Sabka Vishwas deposit credit rule requires full adjustment of prior deposits in computing payable tax under the scheme.

Under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, the amount payable had to be computed after giving credit for all deductible pre-deposits and other deposits already made in relation to the same service tax demand. The Madras HC noted that the declared tax due was accepted and that Section 124 required deduction of sums already deposited before issuing the statement of amount payable. Because Form SVLDRS-3 excluded part of the deposits made both before and after declaration, the computation was held erroneous. The payable amount was therefore directed to be recomputed with full credit for the deductible deposits, and the matter was to be closed on payment of the revised amount with interest.

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Issues: Whether the amount already deposited by the declarant under the earlier service tax compliance scheme, together with subsequent deposits, was required to be deducted while computing the amount payable under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, and whether the impugned computation in Form SVLDRS-3 was erroneous.

Analysis: The declared tax due was accepted by both sides. The relief under Section 124(1)(c)(ii) of the Finance (No. 2) Act, 2019 was 40% of the tax due, and Section 124(2) mandated deduction of any pre-deposit or deposit already made under the indirect tax enactment while issuing the statement of amount payable. The amounts deposited before and after the declaration were found to be deductible, and the computation in Form SVLDRS-3, which excluded part of these deposits, was held to be incorrect.

Conclusion: The amount payable had to be recomputed after giving credit for the entire deductible sum, and the impugned determination was unsustainable.

Final Conclusion: The declarant was entitled to adjustment of the full deductible deposits under the scheme, and the matter was directed to be closed on payment of the recomputed amount with interest.

Ratio Decidendi: While determining liability under the Sabka Vishwas scheme, all deductible pre-deposits and deposits already made in relation to the same tax demand must be given credit in computing the amount payable.

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