2024 (10) TMI 456 - HC - Service Tax

Scheme beneficiary cannot extend payment deadline after missing prescribed time limit under Sabka Vishwas Scheme 2019

The Gujarat HC dismissed a petition seeking direction to accept payment under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and issue ... Extension of time for compliance under a statutory amnesty scheme - modification of a statutory scheme by judicial order - requirement to strictly abide by terms and conditions of a benevolent one time scheme - prerogative of the Government to frame or amend a scheme - quashing or stay of recovery proceedings where scheme cut off not complied withExtension of time for compliance under a statutory amnesty scheme - requirement to strictly abide by terms and conditions of a benevolent one time scheme - modification of a statutory scheme by judicial order - Whether the High Court could permit the petitioners to make payment after the scheme cut off date and thereby extend the time to avail benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. - HELD THAT: - The court held that the Scheme was a one time, benevolent statutory measure with a prescribed cut off for payment and was not an on going scheme. Allowing payment beyond the stipulated date would amount to modifying the Scheme, which is the prerogative of the government. Reliance on the Supreme Court decision in Yashi Constructions established that a person seeking benefit under a scheme must scrupulously comply with its terms and that judicial extension of time not provided by the Scheme would effectively modify it and is impermissible. The Madras High Court decision relied upon by the petitioners was held to be inapplicable in light of the later Supreme Court authority. Consequently, the court declined to extend the time for payment or to permit the petitioners to avail the Scheme despite their stated willingness to pay after the cut off.The petitioners' request for extension of time to make payment and thereby to avail benefits under the Sabka Vishwas Scheme, 2019, was refused; the court will not modify the Scheme or extend the cut off date.Quashing or stay of recovery proceedings where scheme cut off not complied with - prerogative of the Government to frame or amend a scheme - Whether the initiation of recovery proceedings by the revenue (letter dated 16.02.2021) could be quashed or stayed because the petitioners had sought additional time to pay under the Scheme. - HELD THAT: - Given the court's conclusion that the petitioners could not be permitted to pay after the Scheme's cut off, there was no basis to quash or stay recovery proceedings initiated for non payment within the Scheme timeline. The court observed that permitting such relief would amount to judicial modification of the Scheme. Accordingly, interference with the recovery action was not warranted.The challenge to the recovery proceedings was rejected; the court declined to quash or stay the initiation of recovery.Final Conclusion: The petition was rejected: the High Court refused to extend the payment cut off under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 or to quash/stay recovery proceedings, holding that judicial modification of the Scheme's timelines is impermissible and that claimants must comply strictly with the Scheme's terms. Issues:1. Petition seeking writ of Mandamus for payment under SVLDRS-3 and issuance of discharge certificate.2. Request for fresh challans and SVLDRS-4 issuance.3. Petition to prevent coercive steps for tax dues.4. Request to stay implementation of recovery letter.5. Appeal for ex-parte ad-interim relief.6. Interpretation of Sabka Vishwas Scheme, 2019 regarding payment extension due to COVID-19.7. Consideration of High Court and Supreme Court decisions on scheme compliance.Analysis:Issue 1:The petition sought a writ of Mandamus for payment under SVLDRS-3 and issuance of a discharge certificate under Section 127 of the scheme. The petitioner, a company providing taxable services, faced a show cause notice for wrongful availment of Cenvat Credit. Respondent No. 4 confirmed the disallowance of Cenvat Credit. The petitioner then filed a declaration under the Sabka Vishwas Scheme, 2019, seeking relief. However, due to COVID-19, payment was delayed, leading to the present petition.Issue 2:The petition requested fresh challans and SVLDRS-4 issuance pending final disposal. The petitioner expressed readiness to pay the declared amount but faced challenges due to the pandemic. The petitioner cited Circular No. 267/65/2020-CX-8 for extending payment deadlines. The advocate argued for an extension based on a Madras High Court decision, emphasizing the need for a liberal interpretation of time limits under the Finance Act.Issue 3:A plea was made to prevent coercive steps for tax dues pending the petition's final disposal. The petitioner highlighted the adverse impact of the pandemic on their business, leading to payment delays. The advocate contended that the order initiating recovery proceedings was illegal and requested its quashing to allow the petitioner to benefit from the Scheme-2019.Issue 4:The petition sought a stay on the implementation of the recovery letter dated 16.02.2021. The petitioner's advocate argued against the coercive recovery proceedings, emphasizing the petitioner's willingness to pay the tax dues as per SVLDRS-1. The plea aimed to enable the petitioner to avail the Scheme-2019 benefits by extending the payment deadline.Issue 5:An ex-parte ad-interim relief was requested in terms of previous prayers B and C. The petitioner sought relief from coercive measures pending the final disposal of the petition. The advocate relied on the petitioner's genuine difficulties due to the pandemic and the communication sent to the authorities regarding payment readiness by a specified date.Issue 6:The interpretation of the Sabka Vishwas Scheme, 2019 regarding payment extensions due to COVID-19 was a crucial aspect of the case. The petitioner's advocate argued for an extension based on the Scheme's benevolent nature and the pandemic's impact on business operations. Reference was made to Circular No. 267/65/2020-CX-8 and a Madras High Court decision for supporting the extension request.Issue 7:The court considered the compliance of the petitioner with the Scheme's terms and conditions, emphasizing the one-time nature of the Scheme-2019. Citing a Supreme Court decision, the court highlighted the importance of adhering to the Scheme's prescribed timelines. The court rejected the petition based on the petitioner's failure to meet the payment deadline, stating that modifying the Scheme's terms was not permissible under the law.