2025 (4) TMI 1191 - HC - Service Tax

Valid proof of payment under Section 127(5) of the Finance Act 2019 read with Rule 7 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules 2019 - payment made by the petitioner - direction to issue manual discharge certification in Form SVLDRS-4 in accordance with provision of section 127(8) of Finance Act 2019 read with Rule 9 of Sabka vishwas (Legacy Dispute Resolution) Scheme Rules 2019 - HELD THAT - Perusal of the material on record would indicate that the amount payable by the petitioner under the SVLDR Scheme was paid by him under a different head in a manual form as a result of which same was not reckoned towards the scheme despite the petitioner having actually paid the said amount. In the light of the undisputed fact that the amount as quantified and estimated by the respondent No.1 in SVLDRS-Form 3 had already been paid by the petitioner much prior to the cut off date the respondents ought to have issued the SLVDRS- Form 4 certificate to the petitioner and the same having not been issued to the petitioner till date the petition deserves to be allowed. Petition allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter are:

(a) Whether the payment made by the petitioner, evidenced at Annexure-G3, qualifies as valid proof of payment under Section 127(5) of the Finance Act, 2019 read with Rule 7 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 (hereinafter "SVLDR Scheme Rules");

(b) Whether the representations dated 30.06.2020 and 29.09.2020 submitted by the petitioner (Annexures H and H1) ought to be considered by the respondent authorities;

(c) Whether the respondent is obligated to issue a manual Discharge Certificate in Form SVLDRS-4 in accordance with Section 127(8) of the Finance Act, 2019 read with Rule 9 of the SVLDR Scheme Rules;

(d) Whether the failure of the respondent to issue the discharge certificate despite the payment of the quantified amount under the SVLDR Scheme amounts to a breach of statutory obligation warranting judicial intervention.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a): Validity of Payment as Proof under Section 127(5) and Rule 7 of SVLDR Scheme Rules

The relevant legal framework comprises Section 127(5) of the Finance Act, 2019, which mandates that the payment of the estimated amount under the SVLDR Scheme must be made as proof of compliance, and Rule 7 of the SVLDR Scheme Rules, 2019, which details the procedural requirements for such payment.

The petitioner submitted an application on 20.12.2019 seeking benefits under the SVLDR Scheme, admitting a service tax liability of Rs. 22,79,574.50. Subsequently, the respondent issued SVLDRS-Form 3 on 20.01.2020, quantifying the amount payable as the same sum. The petitioner remitted this amount on 19.02.2020 by generating a separate mandate form, evidenced by Annexure-G3.

The Court noted that the payment was made under a different head and in a manual form, which led to the payment not being recognized as compliance with the SVLDR Scheme by the respondents. Despite this, the Court emphasized the undisputed fact that the petitioner had indeed paid the quantified amount prior to the cut-off date.

The Court interpreted the provisions strictly, holding that the payment made, regardless of the mode or head under which it was credited, must be considered valid proof of payment under Section 127(5) and Rule 7, as the legislative intent is to facilitate resolution of legacy disputes upon payment of the quantified amount.

Competing arguments by the respondents that the payment was not made under the prescribed head or mode were rejected on the basis that such technicalities cannot override the substantive fact of payment and the statutory scheme's objectives.

Conclusion: The payment evidenced at Annexure-G3 qualifies as valid proof of payment under the SVLDR Scheme.

Issue (b): Consideration of Representations dated 30.06.2020 and 29.09.2020

The petitioner submitted two representations requesting issuance of the Discharge Certificate (Form SVLDRS-4) as per the statutory provisions. The respondents failed to act on these representations.

The Court held that given the undisputed payment of the quantified amount, the representations were valid and deserved consideration. The failure to consider these representations amounted to non-compliance with the statutory scheme and denial of the petitioner's statutory rights.

The Court ordered the respondents to consider the representations within a stipulated timeframe, thereby ensuring procedural fairness and adherence to the statutory mandate.

Issue (c): Obligation to Issue Discharge Certificate in Form SVLDRS-4

Section 127(8) of the Finance Act, 2019 and Rule 9 of the SVLDR Scheme Rules require the issuance of a Discharge Certificate (Form SVLDRS-4) upon payment of the quantified amount, which certifies that the petitioner has no further liability under the legacy dispute.

The Court found that since the petitioner had paid the quantified amount, the respondents were statutorily bound to issue the Discharge Certificate. The failure to do so was a breach of the statutory obligation and contrary to the objectives of the SVLDR Scheme.

The Court emphasized that issuance of the certificate is a ministerial act that follows as a matter of course upon payment and acceptance thereof.

The respondents' argument that the payment was not made under the prescribed head was rejected, as the substantive compliance with payment was established.

Conclusion: The respondents are mandated to issue the Discharge Certificate in Form SVLDRS-4 forthwith upon proof of payment.

Issue (d): Judicial Intervention Due to Non-Issuance of Discharge Certificate

The petitioner approached the Court seeking a writ of mandamus directing the respondents to issue the Discharge Certificate and consider the payment as valid proof under the SVLDR Scheme.

The Court recognized that the petitioner had fulfilled all substantive requirements under the scheme, and the respondents' failure to issue the certificate or consider the payment was arbitrary and unjustified.

The Court held that such failure undermines the legislative intent of the SVLDR Scheme, which aims at speedy resolution of legacy disputes upon payment of quantified dues.

Accordingly, the Court exercised its writ jurisdiction to direct the respondents to comply with their statutory obligations within specified timelines.

3. SIGNIFICANT HOLDINGS

The Court held: "In the light of the undisputed fact that the amount as quantified and estimated by the respondent No.1 in SVLDRS-Form 3 had already been paid by the petitioner much prior to the cut off date, the respondents ought to have issued the SLVDRS- Form 4 certificate to the petitioner and the same having not been issued to the petitioner till date, the petition deserves to be allowed."

Core principles established include:

- Payment made by the petitioner, even if under a different head or manual form, qualifies as valid proof under Section 127(5) of the Finance Act, 2019 and Rule 7 of the SVLDR Scheme Rules, provided it corresponds to the quantified amount.

- The respondents have a statutory obligation to issue the Discharge Certificate (Form SVLDRS-4) upon proof of payment, as per Section 127(8) and Rule 9 of the SVLDR Scheme Rules.

- Failure to issue the Discharge Certificate despite payment constitutes a breach of statutory duty and justifies judicial intervention by way of writ of mandamus.

- Representations made by the petitioner seeking issuance of the certificate must be considered within a reasonable timeframe to uphold procedural fairness and statutory compliance.

Final determinations:

(i) The payment made by the petitioner is valid proof under the SVLDR Scheme.

(ii) The respondents are directed to consider the petitioner's representations dated 30.06.2020 and 29.09.2020 within four weeks.

(iii) The respondents shall issue the Discharge Certificate in Form SVLDRS-4 within six weeks from receipt of a certified copy of the order.