SVLDRS Scheme Applicable to Taxpayers against whom Investigation by Service Tax Dept is pending: Delhi HC [Read Order]

The Delhi High Court recently held that the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) is applicable to taxpayers against whom investigation by the Service Tax Department is pending.

In the present case, the petitioner, Hans Uttam Finance Limited, had filed a declaration under the Voluntary Compliance Encouragement Scheme (VCES) declaring that a service tax of ₹36 lakhs was due on account of service tax, education cess and higher education cess. The petitioner had also paid ₹18 lakhs pursuant to the declaration made under the VCES.

The petitioner has filed the present petition impugning an order, whereby its declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was rejected. It is the petitioner’s case that it is entitled to the benefit of the Scheme since it had made a declaration under Section 125 of the Finance Act, 2019 (declaration as contemplated under the Scheme).

According to the respondents, the petitioner is not entitled to the benefit of the Scheme as at the material time, the investigation concerning the petitioner was pending and the amount of service tax was not ‘quantified’ within the meaning of Clause (r) of Section 121 of the Finance Act, 2019.

The Parliament enacted the Finance Act, 2019. Sections 120 to 135 (Chapter V) of the Finance Act (No.2), 2019 introduced the Scheme. By virtue of Section 120(1) of the Finance Act (No.2), 2019, the Scheme is called the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The said Scheme came into effect from 01.09.2019.

A Division Bench of the Delhi High Court comprising Justices Vibhu Bakhru and Amit Mahajan observed that “The impugned order rejecting the petitioner’s declaration on the ground that “investigation has not been concluded and hence the demand has not been estimated or concluded on or before the stipulated date” is unsustainable. The Scheme does not exclude taxpayers in respect of whom investigations have not been concluded; it expressly includes taxpayers in respect of whom investigation, enquiry or audit is pending.”

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