Credit for investigation-stage deposits under Sabka Vishwas cannot be denied because of accounting classification.

A deposit made during investigation and before issue of the show cause notice had to be deducted while computing the settlement amount under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2018. Section 124(2) requires credit for amounts paid as pre-deposit or as deposits during enquiry, investigation or audit when determining the amount payable. The Department could not deny credit merely because the payment was recorded under the interest head, since accounting classification could not override the fact of payment or the Scheme's settlement . The assessee was therefore entitled to credit for the deposit in the settlement computation.

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Issues: Whether the amount deposited by the assessee during investigation and before issuance of the show cause notice, though credited by the Department under the head of interest, was required to be deducted while computing the settlement amount under Section 124(2) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2018.

Analysis: Section 124(2) provides that relief under the Scheme is subject to deduction of any amount paid as pre-deposit in appellate proceedings or as deposit during enquiry, investigation or audit when issuing the statement of amount payable. The amount in question was remitted during investigation and before the show cause notice, and its payment was not disputed. The Department's refusal to give credit solely because it was accounted for under the interest head was treated as overly technical. The accounting classification could not override the substantive fact of payment or defeat the object of the Scheme, which was intended to facilitate settlement of legacy indirect tax disputes.

Conclusion: The amount was required to be taken into account under Section 124(2), and the assessee was entitled to credit for the deposit while computing the settlement amount.

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