Direct Tax Vivaad Se Vishwas Act | Out-Of-Court Settlement Not Litigant's Fundamental Right, Can Be Availed Only As Per Law: Allahabad HC

While dealing with a rejection order under the Direct Tax Vivaad Se Vishwas Act, 2020, the Allahabad High Court has held that a litigant does not have a fundamental or inherent right to claim settlement of dispute outside court. The right being created by statute must be availed in accordance with it.

The bench comprising of Justice Saumitra Dayal Singh and Justice Shiv Shanker Prasad opined,

“In the first place, settlement of disputes outside courts/ judicial process is not a fundamental or inherent right of any litigant. That right was created by the statute i.e. the Act. Being a statutory right, the same may have been availed strictly in accordance with the statutory conditions and further inasmuch as it was a stipulation that the application/ declaration may be maintainable only if there was pending a litigation between the parties before the cut off date, it remained from the petitioner to satisfy that condition.”

The issue had arisen when a demand of Rs.1,71,371/- was raised against the petitioner under Section 271 AAB of the Income Tax Act, 1961. In the first appeal, amount was partly reduced. The petitioner filed a second appeal after a delay of 1261 days, which was condoned by the Tribunal, and the appeal remains pending.

Meanwhile, Designated Authority under the Direct Tax Vivaad Se Vishwas Act rejected petitioner’s application for amicable settlement as the second appeal was filed beyond the cut-off period.

Counsel for petitioner argued that the petitioner did not want to litigate the matter with the authorities and pointed out that the policy of the Union was also to prefer settlement over litigation.

Counsel for respondent placed reliance on the decision of the Supreme Court in Yashi Constructions v. Union of India to argue that the petitioner not only failed to file the appeal within limitation period, but also the cut-off period prescribed. It was submitted that no delay condonation application was filed by the petitioner for the authorities to consider condoning the delay.

After hearing the submissions, the court held that the petitioner did not have a fundamental right to settle disputes with the government outside the judicial process. Since the right of settlement outside the judicial process was granted by an Act, i.e. the Direct Tax Vivaad Se Vishwas, Act, 2020, conditions mentioned therein to avail the right of settlement ought to be fulfilled.

It was observed that since the petitioner failed to appeal within the prescribed limitations and also did not file a delay condonation application before the Revenue Authorities, “no right vested or accrued to the petitioner to seek a settlement in terms of the conditions prescribed by the Act.”

The court further opined the petitioner's right to appeal before the Tribunal has been preserved upon condonation of delay of 1261 days. Therefore he was not at loss. Accordingly, the writ petition was dismissed.

Counsels for Petitioner: Kartikeya Saran, Divyansh Jain, Paritosh Jain, Ujjawal Satsangi

Counsels for Respondents: ASGI Abrar Ahmad, Gaurav Mahajan, Krishna Agarawal

Case Title: Umesh Garg v. Union Of India and Another, WRIT TAX No. - 566/2021

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