Tax Dues already Paid must be Considered while Computing Liability under SVLDRS: Madras HC quashes SVLDRS-3 [Read Order]

The Madurai Bench of the Madras High Court recently clarified that tax dues that are already \paid by an assessee must be duly and wholly accounted for while computing liability under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS). The Court accordingly quashed an impugned statement issued in Form SVLDRS-3 alleging the Assessee’s failure to do so.

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The instant case of the petitioner Opal Energy Solution Pvt. Ltd. stems from a duty demand of ₹2,22,93,244/- issued vide show cause notice dated 21.05.2007.

Aggrieved, the petitioner approached the Settlement Commission which determined that the petitioner had already paid a sum of ₹1,83,91,666 and only the balance duty of ₹39,01,578 remained payable. The petitioner contended that they had subsequently paid a sum of ₹38,84,280 in installments, and only a marginal sum of ₹17,298 remained outstanding.

The petitioner later applied through the SVLDR Scheme and submitted a declaration in Form SVLDRS-1 that they were entitled to tax waiver relief once 60% of the due amount had been paid. However, the department raised a demand estimate in SVLDRS-2 that ₹15,60,631 remained payable after tax relief of ₹23,04,947.

Further, while issuing the SVLDRS-3 statement under the 2019 Scheme, the authorities allegedly failed to take into account the deposits already made, and delivered an incorrect computation of the amount payable under the scheme, leading to this petition.

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The petitioner, represented by M. Narasimha Bharathi, sought to quash the impugned statement as arbitrary and contrary to the provisions of the Scheme and the departmental circulars. Senior Standing Counsel R. Gowrishankar appeared for the respondents.

Justice D. Bharatha Chakravarthy noted that the Department did not dispute the deposits made by the petitioner, but since the payments were made under different heads such as interest and other deposits, the same were not taken into account while computing the amount payable under the scheme.

The department’s counter affidavit further highlighted difficulties with their software system, stating that such entries are irreversible and irretrievable in nature.

Justice Chakravarthy noted that software difficulties are purely procedural and hyper-technical in nature, and cannot hinder the SVLDRS’ objective of resolving legacy disputes and effectuating recovery of dues while granting relief to the declarant.

Further noting that the petitioner had deposited an amount that was nearly 100% of the actual dues payable, the Court held they were clearly entitled to relief sought for in the writ petition.

Accordingly, the Court quashed the impugned SVLDRS-3 statement dated 27.12.2019 and directed the respondents to reconsider the petitioner’s declaration by taking into account the prior deposits made between March and July 2008.

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