Recently, the High Court (HC)of Bombay has held that no interest shall be paid by the assessee when the respondent failed to issue thesanction through an electronic form SVLDRS -3 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS).
Virtusa Systems (India) Private Limited, the Petitioner challenged the action of the Respondent /Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, rejecting the declaration dated 20 December 2019 filed by the Petitioner under the Scheme and seeks a direction to the Respondents to extend the benefit of the Scheme to the Petitioner.
The Petitioner, a company, is engaged in providing software development services. The Respondents concluded that the Petitioner was providing information technology software and testing services to SEZ unit and to which a requisite certificate was issued, making the Petitioner liable to pay tax on the transaction. The demand for service tax of Rs. 44,23,609/- was confirmed against the Petitioner.
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was introduced by the Finance Act, 2019 enacted on 1 August 2019 extending certificate benefits to the declarants therein. The Petitioner filed a declaration on 10 September 2019 in form SVLDRS-1 under the category of “arrears”, wherein the Petitioner declared the tax dues as Rs. 17,69,443.60/-.
The Designated Committee manually processed the application and accorded sanction on 18 February 2020 for issuing SVLDRS-3 for tax dues of Rs. 17,69,443.60/-. The said application was not reflected on the portal of the Designated Committee of Thane Commissionerate, and the outcome could not be communicated to the Petitioner.
As per section 127 of the Finance Act 2019, a declaration in form SVLDRS-1 is required to be filed online by a declarant. The same is thereafter verified. If the Designated Committee finds that the amount estimated by the Designated Committee is equal to the amount declared by the declarant, then the Designated Committee will issue form SVLDRS-3 indicating the amount payable within 60 days from the date of receipt of the declaration.
It was contended by the respondent that the Petitioner was eligible for availing the benefit of the Scheme is also accepted, and it is further stated in the reply affidavit that if the Petitioner is allowed to deposit the eligible amount it should be with interest at the rate of Rs. 9% per annum. The Petitioner, therefore, is entitled to a direction to the Respondent to accept the eligible amount.
A two-member bench comprising Justice Nitin Jamdar and Justice Abhay Ahuja observed that to date, the Respondents have not issued an electronic form SVLDRS-3 as required. Therefore, the obligation of the Petitioner under section 127 (5) of the Act of 2019 to pay the amount within 30 days had not arisen at all.
It was observed that there is no fault on the part of the Petitioner and the Court held that “the Petitioner is entitled to the relief prayed for as to the benefit of the Scheme.”
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