Fairness should be applied while Interpreting Provisions of Dispute Resolution Scheme as Its Object is to reduce Legacy Tax Disputes: Madras HC [Read Judgment]

SVLDRS - respondent authority - Taxscan

The Madras High Court, while granting relief to the assessee, held that the objective of the Dispute Resolution Scheme is to reduce legacy tax disputes and therefore, fairness should be there while interpreting the provisions of the scheme.

The petitioner, M/s.Navin Housing and Properties (P) Ltd. is engaged in the construction and sale of residential apartments and was registered as an assessee with the Service Tax Department.

The two show cause notices (SCN) were issued by the respondent authority.

The SCN 1 was issued calling upon the petitioner to remit differential service tax for the periods December 2008 to January 2010 in regard to the services relating to two construction projects, namely, Marry Lands and Dayton Heights.

The SCN 2 was thereafter issued calling upon the petitioner to remit differential service tax for the same period as covered in SCN 1.

As against the demand proposed in SCN 1 for an amount of Rs.1,69,52,423/-, the petitioner had remitted an amount of Rs.99,94,773/- and the deposit/remittance was appropriated in Order –in-Original (OinO 1) as against the total demand.

The Scheme called for the remittance of 30% of the disputed demand to be remitted, and in computing this amount, the assessee was entitled to seek adjustment of the amount remitted as pre- deposit. This relief is in terms of Section 124 (1) and (2) of the Scheme, sub-section (1) setting out the mode of computation of the relief and (2) stipulating that the amount payable by an assessee shall take into account the amount of deposit made during enquiry/audit/investigation or pre-deposit made prior to institution of any statutory appeal.

The Single Judge Bench of Justice Dr. Anita Sumanth held that the petitioner, as confirmed by the order of Respondent authority, is right about the double demands raised for Periods 1 and 2. Thus, as far as the demand of Rs.19,18,375/- is concerned, it ought not to have been raised at all.

The bench further held that the remaining demand of Rs.9,98,350/- corresponding to Period 2 also stands covered/telescoped by the amount of Rs.80,74,333/- already paid for the same period earlier.“The Dispute Resolution Scheme is an attempt to close legacy tax disputes and a certain amount of fairness should be seen in the interpretation of the provisions of the Scheme. Learned counsel for the respondent would harp on the argument that a dispute raised under one SCN cannot be settled by utilising a deposit made under a different SCN. This argument does not arise in a case such as the present, since the two SCNs relate to identical transactions, time periods and demands and constitute a duplication of proceedings,” the bench said.

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