Tax dues under Sabka Vishwas must be computed first, with pre-deposits deducted only when issuing the payable statement.

Under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, relief is to be computed on the statutory tax dues first, and any pre-deposit or deposit made during enquiry, investigation, audit or appellate proceedings is to be deducted only when issuing the payable statement. The Scheme's text controls the computation, and a circular cannot redefine tax dues or require prior adjustment of deposited amounts before grant of relief. The Court held that the impugned circular was inconsistent with Sections 123 and 124(2) to the extent it treated the net outstanding balance as the base for relief, and it was ineffective to that extent.

---

---

Issues: (i) Whether, under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, the amount paid as pre-deposit or deposit during enquiry, investigation or audit is to be deducted only after computing relief on the tax dues, or is first to be adjusted while determining tax dues. (ii) Whether Clause 2(iv) of Circular No. 1072/05/2019/CX dated 25.09.2019 could alter the statutory meaning of "tax dues" under the Scheme by requiring adjustment of pre-deposit or deposit before grant of relief.

Analysis: The Scheme defines "amount in arrears" as the amount of duty recoverable as arrears and provides relief under Section 124(1)(c)(ii) on the tax dues where the amount of duty exceeds the prescribed limit. Section 124(2) separately provides that any pre-deposit or deposit made during appellate proceedings, enquiry, investigation or audit shall be deducted while issuing the statement indicating the amount payable. The statutory sequence therefore requires computation of relief on the tax dues first, followed by deduction of the pre-deposit or deposit at the stage of issuing the statement. Treating the already paid amount as reducing the tax dues would substitute "outstanding" for "recoverable" and would place a payer in a worse position than a non-payer, which is inconsistent with the Scheme's object. A circular cannot enlarge or alter the Scheme, and to the extent the impugned circular required relief to be computed on the outstanding balance after prior adjustment of deposit, it went beyond the statute.

Conclusion: The amount of pre-deposit or deposit was required to be deducted after granting relief under the Scheme, and not before computing the relief. Clause 2(iv) of the circular could not override the statutory scheme and was ineffective to the extent of the inconsistency.

Issue (ii): Whether Clause 2(iv) of Circular No. 1072/05/2019/CX dated 25.09.2019 could alter the statutory meaning of "tax dues" under the Scheme by requiring adjustment of pre-deposit or deposit before grant of relief.

Analysis: The definition of "tax dues" in the Scheme was held to be controlled by the statute itself. The circular's treatment of "tax dues" as the net outstanding amount after prior deduction of deposit was found to be contrary to the plain text of the Scheme, especially Section 123 and Section 124(2). The Court relied on the principle that a clarificatory circular can explain but cannot change the legal effect of the parent enactment, and that a beneficial scheme must be construed literally where the language is clear. The impugned instruction, by effectively redefining the base for relief, altered the statutory computation and was therefore impermissible.

Conclusion: Clause 2(iv) of the circular could not validly change the statutory definition or computation of tax dues under the Scheme and was not enforceable to the extent it did so.

Final Conclusion: The declarations were to be recomputed by granting Scheme relief on the full tax dues first and then deducting the pre-deposit or deposit, with revised statements to be issued accordingly.

Ratio Decidendi: Under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, relief is to be calculated on the statutory tax dues first, and any pre-deposit or deposit made during enquiry, investigation, audit or appeal is to be deducted only at the stage of issuing the payable statement; a circular cannot alter that statutory computation.

---