The Punjab and Haryana High Court quashed the Form SVLDRS-2 by Designated Committee as Taxpayers cannot be punished for depositing the amount under different heads.
The petitioner, Schlumberger Solutions Private Limited was served with a show-cause notice dated 12.04.2019 whereby a further amount of Rs.9,86,53,074/- was sought to be recovered on account of cenvat credit. This amount included interest and penalty as well. Before the proceedings on the aforesaid show cause notice could proceed further, an amnesty scheme by way of the Finance (No.2) Act, 2019 was introduced by the Central Government. The main objective of the scheme is to provide for the settlement of pending disputes related to indirect taxes. The petitioner being eligible under the said scheme availed the same by making the declaration in Form SVLDRS-1. As per the petitioner, his declaration was accepted though with a variation in the computation of the amount payable. Designated Committee, i.e. respondent No.2 disagreeing with the petitioner’s computation issued Form SVLDRS-2 on 28.01.2020 wherein the difference in the amount payable was calculated to be Rs.1,50,95,499.
The Form SVLDRS-2 also contained remarks from Designated Committee which says “The deposit amount indicated by the declarant also includes amounts paid towards interest and penalty. Duty, Interest & penalty are totally different terms under Indirect Tax Laws. There are separate provisions for these which are invoked for different purposes. Accordingly, payments towards these are made under separate heads. Thus, payments made under one head cannot be transferred or adjusted against another head. The calculation table of the SVLDRS form-I also indicates that pre-deposit/any other deposit of duty is to be adjusted during the calculation of tax dues less tax relief. Accordingly, payments made under the heads of interest and penalty are not included in the deposit.”
The division bench of Justice Ajay Tewari and Justice Pankaj Jain held that amount deposited by the petitioner falls in the second category. The provision only talks of amount irrespective of whether it has been paid as tax or interest or penalty. Thus, the view taken by the Designated Committee cannot be sustained. There is another side to the story. Had the petitioner remitted the entire amount paid by him towards tax, the respondents would have given credit of entire amount and his interest liability would have been waived off as well. The petitioner cannot be punished for depositing the amount under different heads once the provision mandates to discount the amount paid during the investigation dehors the head it has been deposited under.
The court quashed the comments of Designated Committee informs SVLDRS-2 and SVLDRS-3; and directed the Designated Committee to reconsider the claim of the petitioner within two weeks from the receipt of the certified copy of the order by adjusting amounts paid towards interest and penalty, in accordance with law and the petitioner is directed to make the payment within two weeks from the date Designated Committee issues SVLDRS-3.
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