2023 (6) TMI 1002 - HC - Service Tax

Earlier duty vs penalty deposits under SVLDRS 2019: penalty deposit not adjustable; duty pre-deposits counted, Scheme relief granted with interest.

The dominant issue was whether amounts earlier deposited could be treated as 'pre-deposit'/duty for computing 'tax dues' under the Sabka Vishwas (Legacy ... Sabka Visvas (Legacy Dispute Resolution) Scheme, 2019 - amount deposited by the petitioner no. 1 – Company were proposed to be adjusted against the demand and penalties proposed to be imposed on both the petitioners and interest was also proposed to be recovered from the petitioner no. 1 – Company - HELD THAT:- It is clear that the petitioners paid total amount of Rs. 19,12,196/- towards the duty and, thereafter, voluntarily made statement before the Tribunal that an amount of Rs. 5,00,000/- towards the penalty will be deposited. Thus, we are of the view that Rs. 5,00,000/-, which was deposited by the petitioners pursuant to the order passed by the Tribunal, cannot be considered towards the amount of “tax due” as the said amount was deposited towards the penalty. Thus from the provision of the Scheme, 2019, it is clear that where the tax dues are relatable to an amount in arrears and the amount of duty is Rs. 50,00,000/- or less then, 60% of the tax dues are required to be paid under the Scheme, 2019. Thus, relief to the aforesaid extent is available to the declarant - in view of the aforesaid Scheme, 2019, amount paid as pre-deposit at any stage of the appellant proceedings or the amount paid towards the deposit during enquiry, investigation and audit, is required to be considered while calculating the amount of tax due. It can be said that the basic object of the Scheme, 2019 is to reduce litigation by allowing the eligible assessee to make the payment of the outstanding dues after availing the relief under the Scheme, 2019. The petitioners herein made bona fide attempt to make the payment as determined under the Scheme, 2019 and the petitioners are also ready to pay the amount in question in accordance with law along with interest for the period for which the petitioners were not permitted to make the payment by the respondents. Therefore, this is a fit case for invocation of powers under Article 226 of the Constitution of India. The present petition stands allowed partly. The respondent authorities are directed to accept the payment of Rs. 1,22,318/- as specified in SVLDRS-3 along with interest @ 9% per annum from 30.06.2020 till the date of payment and grant the benefit of the Scheme to the petitioner. Issues Involved:1. Eligibility for benefit under Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019.2. Consideration of pre-deposit amounts as tax dues.3. Technical issues in payment and procedural compliance under the Scheme.Summary:Eligibility for Benefit under the Scheme:The petitioners sought relief under the Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019, for excise duty arrears. They filed declarations under SVLDRS-1 and SVLDRS-2 forms. The respondents issued Form SVLDRS-3, indicating an additional payment of Rs. 1,22,381/-. The petitioners argued they had already deposited Rs. 24,12,196/- against the tax arrears of Rs. 22,18,148/-, thus not liable for further payment.Consideration of Pre-Deposit Amounts:The petitioners contended that Rs. 5,00,000/- deposited under the Appellate Tribunal's order should be considered towards tax dues. The court clarified that Rs. 5,00,000/- was deposited as a penalty, not tax dues, and thus could not be considered under the Scheme. The court referred to Clause 124 of the Scheme, which mandates that pre-deposits during appellate proceedings or inquiries should be deducted from the tax dues but does not include penalty payments.Technical Issues in Payment:The petitioners attempted to pay the demanded Rs. 1,22,381/- on the last date of the Scheme, 30.06.2020, but the payment was returned due to an expired CPIN. The court acknowledged the petitioners' bona fide attempt to comply with the Scheme and referred to a similar case, L.G. Chaudhary Vs. Union of India, where procedural technicalities during the COVID-19 pandemic were considered.Judgment:The court allowed the petition partly, directing the respondents to accept the payment of Rs. 1,22,318/- along with 9% interest per annum from 30.06.2020 until the payment date. The petitioners were given four weeks to deposit the amount. The court emphasized the Scheme's objective to reduce litigation and granted relief considering the petitioners' bona fide attempt to comply.