Court orders acceptance of declarations & payment with interest under VSV Act, considering exceptional circumstances

The court allowed the writ petitions, directing the respondents to accept the petitioners' declarations as valid and the balance disputed amounts within specified timelines, along with simple interest. The court emphasized the need to interpret the VSV Act liberally to achieve its purpose of reducing litigation, condoning the unintentional delay in payment due to extraordinary circumstances, including the COVID-19 pandemic and the death of a director.

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Issues Involved:
1. Validity of the declaration/application (Form 1 and Form 2) under the Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act).
2. Delay in payment of the disputed amount due to extraordinary circumstances.
3. Interpretation of the VSV Act provisions and their mandatory nature.
4. Equitable relief in extraordinary circumstances.
5. Jurisdiction of the High Court under Article 226 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Validity of the Declaration/Application:
The petitioners sought a direction for the respondents to accept their declaration/application (Form 1 and Form 2) dated 04th March, 2021 as valid under the VSV Act and to accept the balance disputed amount as stipulated by the respondents in Forms 3 dated 07th May, 2021 and 22nd June, 2021. The petitioners argued that they had filed the necessary forms within the stipulated time, but were unable to pay the disputed amount by the last date due to the death of a company director.

2. Delay in Payment:
The petitioners contended that the delay in payment was not intentional and was due to the death of a director who was responsible for taxation matters. They emphasized that the delay should be condoned as it was against the object and purpose of the VSV Act, which aims to reduce litigation and collect revenue.

3. Interpretation of VSV Act Provisions:
The respondents argued that the VSV Act mandates payment within fifteen days of the determination of the demand and does not permit any extension. They relied on Sections 4(6)(b) and 5(1)&(2) of the VSV Act, which state that non-compliance with the payment timeline results in the declaration being presumed never to have been made. They also cited the Supreme Court's decision in Hemalatha Gargya Vs. Commissioner of Income Tax, which interpreted similar provisions in the Voluntary Disclosure of Income Scheme (VDI Scheme) as mandatory.

4. Equitable Relief in Extraordinary Circumstances:
The petitioners argued that the Supreme Court's orders in Suo Moto Writ Petition (Civil) No.3/2020 extended the limitation period due to COVID-19, and that the death of the director was an extraordinary circumstance warranting equitable relief. They emphasized that the VSV Act is a beneficial legislation aimed at reducing litigation and should be interpreted liberally to advance its purpose.

5. Jurisdiction of the High Court under Article 226:
The court acknowledged that while the respondents do not have the power to condone the delay in payment, the High Court under its extraordinary writ jurisdiction under Article 226 of the Constitution of India can pass orders necessary to remedy injustice. The court cited previous judgments to support its broad jurisdiction to grant relief in extraordinary and exceptional circumstances.

Court's Reasoning:
The court recognized the intermittent lockdowns due to the COVID-19 pandemic and the death of the managing director as extraordinary and exceptional events. The court held that the timeline for payment under the VSV Act was not mandatory, as the deadlines had been extended multiple times due to the pandemic. The court found the reliance on Hemalatha Gargya by the respondents to be misconceived, as the VDI Scheme was an amnesty scheme, unlike the VSV Act, which is a beneficial legislation aimed at reducing litigation.

The court emphasized that the VSV Act's provisions should be interpreted liberally to advance its purpose. It noted that no prejudice would be caused to the respondents by accepting the petitioners' prayer, and that such action would help achieve the objectives of the VSV Act. The court concluded that the delay in payment was unintentional and supported by justifiable reasons, and that substantial justice warranted condoning the delay.

Relief:
The court allowed the writ petitions and directed the respondents to accept the petitioners' declarations/applications (Forms 1 and 2) dated 04th March, 2021 as valid within two weeks. The court also directed the respondents to accept the balance disputed amounts as stipulated in Forms 3 dated 07th May, 2021 and 22nd June, 2021, along with simple interest at 9% per annum until the amounts are paid within four weeks.

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