Rejection Of Application Under SVLDR Scheme Without A Hearing Is Violative Of Principles Of Natural Justice: Delhi High Court

The Delhi High Court has held that the summary rejection of the application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme) without affording the opportunity to be heard would violate the principles of natural justice.

The bench of Justice Vibhu Bakhru and Justice Amit Mahajan has observed that in terms of the SVLDR Scheme, the petitioner would be entitled to the waiver of interest and penalty as it had paid the requisite tax prior to the stipulated date. There is no dispute that the amount as estimated to be payable—that is, tax dues less relief—is nil.

The petitioner/assessee had wrongly availed of cess in TRAN-1. The petitioner had reversed the amount, but the interest and penalty were recoverable from the petitioner. The petitioner had deposited the service tax, which was found due on ST-3 reconciliation, but had not deposited the interest and penalty. The petitioner had wrongly availed of the Cenvat Credit on services relating to the rent of a cab, medical insurance, and hotel accommodation, which was deposited by the petitioner but the interest and penalty remained outstanding. The petitioner had wrongfully availed of the Cenvat Credit on exempted income under Rule 6(3) of the Cenvat Credit Rules, 2004. The petitioner had deposited the amount, but the applicable interest and penalty were outstanding.

The petitioner’s declaration submitted under the SVLDR Scheme covered the liabilities, but the amount shown by the petitioner under columns relating to duty details and pre-deposit of duties was erroneously reflected. According to the department/respondents, the amount of duty mentioned in the petitioner’s application ought to have included an amount on account of wrongful availment of cess.

The issue raised was whether the designated authority was justified in rejecting the petitioner’s application on the ground that the amount did not cover the entire details of the duty and the amount deposited by the petitioner.

The court held that the legislative intent to enact the SVLDR scheme was to include all taxpayers in offloading the baggage of disputes. All taxpayers, except those who were specifically excluded, were entitled to avail themselves of the said scheme. The SVLDR Scheme also covered cases where no disputes were pending and enabled the taxpayers to voluntarily pay taxes and avail amnesty under the SVLDR Scheme.

The court held that excluding a taxpayer merely because there were some obvious and not material errors in the quantum of the duty details filled in the form, although the correct amount of duty was deposited, would run contrary to the object of the SVLDR Scheme.

Case Title: Carpet Export Promotion Council Versus Union Of India

Citation: 2023 LiveLaw (Del) 434

Case No.: W.P.(C) 3624/2021

Date: 22.05.2023

Counsel For Petitioner: Raman Kapur

Counsel For Respondent: Vivek Goyal

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