A two-judge Bench of the Supreme Court comprised of Justice M R Shah and Justice B V Nagarathna recently overruled a decision of the Allahabad High Court and held that assessee cannot be denied relief under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 for non-formation of committee.
The Allahabad High Court had dismissed the said writ petition preferred by the appellant herein seeking direction to the respondents for consideration of the case of the petitioner under the scheme “Sabka Vishwas (Legacy Dispute Resolution) Scheme”, 2019.
The Service Tax Department had conducted investigations as to the evasion of service tax by the appellant and issued show cause notices demanding payment of service tax under various categories such as Accommodation in Hotels, Inn, Guest House, Restaurant Services, Mandap Keeper services etc.
After insolvency proceedings were initiated against the appellant company by the financial creditors and a resolution plan was approved, the appellant company- M/s. Shekhar Resorts Limited (Unit Hotel Orient Taj), acting through its Resolution professional submitted an application within the period prescribed under the Scheme 2019.
Subsequently, Form 1 was issued and tax dues were computed. After completion of the resolution process, the appellant submitted that he was willing to deposit the amount of approx. Rs. 1.24 Crores in lieu of the tax dues.
Since the appellant could not obtain permission for payment of the dues post the lifting of the legal moratorium imposed on, the appellant, approached the High Court by way of Writ Tax Petition. The High Court held that the petition is liable to be dismissed stating two reasons.
First, that the High Court shall not issue a direction contrary to the scheme and secondly that the committee designated under the SVLDR Scheme is not existing.
Charanya Lakshmikumaran, on behalf of the appellant submitted that the High Court has erred in holding that the Designated Committee does not exist. The moratorium period was also emphasised in the arguments raised.
Vikramjit Banerji, ASG appearing for the Union of India submitted that the Scheme was closed and even the Designated Committees were also dissolved and therefore as rightly observed by the Hon’ble High Court, the High Court had no jurisdiction to extend the Scheme.
Observing that the Committee is formed on a need basis and that the moratorium period was imposed in view of the Insolvency proceedings, the two-judge bench of Justice M R Shah and Justice B V Nagarathna set aside the High Court order, thereby directing the revenue to appropriate the amount already submitted in lieu of the tax dues towards settlement under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
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