Beneficial tax compliance scheme interpreted to allow penalty waiver where tax and interest were already paid for the relevant period.

A beneficial tax compliance scheme must be construed to advance its object, so a dealer who had already paid the tax and interest for the relevant period could not be denied penalty waiver merely because only the penalty remained under challenge. The Delhi HC found that the dealer satisfied the other scheme conditions and that a contrary reading would create an anomalous result inconsistent with the scheme's purpose. It also treated the Department's FAQs as contemporaneous exposition supporting this interpretation. The rejection of the application under the amnesty scheme was set aside and the claimed penalty waiver was directed to be granted.

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Issues: Whether a dealer who had already paid tax and interest, but was contesting the levy of penalty, was entitled to the benefit of the Delhi Tax Compliance Achievement Scheme 2013 for waiver of penalty.

Analysis: The Scheme was intended to encourage compliance with tax dues and had to be construed in a manner consistent with that object. The Court noted that the dealer had satisfied the other conditions of the Scheme and that the penalty related to the same tax period and deficiency. A construction that denied relief only because tax and interest had already been paid, while allowing relief to dealers who had defaulted in tax, interest and penalty, was found to be anomalous and inconsistent with the Scheme's purpose. The interpretation reflected in the Department's FAQs was treated as a contemporaneous exposition supporting the dealer's entitlement.

Conclusion: The dealer was entitled to claim the benefit of the Scheme and waiver of penalty was directed.

Final Conclusion: The rejection of the dealer's application under the Amnesty Scheme was set aside and the petition succeeded with a direction to grant the claimed penalty waiver.

Ratio Decidendi: A beneficial tax compliance scheme must be interpreted to advance its object, and a dealer who has paid tax and interest for the relevant period cannot be denied penalty waiver merely because the penalty alone remains under challenge, where the scheme contemplates relief for the same tax dues.

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