Later show-cause notice after SVLDR cut-off treated as separate demand, blocking scheme eligibility; rejection upheld, appeal allowed

The dominant issue was whether a subsequent show cause notice (SCN-II), issued after the SVLDR Scheme cut-off, could be treated as a continuation of an earlier notice (SCN-I) so as to confer Scheme eligibility. The HC held that mere reference to SCN-I or use of SCN-I as a relied-upon document did not merge SCN-II with SCN-I; SCN-II "stood on its own legs" because it independently quantified the demand and culminated in adjudication. Consequently, SCNs issued beyond the Scheme deadline could not attract SVLDR benefits, and the rejection of Scheme relief for SCN-II was upheld. The petitioner was, however, permitted to file a statutory appeal against the adjudication order by a specified date.

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ISSUES PRESENTED AND CONSIDERED

1. Whether a show cause notice issued after 30 June 2019 can qualify for relief under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, on the basis that it is a continuation of an earlier show cause notice/refund proceedings.

2. Whether rejection of the declaration under the Scheme was legally sustainable where the later show cause notice quantified the demand only after the Scheme's cut-off date.

3. Whether, despite denial of Scheme benefit, the Court should protect the petitioner's statutory remedy by permitting an appeal against the adjudication order without dismissal on limitation due to pendency of the writ petition.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 & 2: Eligibility of a post-cut-off show cause notice for SVLDR Scheme benefit and validity of rejection

Legal framework (as discussed by the Court): The Court examined the Scheme definition of "tax dues", which hinges on (i) appeals pending as on 30 June 2019, (ii) show cause notices received on or before 30 June 2019, and (iii) enquiry/investigation/audit matters where duty has been quantified on or before 30 June 2019. The Court also considered the Scheme-related FAQs referred to in the judgment, stating that eligibility covers persons having an SCN where final hearing has not taken place as on 30 June 2019, and investigation/audit cases where duty was quantified and communicated/admitted on or before 30 June 2019.

Interpretation and reasoning: The Court found that the later show cause notice was dated after the Scheme cut-off date. The Court rejected the argument that the later notice was merely a continuation of the earlier notice/refund proceedings. It held that a mere reference to the earlier show cause notice in the later notice, or treating the earlier notice as a relied-upon document, does not convert the later notice into one eligible under the Scheme. The Court further reasoned that in the factual matrix, the demand amount was quantified in the later show cause notice and culminated in an adjudication order; therefore, the later show cause notice "stood on its own legs" and could not be brought within the Scheme by characterising it as a continuation.

Conclusions: The Court conclusively held that show cause notices issued beyond the Scheme deadline cannot be considered for benefits under the Scheme. Since the later show cause notice was issued post cut-off date and constituted an independent quantified demand leading to adjudication, rejection of the Scheme declaration for that notice was not faulted, and the Scheme benefit was denied for that notice.

Issue 3: Protection of appellate remedy notwithstanding dismissal of Scheme claim

Interpretation and reasoning: While upholding denial of Scheme relief, the Court considered that the writ petition had remained pending since September 2023 and held that the petitioner should not be deprived of remedies available in accordance with law due to the pendency.

Conclusions: The Court permitted filing of an appeal against the adjudication order by a specified future date and directed that, if filed within that time, the appeal shall not be dismissed on limitation and must be decided on merits.

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