2024 (2) TMI 970 - HC - Service Tax

HC allows deduction of prior compliance scheme payments under Sabka Vishwas Section 124(2) reducing tax liability

Shree Vijayalakshmi Charitable Trust, (Represented by its Managing Trustee, A. Senthil Kumar) Versus The Designated Committee, The Commissioner of Central Excise and Service Tax, Union of India

The HC set aside the impugned order in Form SVLDRS-3 calculating tax relief under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The court held ... SVLDRS - Adjustments/set off of amount (of service tax) already paid under Service Tax Voluntary Compliance Encouragement Scheme, 2013 - whether 50% of the amount which was paid by the petitioner under the Provisions of the Service Tax Voluntary Compliance Encouragement Scheme, 2013 is to be set off against the amounts due as payable by the petitioner under the provisions of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. HELD THAT:- As per Sub section (2) to Section 124 of the Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019, the relief calculated under Sub section (1) shall be subject to the condition that any amount paid as pre deposit at any stage of appellate proceeding under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant. The petitioner has deposited a sum of Rs. 1,06,30,596/- [Rs.1,01,32,784 (before filing declaration) + Rs. 4,97,815 (after filing declaration)] over and above Rs. 13,15,41,380/- being 50% of the admitted tax liability under Service Tax Voluntary Compliance Encouragement Scheme, 2013.This is also admitted by the respondents. The petitioner has also deposited Rs. 12,77,911/- on various dates after filing of declaration which has not been taken into consideration in the impugned communication in Form SVLDRS-3 dated 29.02.2020 - in all the petitioner has deposited an amount of Rs. 14,34,49,887/- (Rs. 13,15,41,380.00 + Rs. 1,06,30,596 + Rs. 12,77,911/-) which is to be deducted under Section 124(2) of the Chapter-V of the Finance Act, 2019 of the Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019. Thus, the amount to be paid by the petitioner under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 after deduction under Section 124(2) of the Chapter-V of the Finance Act, 2019 of the Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 is only Rs. 1,43,99,769/- (Rs. 15,78,49,656 – Rs. 14,34,49,887/-) and not Rs. 7,23,47,343/- as quantified vide impugned Communication in Form SVLDRS-3 dated 29.02.2020. The calculation of the tax relief of Rs. 4,85,63,458/- only by the respondent in Form SVLDRS-3 dated 29.02.2020 is not correct. Since, the petitioner is required to pay only a sum of Rs. 1,43,99,769/- under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and since the calculation in impugned Communication in Form SVLDRS-3 dated 29.02.2020 is erroneous, the Impugned Order is therefore liable to be set aside and the case is remitted back to the first respondent or such other officer designated who has been given the power to accept the declarations under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 after the expiry of the aforesaid scheme for issuing necessary forms to bring a closure - the petitioner is directed to pay a sum of Rs. 1,43,99,769/- together with interest at 12% on the aforesaid amount of Rs. 1,43,99,769/- calculated from 29.03.2020 within a period of six (6) weeks from the date of receipt of a copy of this order. Petition allowed. Issues Involved:1. Whether 50% of the amount paid by the petitioner under the Service Tax Voluntary Compliance Encouragement Scheme, 2013, should be set off against the amounts due under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.2. The correct calculation of tax relief and the amount payable by the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.Summary:Issue 1: Set-Off of Amounts Paid under Previous SchemeThe petitioner challenged the Impugned Order dated 29.02.2020 by the Designated Authority under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The petitioner had previously attempted to settle the dispute under the Service Tax Voluntary Compliance Encouragement Scheme, 2013, paying 50% of the admitted tax liability but failing to pay the balance. Consequently, a Recovery Notice was issued, leading to writ proceedings and subsequent appeals.Issue 2: Calculation of Tax Relief and Amount PayableThe petitioner filed Form SVLDRS-1 on 31.12.2019, admitting a tax liability of Rs. 26,30,82,760/-. The respondents admitted the application and estimated the tax due as Rs. 7,89,24,829/- in Form SVLDRS-2. However, Form SVLDRS-3 dated 29.02.2020 showed different figures, stating the tax relief as Rs. 4,85,63,438/- and the amount payable as Rs. 7,23,47,343/-. The petitioner argued that the correct amount payable should be Rs. 1,43,99,769/- after deducting the pre-deposit and other amounts paid.Legal Findings and Conclusion:Both parties agreed on the tax due amount of Rs. 26,30,82,760/-. The petitioner was entitled to a relief of 40%, amounting to Rs. 10,52,33,104/-. The balance payable was Rs. 15,78,49,656/-. Section 124(2) of the Sabka Vishwas Scheme mandates that any pre-deposit should be deducted from the amount payable. The petitioner had deposited Rs. 14,34,49,887/- in total, which should be deducted from the payable amount, leaving Rs. 1,43,99,769/-.The court found the calculation in Form SVLDRS-3 erroneous and remitted the case back to the first respondent for issuing necessary forms. The petitioner was directed to pay Rs. 1,43,99,769/- with 12% interest within six weeks. The writ petition was allowed, and the declaration under the Sabka Vishwas Scheme was to be accepted upon payment.