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Quashes ₹6.23 Lakh Demand Over Impossible DTVSV Deadline for Reddy
The has ruled that the cannot enforce a payment deadline that had already passed when it issued a revised certificate under the Direct Tax Vivad se Vishwas (DTVSV) scheme. A Division Bench of Justices Ninala Jayasurya and T.C.D. Sekhar set aside a ₹6,23,708 demand notice and an interest order against N. Venu Gopal Reddy, a works contractor who had opted to settle his tax dispute under the scheme.
A Tale of Two Forms and an Impossible Deadline
Reddy faced a tax demand of ₹29,60,420 following an assessment under Section 143(3) read with . When the DTVSV scheme was introduced, he withdrew his pending appeal and filed a declaration in Form-1 on . The Department initially issued a Form-3 on , but Reddy pointed out computation errors. After considering his representation, the Department issued a revised Form-3 on , determining the amount payable at ₹23,36,812. However, the revised certificate required payment on or before — a date that had passed nearly a month earlier.
Reddy paid the full amount on and submitted Form-4 the same day. Despite this, the Department issued a demand notice on for ₹6,23,708, claiming the payment was late, and later passed an order under charging interest.
, Says the Court
The High Court firmly rejected the Department's position. “It is to comply with such a condition inasmuch as the petitioner cannot ,” the Bench observed. The court noted that the Department itself acknowledged the errors in the initial computation by issuing the revised certificate. Having done so, it could not impose a condition that was factually impossible to meet.
The court examined Sections 5(1) and 5(2) of the , which require a declarant to pay the determined amount within 15 days of receiving the certificate and intimate the payment. Reddy paid on , immediately after receiving the revised certificate, and submitted Form-4 the same day. “Admittedly, the petitioner had paid the amount within the time stipulated under Section 5(2) of the said Act, therefore it is incumbent on the part of the respondent authorities to pass order stating that the petitioner/declarant has paid the amount,” the judgment read.
Final Verdict: Demand Set Aside, Form-5 to Be Issued
The High Court set aside the demand notice dated and the interest order dated . It directed the Income Tax authorities to pass the requisite order under and issue Form-5 to Reddy within six weeks. The writ petition was allowed with .
The decision reinforces the principle that tax settlement schemes must be administered fairly, and that authorities cannot impose conditions that are literally impossible to fulfill.
