Denying Benefits of SVLDR Scheme is contrary to object of scheme : Himachal Pradesh HC allows Time to pay Dues during Covid Pandemic [Read Order]

East Bourne Hotels Pvt. Ltd, the petitioner is engaged in the business of rendering services of hospitality by way of hotel at Shimla. The Superintendent (Prev.), Shimla vide his letter dated 08.11.2016 directed the petitioner to supply a number of documents enumerated in the said letter for the period 2011-12 to 2015-16. The petitioner supplied all the documents and the official concerned pointed out that the petitioner was not discharging due amount of service tax and, therefore, to avoid liability of penalty, it should deposit its service tax liability.

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The petitioner requested the respondents to discharge its outstanding liability by way of installments, which was duly accepted by the respondents and the petitioner was permitted to clear its outstanding dues in 24 installments commencing from 10.03.2018. The monthly installment was fixed at Rs. 7,16,214/-, however, due to non-availability of funds, the petitioner could not even pay the first installment and accordingly requested the respondents to postpone the schedule of installments. The request so made by the petitioner was accepted by the respondent vide their letter dated 28.03.2018 and the petitioner was asked to deposit the installments from 10.04.2018.

Accordingly, the petitioner paid first installment of Rs. 7,16,214/vide challan dated 10.04.2018.

The petitioner further paid a sum of Rs.7,16,214/- in the month of May, 2018 and thereafter in June, 2018, the petitioner could only pay Rs. 3,00,000/-. However, thereafter despite improvise financial condition, the petitioner deposited a sum of Rs. 40,10,740/- from November, 2016 to 31.01.2019.

Under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 the Petitioner filed 9 declarations under the category of investigation. As per section 121(h) of the Act, 2019 'declarant' means a person who is eligible to make a declaration and files such declaration under Section 125.

Section 124 of the Act, 2019 provides manner to calculate relief available to the declarant. According to section 124(1) (d) of the Act, 2019 where due tax relates to enquiry, investigation (Section 121(m) defines enquiry, investigation) or audit (Section 121(g) defines audit), the declarant is eligible to get relief of 70% of due taxes in case amount of tax/duty is 50 Lakh or less and 50% in case due tax/duty is more than 50 Lakh. Moreso, when no "order", (Section 121(0) defines an order), determination under any of the indirect tax enactment had been passed in relation to a show cause notice in the case at hand.

The petitioner, being eligible, filed the declarations to avail benefit of aforesaid scheme and settle its liabilities under the category of investigation and accordingly the Petitioner filed 9 declarations in Form SVLDRS-1 dated 21.12.2019 wherein Petitioner declared its liability under category of investigation, enquiry or audit. As per the calculations done under the category of investigation the petitioner was required to pay the amount of Rs.3,38,617/- after getting applicable relief under the scheme. The respondent, while issuing the SVLDRS-3 against the declarations filed by the petitioner, changed the category of the petitioner from investigation to arrears and issued Form SVLDRS3 dated 28.01.2020 declaring therein the total tax payable as Rs.29,48,623/-.

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The respondents wrongly arrived at aforesaid taxable amount of Rs. 29,48,623/- by considering the case of the petitioner in arrears category. As evidently, the amount deposited during the investigation i.e. 40,10,740/- was neither a pre-deposit nor a voluntarily deposit but he same had been deposited under the directions/instructions of the respondents. The same included penalty. It is further evident from the fact that had this been voluntary deposit, the petitioner would not have been required to pay penalty.

Since relief, as per the petitioner, had been wrongly calculated, therefore, the petitioner vide application dated 24.02.2020, requested the respondents to revise SVLDRS-3. The petitioner also pointed out that it had made payments against outstanding dues and none of such payments related to specific period/year/quarter and, therefore, the amount paid by them deserves to be deducted from the net amount payable i.e. after deducting relief.

The petitioner was unable to deposit the dues in view of the peculiar circumstances, which had arisen across the world and has accordingly filed the instant petition on the ground that it deserves sufficient time to clear the outstanding dues as the petitioner was a bona fide assessee and not attempting to deflect from its responsibility and wishes to settle its liability for which it requires some more time.

The division bench of Justice Tarlok Singh Chauhan and Justice Sushil Kukreja observed that denying the benefits of SVLDR Scheme would not only contrary to object of the scheme but also would also be injustice to the petitioner declarant who otherwise was eligible.

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The court viewed that the petitioner deserves to be granted another chance to make the payment after associating it so as to arrive at the amount due payable. The bench quashed and set aside the demand notices, 9 SVLDRS-3 Forms issued on 28.01.2020 (forming part of Annexure P-12 (Colly), 9 SVLDRS-3 Forms issued 25.02.2020 and letter Annexure P-15 whereby the respondent department has upheld its calculation and the respondents are directed to recalculate the correct liability of the petitioner under the amnesty scheme after associating and affording an opportunity to the petitioner.

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