2022 (8) TMI 834 - HC - Service Tax

Clarification sought on interest waiver under Sabka Vishwas Scheme due to conflicting High Court interpretations

Sigma Construction Company Through Partner Alok Rathi, S/O Prem Narayan Rathni Versus Union Of India Through Secretary, Ministry Of Finance, Central Board Of Indirect Taxes And Customs Through Chairman, Principal Commissioner Of Indirect Taxes Central Goods And Service Tax

Sigma Construction Company Through Partner Alok Rathi, S/O Prem Narayan Rathni Versus Union Of India Through Secretary, Ministry Of Finance, Central Board ... Issues:1. Interpretation of the term 'amount of duty' under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.2. Whether the component of interest arising from late deposit of tax dues can be waived under the Scheme of 2019.Analysis:1. The primary issue in this case revolves around the interpretation of the term 'amount of duty' under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The petitioner, a partnership firm engaged in Works Contract Service, sought the benefit of waiver of interest amount imposed for late deposit of tax dues under the Scheme. The rejection of this claim by Annexure P/9 led to the question of whether the component of interest falls within the ambit of 'amount of duty' or 'amount in arrears' as per the Scheme of 2019.2. The Court referred to a previous decision by a Co-ordinate Bench of the Allahabad High Court in Beenu Gupta vs. Union of India, which addressed a similar issue regarding the waiver of interest amount arising from late deposit of tax arrears. The Allahabad High Court held that the term 'amount of duty' as defined in the Scheme does not cover interest amounts resulting from belated filings. The Court emphasized that the Scheme aims to recover tax arrears at a discounted rate and settle outstanding disputed tax liabilities efficiently.3. On the contrary, the petitioner relied on a Bombay High Court judgment in Thought Blurb vs. Union of India, which did not directly address the inclusion of interest as part of tax arrears under the Scheme of 2019. Additionally, references were made to decisions by the High Court of Chhattisgarh and the Division Bench of Ahmedabad High Court, where interest was considered a part of the 'amount in arrears' and 'amount of duty' eligible for waiver under the Scheme.4. Due to conflicting views from different High Courts, the Court directed the Competent Authority (respondent No.2) to consider whether the component of interest resulting from delayed tax payments can be waived under the Scheme of 2019. The Court refrained from providing a definitive ruling on the matter, leaving it to the Competent Authority to analyze and issue clarifications within sixty days to resolve the ambiguity surrounding the inclusion of interest in the Scheme's provisions.This detailed analysis of the judgment highlights the legal intricacies surrounding the interpretation of the Scheme of 2019 and the eligibility of interest amounts for waiver under its provisions.