Taxpayers Filing Declaration Under SVLDR Scheme Can’t Quantify The Duty Under Indirect Taxes: Delhi High Court

The Delhi High Court has held that taxpayers filing declarations under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 (SVLDR Scheme) cannot quantify the duty under indirect taxes.

The bench of Justice Yashwant Varma and Justice Dharmesh Sharma has observed that in terms of Section 121(r) of the Finance Act, 2019, the word "quantified" means a written communication of the amount of duty payable under indirect tax enactment and that a unilateral quantification by the petitioner does not render the assessee eligible to avail the benefit of the scheme since it was the prerogative of the Department to quantify the amount and not the assessee.

The petitioner was assessed service tax in relation to commission income received from outside India. The petitioner was imposed a total demand of Rs. 1,00,89,786 along with interest and a penalty of Rs. 1,00,89,786. The petitioner had a statutory right to file an appeal within a period of two months from the date of receipt of the order. However, in the meantime, the Finance Minister announced the SVLDR Scheme Rules, 2019 during the Budget Speech of 2019–2020. Later on, the Finance Bill 2019-2020 received the assent of the President on August 1, 2019. The SVLDR scheme was eventually made operational with effect from 01.09.2019.

The grievance of the petitioner company was that the benefit of the scheme was confined to all such cases where the appeal was pending or had been decided prior to June 30, 2019. Although the petitioner company was desirous of availing itself of the benefit under the SVLDR scheme, an appeal was filed on August 16, 2019. But the SVLDR Scheme excluded such a category of cases where no appeal was pending before the "cut-off date," although the appeal was statutorily available by the end date, i.e., June 30, 2011.

In the first round of litigation, an order was passed directing that the respondents seriously examine the issue of extending the benefit of the scheme to the petitioner company, which had filed the statutory appeal after the "cutoff date". The respondent allowed the declarant to file a declaration under the scheme who had filed an appeal after June 30, 2019, subject to furnishing an undertaking with the department that the appeal would be withdrawn. Therefore, the petitioner company withdrew the appeal.

In the second round of litigation, the grievance of the petitioner company was that, though the respondents subsequently extended the validity of the scheme, it had claimed a declaration in Form SVLDRS-1 dated December 30, 2019, under the "litigation" category, seeking a rebate up to 50% of the "tax dues".

The petitioner contended that the respondents have wrongly, by misconstruing the provisions of the scheme, allowed a lesser rebate slab by treating the case of the petitioner under the "litigation" category, and the tax dues have been quantified at Rs. 41,30,697.

The court noted that the petitioner chose to exercise the option of availing the benefit under the scheme and, on its own, apparently took a well-informed decision to avail the benefit of the SLVDR scheme by submitting an undertaking to withdraw the appeal but filed the declaration wrongly construing it under the litigation category.

The court observed that once the pending litigation had been withdrawn, the demand of duty raised by the tax authorities attained "finality" and a fortiori fell under the definition of "amount in arrears," and the declaration was rightly considered under the "arrears" category. In other words, if the amount of duty claimed by the Department has not attained finality or has not been admitted by the declarant as recoverable from it, such a case would have fallen under the "litigation" category. In the other situation where the amount of duty has attained finality on account of an appeal having not been filed before the expiry of the limitation period, the appellate order having attained finality, or the amount of duty having been admitted by the declarant, that would fall under the "arrears" category.

Case Title: Ideal Broadcasting India Pvt. Ltd Versus Union Of India

Citation: 2023 LiveLaw (Del) 467

Case No.: W.P.(C) 3739/2020 & CM APPL. 13407/2020

Date: 29/05/2023

Counsel For Petitioner: Kavita Jha, Shammi Kapoor, Vishal Kumar Prachi Jain

Counsel For Respondent: Harpreet Singh, Suhani Mathur, Jatin Kumar Gaur, Harish Vaidyanathan Shankar, Srish Kumar Mishra and Alexander Mathai Paikaday

Click Here To Read The Order