Way forward for rejection of applications under SVLDRS Scheme
With an intent to bring closure to litigations under the erstwhile Indirect Tax regime (Excise Duty and Service Tax), the Central Government vide the Finance Act, 2019 enacted Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (‘Scheme’). The Scheme came to an end on January 15, 2020.
While the Scheme was largely successful, it has created its own set of disputes. Lately, the department has been rejecting taxpayers’ applications under the Scheme on frivolous, incorrect and immaterial grounds. This Outlook intends to apprise you regarding such disputes under the Scheme and remedy available for taxpayers whose applications were rejected.
Nature of disputes
The department is rejecting taxpayers’ applications inter alia on following grounds:
- Inadvertent declarations made in application
- Interpretation issues on category opted
- Denial of adjustment of deposit made during investigation or pre-deposit made during appeal stages
- Denial of immunity of interest and penalty when tax fully paid
- Non-issuance of discharge certificate in Form SVLDRS-4
- In some cases, rejections have been made by the Designated Committee (‘DC’) even without affording an opportunity of hearing which is against the mandate of law.
Recent High Court judgments
- The taxpayers have started challenging such rejections before the jurisdictional High Courts by way of writ petitions. Some of the key cases dealt by the High Courts are tabulated below:
|
Issue |
Cases |
Decision |
|
Inadvertent declaration of mentioning penalty as zero in requisite form |
Assam Cricket Association, 2020 (6) TMI 38 – Gauhati High Court |
The High Court noted that there are two kinds of mistakes viz. mistake based upon which legal right is claimed and inadvertent mistake which do not impact legal right. The Court held that mistake committed by the Petitioner is not a mistake by which the Petitioner claimed any undue benefit which it was otherwise not entitled to. Hence, the Petitioner is eligible for the Scheme. The Court remanded the matter back to the DC for fresh consideration.
|
|
Opting for wrong category vis-à-vis eligible category |
Ramesh Electricals, Vinayak Bus Body Builders, Praveen Kumar, 2020 (1) TMI 999 – Karnataka High Court
|
The High Court held that the Scheme is for the benefit of taxpayers and should be construed liberally to effectuate the purpose. The Court directed DC to consider the Petitioner’s application under different category upon filing of fresh application.
|
|
Denial of deduction of deposit made during investigation |
Eureka Fabricators Private Limited, 2020 (7) TMI 117 – Bombay High Court
|
The High Court directed DC to re-consider the case in the light of legal provisions subject to the taxpayer depositing full amount.
|
|
Denial of immunity of interest and penalty when entire tax paid |
Pro-Interactive Services India Private Limited, 2020 (6) TMI 641 – Delhi High Court
|
The High Court directed the DC to decide the case after granting a personal hearing. |
|
Denial of benefit on account of unquantified demand |
Kiran Borewells, 2019 (12) TMI 1067 – Karnataka High Court
|
The High Court held that application cannot be rejected without affording an opportunity of hearing. The Court directed DC to grant personal hearing to Petitioner before deciding the matter. |
|
Denial of benefit without granting opportunity of hearing |
Hotel Mela Plaza, 2019 (12) TMI 1011 – Delhi High Court
|
The High Court directed DC to consider Petitioner’s representation and grant personal hearing before deciding the matter. |
Way Forward
As the Scheme does not provide for any appellate mechanism, taxpayers are only left with option of filing writ petition against such rejections before their jurisdictional High Court.
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