SVLDRS benefits granted despite one-day delay when taxpayer relied on system-generated challan showing July 1 deadline

The Bombay HC allowed a petition challenging denial of SVLDRS benefits where service tax payment was made on 1st July 2020, one day after the 30th June 2020 deadline. The petitioner relied on a system-generated challan showing expiry date as 1st July 2020, creating bona fide belief about the payment date. The court held that procedural irregularities cannot defeat substantial justice, noting the payment reached government coffers and the petitioner had no mala fide intention. Following coordinate bench precedents, the HC quashed the denial communications and directed authorities to issue Form SVLDRS 4 within four weeks, emphasizing the scheme's twin objectives of dispute resolution and revenue collection.

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Issues:
Challenge to communication directing payment of service tax liability under SVLDR Scheme 2019.

Analysis:
The petitioner challenged a communication from Respondent No. 5 directing payment of service tax liability under the Sabka Vishwas (Legal Dispute Resolution) Scheme 2019 (SVLDRS). The petitioner, engaged in facade solutions business, faced an enquiry alleging short payment of service tax. The petitioner filed for SVLDRS benefit on 31st December 2019, declaring tax dues of Rs. 32,05,890. Despite generating a challan for payment by 31st March 2020, the petitioner paid on 1st July 2020 due to a technical glitch and pandemic-related extension. Respondents refused the final certificate under SVLDRS, demanding full payment. The petitioner argued technical difficulties caused the delay, citing precedents supporting acceptance of SVLDRS declarations.

The respondents opposed the petition, highlighting the one-day delay in payment and citing relevant case laws. They contended that the payment was not under SVLDRS but a service tax challan, urging dismissal. The primary issue was whether the payment made on 1st July 2020 qualified under SVLDRS. The court referenced the SVLDRS objective for past dispute resolution and unpaid tax disclosure, emphasizing benefits for declarants. It noted that procedural irregularities should not impede substantial justice. Considering the technical glitch and absence of mala fide intent, the court found denying SVLDRS benefits unjust. It distinguished the present case from precedents involving financial constraints, emphasizing the payment made and the technical issue faced.

The court held that denying SVLDRS benefits would contradict the scheme's objective and cause injustice to the eligible petitioner. It rejected the respondents' reliance on certain case laws, emphasizing the technical glitch's impact on payment timing. Relying on prior decisions of the Co-ordinate Bench, the court directed the respondents to issue Form SVLDRS 4 to the petitioner within four weeks, quashing the challenged communications. The judgment favored the petitioner's position, considering the technical challenges faced and the overall objective of the SVLDRS.

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