Arjun Rampal Couldn't Clear Tax Dues Under SVLDR Scheme Due To Technical Glitch, Not At Fault: Bombay High Court Grants Relief

The Bombay High Court has permitted actor Arjun Rampal to belatedly avail of the Sabka Vikas Legacy Dispute Resolution Scheme 2019 to settle service tax dues for the year 2016-2017.

A division bench of Justices Nitin Jamdar and Abhay Ahuja observed that Rampal couldn’t be denied benefits of the scheme due to a technical glitch for no fault of his.

“…we are of the view that in the facts of this case the Petitioner cannot be deprived of the benefit of the SVLDR Scheme merely on the basis of a technical issue of reversal of the amount paid by Petitioner prior to 30 June 2020 on the ground of expiry of challan for which clearly the Petitioner was not at fault.”

Therefore, the court directed authorities to allow Rampal to make the challan payment of Rs. 2.74 lakhs under the SVLDR, settle his tax dues of over Rs. 9.16 lakhs and to issue the necessary discharge certificate under the scheme.

The court cited the cases of Shekhar Resorts Ltd. and Antares Pvt. Ltd, along with the objectives of the Scheme to grant him relief.

In 2018, Anti Evasion Officers summoned Rampal who submitted that he had paid Rs. 58 lakhs of service tax for that duration, however, Rs. 9.16 lakhs was still pending as the total amount was Rs. 67 lakhs for April 2016-2017.

On September 1, 2019, the government brought in the “SVLDR Scheme to end all pending litigation under the indirect tax regime. Rampal declared Rs. 9.16 tax dues for the concerned year. Accordingly on February 23, 2020 a SVLDRS Form was issued to him directing him to make an initial payment of Rs. 2.74 lakhs. Therefore, he generated a mandate form (or Challan) from the Central Board of Indirect Taxes and Customs (CBIC) portal.

But Rampal couldn’t make the payment, as the nationwide Covid-19 lockdown was announced. The Superintendent of Investigation team, CGST informed him that the deadline for payment had been extended till June 30, 2020. While he made the payment via RTGS, the payment was initially accepted but later reversed as the Challan had expired.

In July, he informed the Dy. Commissioner, CGST and Joint Commissioner, CGST requesting them for issuance of another challan. However, he was subsequently informed that the date hadn’t been extended for payment through the portal.

Rampal finally approached the High Court in 2021.

Advocate Bharat Raichandani for Rampal submitted that despite extensive correspondence with the CGST officials his client was suffering due to a technical glitch of an expired challan. He urged the court allow him to make payment under the SVLDR Scheme.

Advocate Siddharth Chandrashekhar for the authorities submitted that Rampal failed to make the payment before June 30, 2020 therefore he cannot avail of the SVLDR Scheme. The time to make the payment has expired long back and even the Scheme is over now. That the Court cannot defer the date for payment/modify the Scheme, he said.

At the outset the court noted that the only issue arising for its consideration is whether Petitioner (Rampal) can be denied benefit of SVLDR Scheme due to his inability to make payment of Rs.2,74,860/- pursuant to Form SVLDRS-3 in view of the expiry of the challan (mandate form) in the face of the fact that although the payment that was made vide RTGS dated 22 June 2020 was initially accepted but later on reversed and refunded to the Petitioner’s bank account due to an expired challan.

The court noted that the intent of the Scheme was to end long standing disputes of indirect tax to benefit the tax payer, assessees as well as the Revenue. “The tax payers would have the benefit of ending the legacy disputes with the Revenue Authorities and the Revenue Authorities would in turn unlock the Revenues that were locked up in such disputes.”

It noted that in the case of Shekhar Resorts Ltd., wherein the SC court held that an applicant cannot be punished for doing something which was impossible to do, while considering a challenge under the SVLDR Scheme. In Innovative Antares Pvt. Ltd. the SC extended the time to deposit tax under the scheme as a challan wasn’t issued.

Therefore, the court directed authorities to allow Rampal to make the payment of Rs. 2.74 lakhs under the SVLDR, settle his tax dues of over R. 9 lakhs and issue the necessary discharge certificate under the scheme.

The court accordingly granted him relief.

Case Title: Shri Arjun Amarjeet Rampal vs Union of India

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