2026 (1) TMI 115 - HC - Service Tax

SVLDRS tax dues calculation for pending CESTAT appeal pre-deposit credit, revised SVLDRS-3 ordered and nil payable recognized

Whether the designated authority under the SVLDRS was bound to give credit for a mandatory pre-deposit made in a pending CESTAT appeal while determining ... Legality of quashing of Form SVLDRS-2 dt.30.1.2020 in Annexure N-2, Form SVLDRS- 2A dt.25.2.2020 in Annexure N-3 and Form SVLDRS-3 dt.29.2.2020 in Annexure N-4 issued by Respondent No. 1 - seeking direction to consider the pre-deposit amount of Rs. 10 lakh paid by the Petitioner and to issue revised Form SVLDRS-3 in lieu of Form SVLDRS-3 issued on 29.2.2020 in Annexure N-4 - direction to issue discharge certificate in Form SVLDRS-4 and to reckon the amount payable as zero after considering the pre-deposit - HELD THAT:- A perusal of the material on record will indicate that the petitioner had made the mandatory pre-deposit of Rs. 10 lakhs before the CESTAT, Bangalore in the aforesaid appeal which is pending even as on today. In addition thereto, in his application in Form SVLDRS-1, the petitioner had clearly indicated that he had made the pre-deposit of Rs. 10 lakhs and if the petitioner was granted benefit under the SVLDRS Scheme, the tax dues payable by the petitioner would be 'NIL' or '0' as can be seen from the aforesaid Form SVLDRS-1 submitted by the petitioner. However, despite the petitioner submitting Form SVLDRS-1 indicating not only the pre-deposit made by him but also that no amount was due by him to the respondents upon acceptance of Form SVLDRS-1, the respondents issued Form SVLDRS-2 without taking into account the pre-deposit made by the petitioner and indicated in Form SVLDRS-1, as a result of which, the petitioner had inadvertently and due to the oversight submitted Form SVLDRS-2A and consequently, From SVLDRS-3 dated 29.02.2020 deserves to be quashed and the respondents are directed to be issued fresh Form SVLDRS-3 by taking into account Rs. 10 lakhs pre-deposit made by the petitioner and to proceed further and issue discharge certificate in Form SVLDRS-4 in accordance with law. The impugned Annexure-N4 i.e., Form SVLDRS-3 issued by respondent No. 1 is hereby quashed - respondents are directed to issue fresh From SVLDRS-3 to the petitioner by taking into account Rs. 10 lakhs pre-deposit made by the petitioner and to proceed further and issue discharge certificate in Form SVLDRS-4 in favour of the petitioner within period of four weeks from the date of receipt of a copy of this order - Petition allowed. ISSUES PRESENTED AND CONSIDERED 1) Whether, under the SVLDRS Scheme declaration, the authorities were required to take into account the petitioner's undisputed mandatory pre-deposit of Rs. 10 lakhs made pursuant to the pending appeal, while determining the amount payable in Forms SVLDRS-2/SVLDRS-3. 2) Whether the petitioner's uploading of Form SVLDRS-2A (accepting Form SVLDRS-2) barred correction of the determination and issuance of a fresh Form SVLDRS-3 reflecting the pre-deposit, and consequential issuance of discharge certificate in Form SVLDRS-4. ISSUE-WISE DETAILED ANALYSIS Issue 1: Consideration of pre-deposit while determining dues under SVLDRS forms Legal framework (as discussed in the judgment): The Court proceeded on the basis of the SVLDRS Scheme process involving filing of Form SVLDRS-1 (declaration), followed by determination/communication through Form SVLDRS-2 and issuance of Form SVLDRS-3, culminating in discharge certificate in Form SVLDRS-4, and addressed whether the pre-deposit disclosed in the declaration must be accounted for in this sequence. Interpretation and reasoning: The Court found it undisputed that the petitioner had made a mandatory pre-deposit of Rs. 10 lakhs pursuant to an interim order in a pending appeal and that compliance had been recorded. The Court also noted that the petitioner, in Form SVLDRS-1, clearly furnished details of that pre-deposit and stated that upon granting scheme benefit, the dues payable would be 'NIL/0'. Despite this disclosure, the authorities issued Form SVLDRS-2 without taking the pre-deposit into account. The Court treated this omission as an error leading to an incorrect downstream determination in Form SVLDRS-3. Conclusion: The Court held that Form SVLDRS-3 dated 29.02.2020, being consequential to Form SVLDRS-2 which failed to account for the Rs. 10 lakhs pre-deposit, could not stand and required correction by issuance of a fresh Form SVLDRS-3 taking the pre-deposit into account, followed by further action culminating in issuance of Form SVLDRS-4 in accordance with law. Issue 2: Effect of petitioner's acceptance through Form SVLDRS-2A on entitlement to correction and revised SVLDRS-3 Legal framework (as discussed in the judgment): The Court examined the scheme's operational forms (SVLDRS-2, SVLDRS-2A, SVLDRS-3, SVLDRS-4) to determine whether the petitioner's act of uploading Form SVLDRS-2A foreclosed revision of an erroneous determination that ignored an undisputed pre-deposit. Interpretation and reasoning: The authorities contended that because the petitioner accepted Form SVLDRS-2 by uploading Form SVLDRS-2A, no revised Form SVLDRS-3 was required. The Court rejected this objection on the facts found: the petitioner's Form SVLDRS-1 had already disclosed the pre-deposit; the omission originated in Form SVLDRS-2 issued by the authorities; and the petitioner's submission of Form SVLDRS-2A was characterized by the Court as inadvertent and due to oversight, 'mechanically/blindly' accepting a form that was erroneous in not reflecting the pre-deposit. Given the undisputed deposit and its disclosure, the Court concluded the determination had to be corrected notwithstanding the petitioner's prior acceptance. Conclusion: The Court held that the petitioner was entitled to relief despite uploading Form SVLDRS-2A. It quashed Form SVLDRS-3 dated 29.02.2020 and directed the authorities to issue a fresh Form SVLDRS-3 after taking the Rs. 10 lakhs pre-deposit into account and then to proceed to issue the discharge certificate in Form SVLDRS-4 within four weeks.