2023 (3) TMI 240 - HC - Service Tax

Court orders refund of settlement dues, stresses compliance during pandemic.

The court allowed the petition, directing the respondent to consider the payment made by the petitioner towards the SVLDRS settlement dues and issue the ... Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - discharge certificate in Form SVLDRS-4 - bonafide attempt to make payment - technical glitch / bank failure - time-bound conditions of a statutory scheme - remedial relief where performance was impossible due to external impediment - appropriation of payment towards settlement duesSabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - discharge certificate in Form SVLDRS-4 - bonafide attempt to make payment - technical glitch / bank failure - time-bound conditions of a statutory scheme - entitlement to issuance of Form SVLDRS-4 despite non-crediting of payment within the stipulated period due to technical glitches and Covid-19 pandemic conditions - HELD THAT: - The Court found that the petitioner had opted for the SVLDRS scheme, received the statement in Form SVLDRS-3 and made bona fide attempts to pay the amount determined by the designated committee. On two occasions the remittances were debited and subsequently re-credited to the petitioner's account because of technical/systemic bank failures, and a further successful debit could only be effected after the stipulated time had expired. The Court distinguished the effect of the Apex Court's decision in M/s Yashi Constructions (upholding adherence to scheme timelines) by noting that the present petitioner was not at fault and had made genuine attempts to comply within time. Applying and following the reasoning in earlier High Court decisions (including L.G. Chaudhary) and the Apex Court's decision in M/s Shekhar Resorts Ltd., the Court held that where performance within the time limit was rendered impossible by external impediments (technical/bank failure and pandemic-related disruptions), denying the substantive benefit of the scheme would leave the petitioner remediless. Accordingly, the designated committee must consider the payment made and issue the discharge certificate in Form SVLDRS-4. [Paras 16, 18, 22, 23]The petitioner is entitled to issuance of Form SVLDRS-4; respondent no.2 to consider the payment and issue the discharge certificate.Appropriation of payment towards settlement dues - remedial relief where performance was impossible due to external impediment - bonafide attempt to make payment - refund and consequential relief arising from recovery effected because the petitioner was not allowed to be considered under the scheme despite bona fide attempts to pay - HELD THAT: - The Court recorded that recovery of the larger amount from the petitioner flowed from the department's position that the SVLDRS payment was not made within the prescribed period. Given the petitioner's documented bona fide attempts and the role of technical glitches and pandemic conditions in preventing timely debit, the Court concluded that the recovery ought not to stand. Applying the principles that a party should not be punished for impossibility caused by external impediments and following precedents affording relief in such circumstances, the Court directed respondent no.2 to appropriate the successful payment made by the petitioner towards the settlement dues under the scheme and ordered refund of the recovered amount with interest and consequential benefits within a specified timeframe. [Paras 22, 23]Respondents to appropriate the petitioner's payment towards SVLDRS settlement and refund the recovered amount with interest and consequential benefits within eight weeks.Final Conclusion: Writ petition allowed. Respondent no.2 directed to appropriate the petitioner's payment towards settlement under the SVLDRS 2019 and issue Form SVLDRS-4; respondents directed to refund the recovered amount with interest and consequential benefits within eight weeks. Issues Involved:1. Non-issuance of Form SVLDRS-4 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.2. Recovery proceedings initiated under Section 79(1)(c) of the CGST Act.3. Refund of the amount paid under coercive action by the respondents.Detailed Analysis:1. Non-issuance of Form SVLDRS-4 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:The petitioner, engaged in manpower recruitment and maintenance services, challenged the respondent's action of not issuing Form SVLDRS-4 under the SVLDRS scheme as per Section 127(8) of the Finance Act, 2019. The petitioner had filed an application under the scheme and was required to pay Rs 81,050.60 as full and final settlement. Despite making the payment within six days, technical glitches resulted in the amount being re-credited to the petitioner's account. The petitioner made multiple attempts to pay, but the due date elapsed, leading to the non-issuance of the discharge certificate. The court noted that the petitioner made bona fide attempts to comply with the scheme's requirements and cited precedents where technical issues during the Covid-19 pandemic were considered valid reasons for delays.2. Recovery proceedings initiated under Section 79(1)(c) of the CGST Act:The respondent initiated recovery proceedings under Section 79(1)(c) of the CGST Act, directing the petitioner to pay liabilities. The petitioner argued that the payment was made under the SVLDRS scheme and that the matter should be considered resolved. The court observed that the petitioner had made the payment as required but faced technical issues. The court emphasized that denying the petitioner the benefit of the scheme due to technical glitches would be unjust and would leave the petitioner remediless, which is impermissible under the law.3. Refund of the amount paid under coercive action by the respondents:The petitioner sought a refund of Rs 7,68,675, which included service tax, interest, and penalty paid due to the respondents' coercive actions. The court referenced the decision in M/s Shekhar Resorts Ltd. Vs Union of India, where the Apex Court held that no party should be left remediless and that legal impediments preventing timely payments should be considered. The court applied this rationale to the petitioner's case, noting that the technical glitches were beyond the petitioner's control. Consequently, the court directed the respondents to refund the amount with interest and issue the discharge certificate.Conclusion:The court allowed the petition, directing the respondent to consider the payment made by the petitioner towards the SVLDRS settlement dues and issue the discharge certificate. Additionally, the respondents were ordered to refund Rs 7,68,675 with interest within eight weeks. The judgment emphasized the importance of considering bona fide attempts to comply with legal requirements, especially during the Covid-19 pandemic, and ensuring that parties are not left without remedies due to technical issues.