphasizing the distinction between "arrears" and "voluntary disclosure." It found that the Petitioner's declaration was erroneously filed under "arrears" when it should have been under "voluntary disclosure" due to the admitted but unpaid tax liability in the ST-3 return filed on 05.06.2018. Key Evidence and Findings The Petitioner filed an ST-3 return on 05.06.2018, declaring a tax liability of Rs. 1,86,158/- but did not pay this amount. Instead, in the declaration under the Scheme, the Petitioner claimed a lower tax liability and sought abatement. This inconsistency was central to the Court's findings. Application of Law to Facts The Court applied Section 125(1)(f)(ii) of the Scheme, which precludes a declarant from making a declaration under "voluntary disclosure" if they have filed a return indicating a payable amount but have not paid it. The Court concluded that the Petitioner's declaration was invalid under the "arrears" category, as the correct category was "voluntary disclosure." Treatment of Competing Arguments The Petitioner argued that once the dispute was settled under the Scheme, further demands or orders were unwarranted. The Respondents contended that the Petitioner was not entitled to the Scheme's benefits due to the false particulars in the declaration. The Court sided with the Respondents, emphasizing the Petitioner's incorrect declaration. Conclusions The Court concluded that the Petitioner's declaration under the Scheme was invalid as it was filed under the wrong category. Consequently, the Discharge Certificate issued was erroneous, and the Respondents were justified in issuing the Statement of Demand and the subsequent Order-in-Original. SIGNIFICANT HOLDINGS Core Principles Established The judgment reinforces the principle that a declarant cannot benefit from the Scheme if they file a declaration under a misrepresented category, particularly when the tax liability was declared but not paid in the filed return. Final Determinations on Each Issue The Court held that the Petitioner's declaration under the Scheme was not valid under the "arrears" category. The Petitioner was not entitled to any relief under the Scheme due to the false particulars furnished in the declaration. The Discharge Certificate was not conclusive, and the Respondents were entitled to proceed with recovery actions. The Court dismissed the Writ Petition, granting the Petitioner the liberty to file a statutory appeal before the Appellate Commissioner within 30 days, failing which the Respondents could proceed with recovery actions. The Appellate Authority was directed to entertain the appeal without being influenced by the Court's observations.
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