SVLDRS payments made after original due date but within COVID-19 extension held valid; Department must accept deposits, issue Form SVLDRS-4

Bombay HC held that payments made under the SVLDRS after the original due date but within the COVID-19 extension should have been treated as valid; the Department was obliged to accept deposits made on 1 Jan 2021 and 14 Feb 2021 and to issue Form SVLDRS-4. The Court found the Scheme's time limits directory in light of the Supreme Court's extension and relevant HC precedent, quashed the impugned show cause notice and Order-in-Original, and directed respondents to accept the payments; petition allowed in part.

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ISSUES PRESENTED AND CONSIDERED

1. Whether amounts paid under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) after the prescribed payment date but during the period of COVID-19 extension should be treated as valid payments under the Scheme or be treated as regular tax payments, entitling the payer to discharge certificates (Form SVLDRS-4).

2. Whether the time-limit for payment under Form SVLDRS-3 is mandatory or directory for the purposes of acceptance of payments and issuance of Form SVLDRS-4, particularly in light of the Supreme Court's extensions of limitation during the COVID-19 pandemic.

3. Whether a Show Cause Notice and consequential Order-in-Original confirming demand, interest and penalty should be quashed where payments were made after the original SVLDRS payment deadline but within the extended COVID-19 period.

4. Whether interest is payable by the petitioner for the delayed period even where payments are accepted under the Scheme post original due date.

ISSUE-WISE DETAILED ANALYSIS - Issue 1: Validity of post-deadline payments under SVLDRS during COVID-19 extensions

Legal framework: SVLDRS provides for declaration (Form SVLDRS-1), issuance of quantification (Form SVLDRS-3) and payment within the time specified (30 days from Form SVLDRS-3) to obtain Discharge Certificate (Form SVLDRS-4). Administrative notifications extended timelines; the Supreme Court issued suo motu directions extending limitation during the COVID-19 period.

Precedent treatment: Reliance placed on a High Court decision which held that payments made during the pandemic period beyond prescribed dates were to be regarded as payments under the Scheme and directed issuance of Form SVLDRS-4, treating the statutory timeline as directory in the context of COVID-19 extensions.

Interpretation and reasoning: The Court accepted that the Department had issued SVLDRS-3s in February 2020 with a 30-day payment window, later extended administratively to 30 June 2020. The Supreme Court's suo motu extension of limitation during COVID-19 and subsequent departmental notifications created a context permitting consideration of payments made within the broader extended period. Given the Department itself issued extensions and the Supreme Court extended limitation up to 28 February 2022, the Court reasoned that payments made during the extended COVID period ought to be considered as payments under the Scheme rather than ordinary tax payments.

Ratio vs. Obiter: Ratio - payments made within the COVID-19 extended limitation should be accepted under SVLDRS where the Department issued extensions and the Supreme Court extended limitation; Obiter - observations on policy considerations underlying delegation to Central Government and directory nature of time-limits.

Conclusion: Payments made by the petitioner on specified dates in January and February 2021 were to be accepted under the Scheme and treated as payments pursuant to Form SVLDRS-3, entitling the petitioner to Form SVLDRS-4 upon compliance with interest conditions (see Issue 4). (Cross-reference: Issues 2 and 4.)

ISSUE-WISE DETAILED ANALYSIS - Issue 2: Mandatory or directory nature of SVLDRS time-limits

Legal framework: Power under the Finance Act to frame SVLDRS and delegate fixation/extension of timelines via notifications; interplay with judicial extensions of limitation during COVID-19.

Precedent treatment: The cited High Court held fixation of time-limits under the Scheme to be directory, noting delegation to the Central Government to extend timelines based on circumstances; Supreme Court's extensions of limitation were applied even where limitation was fixed under mandatory laws.

Interpretation and reasoning: The Court agreed that the delegation to the Central Government to fix/extend time-limits indicates a directory scheme of temporal regulation for SVLDRS; because the Department repeatedly extended timelines and the Supreme Court extended limitation broadly during COVID-19, the Department was obliged to consider payments made within that extended period as compliant with the Scheme. The Court noted the Department's failure to consider the pandemic-related difficulties and the extension machinery when issuing the impugned show cause and confirmation order.

Ratio vs. Obiter: Ratio - the time-limits fixed under SVLDRS are directory such that, in circumstances of widespread disruption (COVID-19 and judicial extensions of limitation), delayed payments can be accepted under the Scheme; Obiter - broader remarks on delegation implying directory character.

Conclusion: The time-limit under SVLDRS is directory for the purposes of the present facts; consequently, payments within the COVID-19 extended limitation must be considered acceptable under the Scheme. (Cross-reference: Issue 1.)

ISSUE-WISE DETAILED ANALYSIS - Issue 3: Quashing Show Cause Notice and Order-in-Original

Legal framework: Administrative action (show cause and Order-in-Original) rests on failure to pay quantified amounts within prescribed time; remedies include quashing where statutory context and reliefs applied incorrectly.

Precedent treatment: The Court followed the reasoning of the referenced High Court which quashed similar departmental refusals and directed issuance of discharge certificates where payments were made during COVID-19 extensions.

Interpretation and reasoning: Since the payments were to be treated as payments under the Scheme (Issues 1-2), the foundation for the show cause (failure to pay under the Scheme) and the consequent Order-in-Original confirming demand, interest and penalty no longer stood. The Department's omission to treat the petitioner's deposits as SVLDRS payments rendered the impugned actions unsustainable.

Ratio vs. Obiter: Ratio - where payments properly fall within the extended COVID-19 limitation and the Scheme's time-limits are to be treated as directory, departmental show cause and confirmation orders based on non-payment must be quashed; Obiter - none additional beyond Interconnected reasoning.

Conclusion: The Show Cause Notice and Order-in-Original are quashed and set aside; respondents to accept payments under the Scheme. (Cross-reference: Issues 1-2 and reliefs ordering acceptance and issuance of Form SVLDRS-4.)

ISSUE-WISE DETAILED ANALYSIS - Issue 4: Liability to interest for delayed payment despite acceptance under SVLDRS

Legal framework: SVLDRS and tax statutes contemplate interest for delayed payment; prior decisions accepted interest as condition for granting relief where payments accepted post-deadline.

Precedent treatment: The referenced High Court directed payment of interest as a condition precedent to issuance of discharge certificate when accepting post-deadline payments.

Interpretation and reasoning: The Court accepted that although payments should be accepted under the Scheme given COVID-19 extensions, equitable and statutory considerations require payment of interest for the delayed period. Quantified interest rates and periods were specified in the order reflecting the period from 1 July 2020 until the respective dates of actual payment.

Ratio vs. Obiter: Ratio - acceptance of late payments under exceptional extension is subject to payment of interest for the delayed period; Obiter - none.

Conclusion: Petitioner must pay interest at specified rate and for specified periods on the sums paid; on such payment, respondents to issue Form SVLDRS-4. (Cross-reference: Issues 1-3.)

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