Delhi High Court Rules SCN Issued Post-Cutoff Ineligible for SVLDR Scheme

The High Court of Delhi has settled a dispute regarding the eligibility of tax-related proceedings under the Sabka Vikas Legacy Dispute Resolution (SVLDR) Scheme. In a judgment delivered by a bench comprising Justice Prathiba M. Singh and Justice Shail Jain, the Court affirmed that the statutory cutoff date of June 30, 2019, is a hard boundary for the inclusion of Show Cause Notices (SCNs) within the scheme's amnesty benefits.

Case Background

The petition was brought by Varner Retail Services South Asia Pvt. Ltd., which had been engaged in a protracted dispute regarding CENVAT credit refunds. The company’s refund claims for the period January 2016 to June 2017 were rejected by the Department of Central Goods and Service Tax. Following this, the Department issued two separate Show Cause Notices (SCN): SCN-I on October 18, 2018, and SCN-II on December 19, 2019.

While the Petitioner successfully availed the benefits of the SVLDR Scheme for the first notice (SCN-I), their application regarding the second notice (SCN-II) was rejected by the authorities. The department maintained that because SCN-II was issued after the June 30, 2019, cutoff, it could not be covered under the dispute resolution mechanism.

The Conflict of Interpretation

The Petitioner contended that SCN-II was merely a "continuation" of the initial refund proceedings and the first SCN, and should therefore be treated as falling within the ambit of the scheme. They relied on specific clauses of the CBIC Circular dated December 12, 2019, to argue that the application should be entertained.

Counsel for the Respondents, however, emphasized the rigorous nature of the Scheme’s eligibility criteria, noting that it was designed to settle legacy disputes quantified by the cutoff date, not to provide blanket relief for ongoing or subsequent investigations.

Key Observations

The Court examined the provisions of the SVLDR Scheme and found little room for the Petitioner’s interpretation. Writing for the bench, Justice Prathiba M. Singh clarified that SCN-II stood as an independent legal proceeding.

Key excerpts from the judgment include:

• "The mere fact that the SCN-II makes a reference to SCN-I would not mean that the Petitioner would get a chance to apply under the SVLDR Scheme with respect to SCN-II as well, when admittedly SCN-II was issued subsequent to the SVLDR Scheme being launched and subsequent to the deadline which is mentioned in the Scheme."
• "In the opinion of this Court, SCN-II is not to be considered as a continuation of SCN-I or the refund proceedings. SCN-II stood on its own legs."
• "The SCNs issued beyond the deadline prescribed in the Scheme itself cannot be considered for benefits under the Scheme."

The Final Order

While the High Court upheld the rejection of the Petitioner’s application under the SVLDR Scheme, it acknowledged the fairness of allowing the company to pursue its remedies through standard litigation. Considering the time consumed by the writ petition, the Court granted the Petitioner liberty to file an appeal against the impugned order dated June 30, 2023.

The order dictates that if the appeal is filed by January 31, 2026, it shall be heard and adjudicated on its merits, without being dismissed on grounds of limitation. This judgment serves as a vital reminder to corporate entities that statutory deadlines for amnesty schemes are strictly enforced by the judiciary, emphasizing that such schemes provide limited windows for dispute resolution rather than ongoing procedural extensions.