2023 (2) TMI 484 - HC - Service Tax

Validity of action of the respondent No.1 who did not issue discharge certificate in Form SVLDRS-4 under Section 127(8) of the scheme of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and under Rule 9 of Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 within 30 days of the date of payment - recovery of penalty - HELD THAT - It is directed in Rule 7 that the amount of tax is required to be deposited electronically. Electronic transfer means transfer by NEFT or RTGS so that the amount is immediately credited to the respondent authority. In the instant case, the amount was deposited on 30th June, 2020 by RTGS through cheque after obtaining E-Mandate Form. E-Mandate Form is electronically generated. When a cheque is deposited for transmission through NEFT or RTGS, it is the duty of the bank to immediately credit the money to the account of the RBI on verification of the account of the petitioners to ascertain as to whether the petitioners have requisite amount to honour the cheque. For the failure of the bank in sending the money by electronic by RTGS on 30th June, 2020, the petitioners cannot be held liable. The respondents are directed to accept payment of tax of Rs.16,951/- dated 30th June, 2020 as per statement in SVLDRS-3 and issue discharge certificate in favour of the petitioners in Form SVLDRS-4 settling all dues relating to payment of tax and granting consequential relief for the financial year 2011- 2012 to 2014-2015 under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Imposition and recovery of penalty of Rs.12,15,185/- by the respondents from the bank account of the petitioners is accordingly quashed and the respondents are directed to repay the said amount within four weeks from the date of communication of this order - Petition allowed.

Summary

Issues:
1. Non-issuance of discharge certificate under Sabka Vishwas Scheme.
2. Penalty imposition and recovery for alleged delay in tax payment.
3. Interpretation of relevant notifications and rules.
4. Obligation of taxpayers under the Sabka Vishwas Scheme.
5. Legal validity of penalty imposition by the authorities.

Issue 1: Non-issuance of discharge certificate under Sabka Vishwas Scheme
The petitioners, a partnership firm, were aggrieved by the respondent's failure to issue a discharge certificate in Form SVLDRS-4 within the stipulated 30 days under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The petitioners had paid a significant portion of their tax dues but were penalized for an alleged delay, leading to recovery of a substantial amount from their bank account.

Issue 2: Penalty imposition and recovery for alleged delay in tax payment
The petitioners argued that they had paid the remaining tax amount within the extended deadline of 30th June 2020, as per the provisions of the relevant ordinances and notifications. Despite a technical glitch causing a one-day delay in crediting the amount to the respondent's account, a hefty penalty was imposed unilaterally, amounting to Rs. 12,15,185, which the petitioners contested as arbitrary and illegal.

Issue 3: Interpretation of relevant notifications and rules
The court analyzed the notifications issued by the Central Government, specifically the Taxation and other Laws (Relaxation Certain Provisions) Ordinance, 2020, and subsequent amendments to the Sabka Vishwas Scheme rules. The amendments clarified the deadline for tax payment under the scheme, emphasizing the importance of adherence to the revised timelines for availing benefits and avoiding penalties.

Issue 4: Obligation of taxpayers under the Sabka Vishwas Scheme
The court highlighted the importance of strict compliance with the terms and conditions of the Sabka Vishwas Scheme, emphasizing that taxpayers seeking relief under such schemes must adhere to the prescribed timelines and procedures. The judgment underscored the significance of timely payments and electronic transfers to ensure seamless processing of tax liabilities under the scheme.

Issue 5: Legal validity of penalty imposition by the authorities
In assessing the legality of the penalty imposition and recovery by the authorities, the court referred to relevant case laws, including decisions by the Hon'ble Supreme Court and High Courts. The court ruled in favor of the petitioners, emphasizing that the retrospective effect of procedural law amendments must be considered, and the penalty imposed for the delayed payment was unjustified due to the technical glitch causing the delay in crediting the tax amount.

In conclusion, the High Court of Calcutta, in a judgment delivered by Hon'ble Justice Bibek Chaudhuri, allowed the writ petition filed by the petitioners. The court directed the respondents to accept the tax payment made by the petitioners on 30th June 2020, issue the discharge certificate in their favor, and quash the penalty imposition of Rs. 12,15,185. The court emphasized the importance of adherence to timelines and procedural requirements under the Sabka Vishwas Scheme, ensuring fair treatment of taxpayers seeking relief under such schemes.