Rectification Application not Equal to Appeal: Madras HC limits SLVDRS Eligibility to "Arrears" Category, directs to Pay 60% of Demand [Read Order]

A Single Bench of the Madras High Court has held that the petitioner is not eligible for reduced payment of dues at 50% as no appeal was pending before the appellate authority as per SLDRS Rules, differentiating appeals from rectification applications.

The petitioner has challenged the impugned communications all dated 12.02.2020 in Form SVLDRS-3, whereby the Designated Authority has asked the petitioner to pay the amounts towards arrears of tax in terms of Section 124(1)(c) of the Sabka Vishwas ( Legacy Dispute Resolution ) Scheme Rules, 2019 in the Finance Act, 2019.

The petitioner claims to have invoked the powers under Section 74 of the Finance Act, 1994 to rectify the alleged mistakes in so far as demand proposed and confirmed vide Order in Original dated 22.02.2017.

Thus, according to the petitioner, the petitioner was required to pay only 50% of the tax due under Section 124(1)(a)(ii) of the Sabka Vishwas ( Legacy Dispute Resolution ) Scheme, 2019 and not 60% of amount confirmed in Order in Original 62 to 65/2016-17 as per Section 124(1)(c)(ii) of Chapter V of Finance Act, 2019.

It was submitted that the petitioner did not file an appeal against the Order in Original before Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) as the application under Section 74 of the Finance Act for rectification of mistake was pending before the Commissioner.

It was also submitted that reminders were also sent to the Commissioner on 26.03.2019, 17.07.2019 and 04.09.2019 respectively. However, the petitioner did not get any reply from the Commissioner.

The specific case of the petitioner is that the petitioner was issued with a Show Cause Notice dated 21.10.2014 for the period between April 2012 to June 2012 under Section 73(1) of the Finance Act, 1994 and consequently interest and penalty under Sections 75 & 76 of the Finance Act, 1994 and thereafter, the petitioner was issued with periodical statement of demand under Section 73(1)(a) of the Finance Act, 1994 as above for the succeeding period which ultimately culminated in Order in Original dated 22.02.2017.

It was submitted that with the announcement of Sabka Vishwas ( Legacy Dispute Resolution ) Scheme, 2019 under Chapter V of Finance Act, 2019, the petitioner opted to settle the dispute under the aforesaid Scheme.

The petitioner further submitted that, “the application of the petitioner under the Sabka Vishwas ( Legacy Dispute Resolution ) Scheme, 2019 was to be viewed for the perspective of Section 124(1)(a)(ii) of the Finance Act, 2019 i.e. where one or more appeals arising out of such notice was pending as on the 30th day of June, 2019 and not under the “arrears” category.

It was observed that, “The petitioner had filed the applications in Form SVLDRS-1 in time. Thus, the petitioner is entitled to settle the dispute under the aforesaid scheme.”

The Madras High Court also noted that, “ An appellate remedy under Section 86 of the Finance Act, 1994 before the Appellate Authority is very different from a rectification proceeding under Section 74 of the Finance Act, 1994 before the same authority who passed the order.”

It was also remarked that, “9. The scope of appeal is different from a scope of application filed under Section 74 of the Finance Act, 1994. An application under Section 74 of the Finance Act, 1994 is for rectification of mistake for rectifying any mistake apparent from the record.”

It was thus held that the petitioner is not entitled to settle the amount under the aforesaid Scheme in terms of Section 124(1)(a)(ii) as no appeal was pending before the Appellate Tribunal.

It was thus directed by the Single Bench of Justice C Saravanan that, “The petitioner shall pay an amount of Rs.33,36,656/- ( Rs.2,00,19,942 – Rs.1,66,83,286/- ) within a period of 30 days from the date of receipt of a copy of this order, provided the petitioner has paid a sum of Rs.1,66,83,286/- as was ordered on 17.03.2020.”

It was also held that, “The petitioner shall also pay the interest at 12% p.a. on the delayed payment of ( Rs.1,66,83,286/- and Rs.33,36,656/- ) Rs.2,00,19,942/- from the date of expiry of 30 days from the receipt of Form SVLDRS-3.”

Further, in case, the petitioner had failed to pay the amount of Rs.1,66,83,286/- as ordered on 17.03.2020 and fails to pay the amounts as ordered now, the benefit of Sabka Vishwas - ( Legacy Dispute Resolution ) Scheme, 2019 shall not be extended to the petitioner.

To Read the full text of the Order CLICK HERE

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