Taxpayer gets relief for 29-day delay in amnesty scheme payment due to Covid hardships

Gujarat HC condoned 29-day delay in payment of last two installments under Vera Samadhan Yojna 2019 amnesty scheme due to Covid-19 hardships. Petitioner had paid approximately Rs. 3,00,000 in first ten installments timely but delayed final Rs. 55,780 payment. Court held that petitioner's clear intention to avail scheme was evident from full payment despite delay, and Covid hardships constituted compelling circumstances beyond control. Following Supreme Court precedent in Dalchandra Rastogi, HC emphasized amnesty schemes should further their object rather than deny benefits to assessees. Application allowed.

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter are:

(a) Whether the delay of 29 days in payment of the last two installments under the 'Vera Samadhan Yojna, 2019' amnesty scheme, caused by the Covid-19 pandemic hardships, can be condoned by the Court despite the absence of explicit departmental power to condone such delay;

(b) Whether the Petitioner's application under the amnesty scheme can be allowed notwithstanding the delayed payment of installments, given the Petitioner's substantial compliance with the scheme and the unforeseen circumstances;

(c) Whether the Respondent's rejection of the Petitioner's application under the amnesty scheme and the consequent demand recovery notice are legally sustainable;

(d) Whether the Court can exercise its extraordinary writ jurisdiction under Article 226 of the Constitution of India to grant relief in the interest of justice, equity, and to further the object and purpose of the amnesty scheme;

(e) The applicability and interpretation of relevant precedents concerning condonation of delay in payment under statutory schemes, especially in the context of Covid-19 related hardships.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a) & (b): Condonation of Delay in Payment under Amnesty Scheme Due to Covid-19 Hardships

Relevant Legal Framework and Precedents: The 'Vera Samadhan Yojna, 2019' was introduced by the Government of Gujarat to resolve pending tax disputes by allowing payment of outstanding dues in installments with waiver of penalties and interest, conditional upon timely payment and withdrawal of appeals. The scheme did not explicitly empower departmental authorities to condone delays in payment.

Precedents considered include:

• Sunflowers Developers Vs. State of Gujarat: Emphasized the object of amnesty schemes to ensure expeditious resolution of disputes and administrative efficiency, expecting authorities to respect the scheme's purpose and provide benefits to assessees.
• Sky Industries Ltd Vs. State of Gujarat: Reiterated the above principles and held that minor inadvertent short payments should not deprive assessees of scheme benefits.
• IA Housing Solution (P.) Ltd. Vs. Principal Commissioner of Income-tax: Held that High Courts, under extraordinary writ jurisdiction, can condone delay in payment due to extraordinary circumstances such as Covid-19, even if departmental authorities lack such power, to prevent injustice.
• Dal Chandra Rastogi v. CBDT: Supreme Court allowed late payment under the Income Declaration Scheme due to genuine hardship, despite no provision for such delay, emphasizing the Court's role in remedying injustice.

Court's Interpretation and Reasoning: The Court recognized that the Petitioner had diligently paid the first ten installments within the extended timeline but defaulted on the last two installments amounting to Rs. 55,780/-, which were paid belatedly due to the severe impact of the second wave of Covid-19. The Court inferred that the delay was caused by "dire and compelling necessity and reasons beyond the control of the Petitioner."

The Court emphasized the clear and unequivocal intention of the Petitioner to avail the scheme benefits, as evidenced by the eventual full payment. It held that the delay did not amount to rewriting or modifying the scheme but was a case of genuine hardship.

The Court relied heavily on the principle that the object and purpose of amnesty schemes are to expedite resolution of pending dues and reduce litigation and administrative burden, which would be defeated by rigid denial of benefits for minor and unintentional delays caused by extraordinary circumstances.

Key Evidence and Findings: The Petitioner's payment records showed substantial compliance with the scheme, with only the last two installments delayed. The Petitioner's family was severely affected by Covid-19, leading to business closure and payment difficulties. The Respondent's delay in communicating the status of the application further complicated the matter.

Application of Law to Facts: Applying the precedents and the legal principles, the Court found that the Petitioner's delay was excusable and condonable in the extraordinary circumstances of the pandemic. The Court held that denying the Petitioner the scheme's benefits would be contrary to the scheme's object and cause injustice.

Treatment of Competing Arguments: The Respondent argued that the delay amounted to rewriting the scheme and relied on an Apex Court order in a different matter to urge dismissal. The Court distinguished the present case on facts, noting the absence of pleadings about Covid hardship in the cited Apex Court case and the full payment made by the Petitioner here. The Court preferred the reasoning in Dal Chandra Rastogi and IA Housing Solution cases, which allowed relief in extraordinary circumstances.

Conclusions: The Court concluded that the 29-day delay in payment of the last two installments was caused by justifiable, unforeseen hardship and was therefore condonable. The Petitioner's application under the Vera Samadhan Yojna, 2019 deserved to be allowed.

Issue (c): Legality of the Respondent's Rejection of Application and Demand Recovery Notice

The Respondent issued a demand recovery notice for the balance dues and penalties, alleging non-compliance with the scheme's payment schedule.

The Court found that since the Petitioner had ultimately complied with the payment obligations, albeit belatedly, and the delay was condonable, the rejection of the application and the consequent demand notice were not legally sustainable.

The Court set aside the order dated 02.05.2022 disposing of the Petitioner's application and quashed the demand recovery notice dated 10.07.2023.

Issue (d): Exercise of Extraordinary Writ Jurisdiction under Article 226

The Court extensively discussed the scope of its writ jurisdiction under Article 226, emphasizing that even if departmental authorities lack power to condone delay, the High Court can pass any order necessary to do complete justice in extraordinary circumstances.

The Court cited the principle from B.C. Chaturvedi v. Union of India that the High Court's jurisdiction is broad and not curtailed by legislation, enabling it to remedy injustice and do equity.

Accordingly, the Court exercised its writ jurisdiction to condone the delay and grant relief to the Petitioner.

Issue (e): Applicability of Precedents and Interpretation of Amnesty Schemes

The Court analyzed the precedents to highlight that amnesty schemes are designed to reduce litigation and expedite recovery, and their benefits should not be denied on technical grounds when genuine hardship is shown.

The Court distinguished the Apex Court order relied upon by the Respondent on facts and emphasized the need to balance strict compliance with equitable considerations, especially in the context of the Covid-19 pandemic.

3. SIGNIFICANT HOLDINGS

The Court held:

"Thus, the object of the amnesty scheme is to bring about expeditious and effective resolution of old disputes and recoveries of old outstanding dues of the Government and reduction of administrative costs. Since such scheme is applicable to all pending cases, the officers acting under the relevant statutes are expected to respect the object of the scheme and to ensure that the assessees get the benefit under the scheme."

"Though respondents have no power to condone the delay in payment, yet this Court in extraordinary writ jurisdiction can pass any order necessary to remedy injustice."

"The power of the High Court under Article 226 of the Constitution of India to grant relief in extraordinary and exceptional circumstances cannot be taken away or curtailed by any legislation."

"The Petitioner, due to demonstrable hardships was unable to pay the last two installments under the said Scheme after having diligently paid the first ten installments within the stipulated time, cannot be said to have rewritten or modified the 'Vera Samadhan Yojna 2019' in any manner."

"The object and purpose of an Amnesty Scheme has to be seen from that angle which furthers the object of the Scheme, than which merely renders the Scheme illusory and denies the benefit to the Assessee and adds to the pendency of conflicts with the State."

"The order dated 02.05.2022 disposing of the Petitioner's application under 'Vera Samadhan Yojna 2019' is hereby quashed and set aside. The delay of 29 days in making the payment under the aforesaid scheme is hereby condoned. Consequently, the Demand Notice dated 10.07.2023 is also set aside."

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