Petitioner eligible for Direct Tax Vivad Se Vishwas Act settlement despite filing writ petition instead of formal appeal

The Madras HC held that a petitioner was eligible to settle disputes under the Direct Tax Vivad Se Vishwas Act, 2020. The court ruled that while "appeal" is not defined in the Act, a writ petition challenging a tax order constitutes an appeal in nature. The petitioner, who had filed a writ petition questioning an order regarding interest waiver eligibility, qualified as an "appellant" under the Act's definition. The court agreed with Bombay HC and Delhi HC precedents, directing respondents to process the petitioner's application within six months under the settlement scheme.

---

---

Issues Involved:
1. Challenge to the rejection of the declaration under the Direct Tax Vivad Se Vishwas Act, 2020.
2. Eligibility of the petitioner to file a declaration under the Direct Tax Vivad Se Vishwas Act, 2020.
3. Interpretation of "appeal" under the Direct Tax Vivad Se Vishwas Act, 2020.
4. Applicability of FAQ clarifications issued by the Central Board of Direct Taxes.

Issue-wise Detailed Analysis:

1. Challenge to the Rejection of the Declaration:
The petitioner challenged the rejection order dated 03.02.2021, issued by the designated authority under the Direct Tax Vivad Se Vishwas Act, 2020. The rejection was primarily on the grounds that the petitioner's case did not fall within the purview of the said Act as no appeal was pending on the "specified date" as defined in Section 2(1)(n) of the Act.

2. Eligibility of the Petitioner to File a Declaration:
The petitioner contended that they were eligible to file a declaration under the Direct Tax Vivad Se Vishwas Act, 2020, for the disputed interest charged under Sections 234A, 234B, and 234C of the Income Tax Act, 1961. The petitioner had previously filed a writ petition (W.P.No.12500 of 2010) challenging the denial of interest waiver, which was pending on the "specified date." The court observed that the definition of "tax arrears" under Section 2(1)(o) of the Act includes "disputed interest," and thus, the petitioner was indeed entitled to file a declaration to settle their tax arrears.

3. Interpretation of "Appeal" under the Act:
The court examined the interpretation of "appeal" within the context of the Direct Tax Vivad Se Vishwas Act, 2020. It was noted that the term "appeal" is not explicitly defined in the Act. However, the court referred to precedents and legal interpretations, concluding that the writ petition filed by the petitioner could be considered akin to an "appeal" as it sought to rectify an erroneous decision by a lower authority. The court emphasized that the expression "appeal" should be construed broadly to include proceedings like writ petitions challenging departmental decisions.

4. Applicability of FAQ Clarifications:
The respondents relied on FAQ No.13 issued by the Central Board of Direct Taxes, which stated that waiver applications pending as of 31 January 2020 are not covered under the Vivad Se Vishwas scheme. However, the court held that such clarifications are not binding and do not override the statutory provisions of the Act. The court agreed with the interpretations of the Bombay and Delhi High Courts, which emphasized that the Act's purpose is to provide a resolution mechanism for tax disputes, including disputes over interest.

Conclusion:
The court concluded that the petitioner was eligible to settle the dispute under the Direct Tax Vivad Se Vishwas Act, 2020, and directed the respondents to process the petitioner's application filed on 29.01.2021 in accordance with the law. The writ petitions were allowed, granting consequential relief to the petitioner. No costs were imposed, and connected miscellaneous petitions were closed.

---