Court quashes tax statement, upholds petitioner's entitlement under Sabka Vishwas Scheme

The court quashed the impugned statement dated 12.02.2020 as it failed to consider pre-deposits towards tax liability, violating constitutional provisions and the Sabka Vishwas (Legal Disputes Resolution) Scheme Rules, 2019. Respondent no. 4 was directed to issue a new statement reflecting adjustments for pre-deposited amounts. The petitioner's entitlement to benefits under section 124 of the 2019 Act was upheld, emphasizing fairness and natural justice principles. The court highlighted the scheme's purpose of facilitating voluntary tax settlement without contestation, ultimately disposing of the writ petition with each party bearing its costs.

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Issues Involved:
1. Validity of the impugned statement dated 12.02.2020.
2. Interpretation of section 66B of the Finance Act 1994 and Chapter V of the Finance Act 2019.
3. Violation of Articles 14, 19(1)(g), 265, and 300A of the Constitution.
4. Entitlement to benefits under section 124 of the 2019 Act.
5. Adjustment of pre-deposited amounts towards tax liability.
6. Provisions of the Sabka Vishwas (Legal Disputes Resolution) Scheme Rules, 2019.

Detailed Analysis:

1. Validity of the Impugned Statement:
The petitioner challenged the statement dated 12.02.2020 issued by respondent no. 4, arguing it was ultra vires section 66B of the Finance Act 1994 and Chapter V of the Finance Act 2019. The petitioner sought a declaration that the impugned statement violated Articles 14, 19(1)(g), 265, and 300A of the Constitution. The court examined the provisions of the 2019 Act and concluded that the impugned statement did not consider the pre-deposits made by the petitioner towards the tax liability, thus rendering it invalid.

2. Interpretation of Section 66B of the Finance Act 1994 and Chapter V of the Finance Act 2019:
The court noted that the Sabka Vishwas (Legal Disputes Resolution) Scheme 2019 was framed under Chapter V of the 2019 Act, which received the President's assent on 01.08.2019. The scheme aimed to provide relief based on the category of the declarant, as outlined in sections 123, 124, 125, 126, and 127 of the 2019 Act. The court emphasized that the scheme's intent was to encourage voluntary disclosure and settlement of tax dues without contestation.

3. Violation of Articles 14, 19(1)(g), 265, and 300A of the Constitution:
The petitioner argued that the impugned statement violated constitutional provisions by not allowing the adjustment of pre-deposited amounts towards the tax liability. The court agreed, stating that the scheme's provisions should be interpreted to avoid manifestly unjust or unreasonable results, aligning with the principles of natural justice and fairness.

4. Entitlement to Benefits under Section 124 of the 2019 Act:
The petitioner sought benefits under section 124 of the 2019 Act, arguing that the tax dues should be limited to the amount remaining unpaid after setting off the pre-deposited amounts. The court held that the expression "total amount of duty" in section 123(d) should be interpreted to mean the outstanding duty payable, excluding the tax liability already discharged.

5. Adjustment of Pre-Deposited Amounts towards Tax Liability:
The petitioner contended that the amounts pre-deposited towards tax liability should be adjusted against the estimated tax liability. The court agreed, stating that the scheme did not intend to recover tax liability already discharged by the declarant. The court emphasized that the expression "tax dues" should exclude tax liability already paid, and the impugned statement should be modified accordingly.

6. Provisions of the Sabka Vishwas (Legal Disputes Resolution) Scheme Rules, 2019:
The court examined the provisions of the SVLDRS Rules, 2019, and noted that the designated committee was not empowered to verify declarations made under the voluntary disclosure category. The court emphasized that the scheme aimed to provide a mechanism for declarants to settle tax dues without contestation, and the impugned statement should reflect this intent.

Conclusion:
The court quashed the impugned statement dated 12.02.2020 and directed respondent no. 4 to issue a fresh statement in the prescribed form SVLDRS-3, taking into account the pre-deposited amounts towards the tax liability. The writ petition was disposed of with the parties bearing their respective costs.

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