Sabka Vishwas credit rule: pre-notice payments must be deducted despite separate accounting classification.

For computation under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, an amount actually paid before issuance of the show cause notice had to be credited under section 124(2) of the Finance Act, 2019. The provision requires deduction of any amount paid as a pre-deposit or during enquiry, investigation or audit, and the accounting code used for recording the payment does not control entitlement to credit. A restrictive reading based on departmental classification would defeat the Scheme's beneficial, settlement-oriented object. The Designated Committee's exclusion of the pre-notice interest payment was therefore unsustainable.

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Issues: Whether, for purposes of computation under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, the amount paid by the declarant towards interest before issuance of the show cause notice, though reflected under a separate accounting code, is liable to be deducted under section 124(2) of the Finance Act, 2019 while determining the amount payable.

Analysis: Section 124(2) requires deduction of any amount paid as pre-deposit or deposit during enquiry, investigation or audit when issuing the statement indicating the amount payable. The expression "any amount paid" is broad and does not make the deduction dependent on the accounting head under which the payment was made. The Scheme is a beneficial amnesty measure intended to settle legacy disputes and grant relief in respect of tax dues, interest, fine, penalty and prosecution consequences. A restrictive construction based only on the departmental accounting classification would frustrate the object of the Scheme and unjustly deny credit for an amount admittedly paid before the show cause notice.

Conclusion: The interest amount paid before the show cause notice was required to be given credit under section 124(2), and the Designated Committee's exclusion of that amount was unsustainable.

Ratio Decidendi: Under section 124(2) of the Finance Act, 2019, any amount actually paid during the relevant pre-decisional stage must be deducted in computing the amount payable under the Scheme, irrespective of the accounting head in which the payment was recorded.

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