Duty liability in Form SVLDRS-1 admitted in an oral statement stood quantified prior to the cut-off date of beneficial circulars: Delhi HC

The Delhi High Court held that the duty liability in Form SVLDRS-1 admitted in an oral statement stood quantified prior to the cut-off date of beneficial circulars.

The present writ petition was filed challenging the rejection order dated 17th January 2020 whereby the declaration filed by the petitioner under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) has been rejected on the ground that the audit was conducted and conveyed on 02nd July 2019 and amount of duty involved in the audit had not been quantified on or before the 30th day of June 2019.

Petitioner points out that though respondent authority in its counter-affidavit has denied that all the demands were quantified and communicated to the petitioner on 28th June 2020, yet the respondents in their counter- affidavit have admitted that during the visit of the audit team on 28th June 2020, not only the audit was concluded but tax amount on each issue was quantified and communicated to the petitioner.

The Frequently Asked Questions (FAQs) issued on the SVLDRS, 2019 by the Ministry of Finance states that even if the amount quantified under an audit before 30th June 2019 gets modified subsequently due to any reason, the assessee shall be entitled to file a declaration under the SVLDRS, 2019, the petitioner argued.

However, the respondent contended that the petitioner was ineligible to apply under the SVLDRS, 2019 as the amount of duty involved in the audit had not been quantified before 30th June, 2019. They submit that the expression “quantified” underSection 121(r) of the Finance Act, 2019 means a written communication of the amount of duty payable under the indirect tax enactment.

The division bench of Justice Manmohan and Justice Sanjeev Narula observed that the duty amount mentioned in Form SVLDRS-1 by the petitioner is the same amount that had been admitted by the declarant during the last visit of the Audit Team on 28th June 2019 as mentioned in the respondents‟ Audit Memo dated 2nd July 2019.

“This Court is of the view that the duty liability stood admitted in an oral statement by the petitioner before 30th June 2019 and consequently stood quantified prior to the cut-off date in accordance with the beneficial circulars dated 12th December 2019 and 27th August 2019 issued by the Central Board of Indirect Taxes and Customs,” the bench said.

The Court was of the opinion that a liberal interpretation has to be given to the SVLDRS, 2019 and the circulars issued by Central Board of Indirect Taxes and Customs as their intent is to unload the baggage relating to legacy disputes under the Central Excise and Service Tax and to allow the businesses to make a fresh beginning.