2022 (8) TMI 834 - HC - Service Tax

Benefit of waiver of the interest - SVLDRS Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection of interest on the ground of ineligibility - whether the component of interest would be covered by the expression amount of duty / amount in arrears under the said Scheme of 2019 to extend the amnesty available under the scheme to the petitioner or not? HELD THAT - The Division Bench of Allahabad High Court in Beenu Gupta vs. Union of India and four others 2021 (1) TMI 104 - ALLAHABAD HIGH COURT , dealing with the issue of waiver of interest amount arising from late deposit of tax arrears rejected the petition of the assessee. The Division Bench of Allahabad High Court while rejecting the petition held that Sabka Vishwas Scheme , although a beneficial scheme for a declarant, is statutory in nature, which has been enacted with the object and purpose to minimize the litigation and to realize the arrears of tax by way of settlement at discounted amount in an expeditious manner. In other words, the scheme is a step towards the settlement of outstanding disputed tax liability. Whereas petitioner has placed reliance of the Division Bench judgment of Bombay High Court in Thought Blurb vs. Union of India and others . 2020 (10) TMI 1135 - BOMBAY HIGH COURT - In the said decision of Bombay High Court, the question of interest being a part of the arrears of tax for the purpose of the Scheme of 2019 was not involved. The question before the Bombay High Court was as to whether despite the assessee therein being eligible under the scheme was entitled to an opportunity of being heard before the designated Committee under Clause 127 of the Scheme or not? Thus, the said decision of the Bombay High Court is of no avail to the petitioner. Thus, in view of the conflicting views, it would be appropriate that the Competent Authority i.e. the respondent No.2 should apply its mind on the said issue as to whether component of interest levied due to late deposit of tax dues, can be waived under the Scheme of 2019 or not? This Court declining to take any view in the matter leaves it to the respondent No.2 to dwell upon the question - Respondent No.2 is directed to dwell upon the question as to whether the component of interest arising out of delayed payment of tax dues, can be waived under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 or not? - Petition disposed off.

Summary

Issues:
1. Interpretation of the term "amount of duty" under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. Whether the component of interest arising from late deposit of tax dues can be waived under the Scheme of 2019.

Analysis:
1. The primary issue in this case revolves around the interpretation of the term "amount of duty" under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The petitioner, a partnership firm engaged in Works Contract Service, sought the benefit of waiver of interest amount imposed for late deposit of tax dues under the Scheme. The rejection of this claim by Annexure P/9 led to the question of whether the component of interest falls within the ambit of "amount of duty" or "amount in arrears" as per the Scheme of 2019.

2. The Court referred to a previous decision by a Co-ordinate Bench of the Allahabad High Court in Beenu Gupta vs. Union of India, which addressed a similar issue regarding the waiver of interest amount arising from late deposit of tax arrears. The Allahabad High Court held that the term "amount of duty" as defined in the Scheme does not cover interest amounts resulting from belated filings. The Court emphasized that the Scheme aims to recover tax arrears at a discounted rate and settle outstanding disputed tax liabilities efficiently.

3. On the contrary, the petitioner relied on a Bombay High Court judgment in Thought Blurb vs. Union of India, which did not directly address the inclusion of interest as part of tax arrears under the Scheme of 2019. Additionally, references were made to decisions by the High Court of Chhattisgarh and the Division Bench of Ahmedabad High Court, where interest was considered a part of the "amount in arrears" and "amount of duty" eligible for waiver under the Scheme.

4. Due to conflicting views from different High Courts, the Court directed the Competent Authority (respondent No.2) to consider whether the component of interest resulting from delayed tax payments can be waived under the Scheme of 2019. The Court refrained from providing a definitive ruling on the matter, leaving it to the Competent Authority to analyze and issue clarifications within sixty days to resolve the ambiguity surrounding the inclusion of interest in the Scheme's provisions.

This detailed analysis of the judgment highlights the legal intricacies surrounding the interpretation of the Scheme of 2019 and the eligibility of interest amounts for waiver under its provisions.