SVLDRS Benefits Not Available for Voluntary Disclosure When Tax is Admitted in Filed Returns: Madras HC
The Madras High Court rules that SVLDRS benefits are not available for voluntary disclosures when tax liability is already admitted in filed returns
In a recent ruling, the Madras High Court held that benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) are not available for voluntary disclosure when the taxpayer has already filed returns admitting the tax liability.
Taufiq Manpower, a recruitment agency, had filed its ST-3 return on 05.06.2018 for the period between April and June 2017, admitting a service tax liability of Rs. 1,86,158. When applying under the SVLDRS scheme on 13.01.2020, the company declared a much lower tax due of Rs. 74,266 and paid only Rs. 29,706 after claiming a 60% abatement, misclassifying the declaration under the “arrears” category.
The company argued that it was eligible for relief under the “arrears” category since it had filed a return and the tax amount remained unpaid. It relied on the discharge certificate issued by the department under the scheme as proof of settlement. The petitioner’s counsel claimed that once the discharge certificate was issued, no further proceedings could be initiated for the same period.
GST on Real Estate & Works Contracts – Your Ultimate Guide to GST in the Real Estate Sector!, Click Here
The GST department’s counsel argued that the petitioner had made a false declaration. They stated that once a return was filed admitting tax due, the taxpayer could not claim voluntary disclosure or manipulate the amount due. They further argued that under Section 125(1)(f)(ii) of the scheme, such a declaration was ineligible. Since the declaration was based on incorrect particulars, the department was entitled to revoke the discharge certificate under Section 129(2)(c) and proceed with recovery.
The bench presided over by Justice C. Saravanan observed that the petitioner deliberately reduced the admitted tax liability while filing the declaration under SVLDRS and misrepresented the amount as if it fell under the “arrears” category. The court explained that once a return has been filed admitting tax due, the benefit of voluntary disclosure is not available under the scheme.
The court further held that the discharge certificate issued based on a false declaration could not be considered valid and could be set aside under the law. The court ruled that the petitioner was not entitled to relief under the SVLDRS scheme and upheld the department’s demand. However, the court granted liberty to the petitioner to file a statutory appeal before the Commissioner (Appeals) within thirty days. The appellate authority was directed to consider the appeal on merits without being influenced by the High Court’s observations. The writ petition was dismissed.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
