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IN THE HIGH COURT OF DELHI AT NEW DELHI
Yashwant Varma, Dharmesh Sharma, JJ.
Ideal Broadcasting India Pvt. Ltd. – Appellant
Versus
Union of India & Ors. – Respondents
W.P.(C) 3739 of 2020 & CM APPL. 13407 of 2020
Decided On : 29-05-2023
Companies Act - Service Tax - SVLDR Scheme - Section 85(3A) of the Finance Act, 1994 - Article 226 & 227 of the Constitution of India
Fact of the Case:
The petitioner, a company engaged in broadcasting and telecommunication, was assessed to service tax and imposed with a demand. The petitioner filed a statutory appeal after the 'cut off date' for the SVLDR Scheme. The petitioner later withdrew the appeal and filed a declaration under the SVLDR Scheme, but the tax authorities classified the tax dues under the 'arrears' category instead of the 'litigation' category, leading to the present writ petition.
Finding of the Court:
The court found that the petitioner voluntarily chose to avail the benefit of the SVLDR Scheme by submitting an undertaking to withdraw the appeal. The court held that the tax authorities rightly considered the case under the 'arrears' category, and the petitioner was estopped from challenging the classification. The court also noted that the penalty imposed was wiped out, and the petitioner's plea of being unduly prejudiced was rejected.
Issues: The issues revolved around the classification of tax dues under the SVLDR Scheme, the petitioner's voluntary withdrawal of the appeal, and the applicability of the Scheme to cases filed after the 'cut off date'.
Ratio Decidendi: The court held that the SVLDR Scheme applied to cases where there was some degree of finality with regard to imposition of duty/tax dues as on the 'cut off date'. The court emphasized that the petitioner's voluntary withdrawal of the appeal resulted in the duty attaining finality and falling under the 'arrears' category.
Final Decision: The court dismissed the writ petition, finding no merit in the petitioner's contentions and disposed of the pending application.
JUDGMENT
Dharmesh Sharma, J. The petitioner is invoking the writ jurisdiction of this Court second time under Article 226 & 227 of the Constitution of India. The petitioner is a company incorporated under the provisions of Companies Act, 1956 and engaged in the business of providing hardware support and services in the areas of broadcasting and telecommunication, both terrestrial and satellite, which primarily includes supplying the broadcast equipment, catering to required system integration for the same and other aspects of incidental design, consultancy and support services.
GENESIS-FIRST ROUND OF DISPUTE
2. Briefly stated, the petitioner was assessed to service tax inter-alia in relation to commission income received from outside India and vide order dated 14.06.2019 passed by respondent no.3/Commissioner (Appeal), Central Tax GST, Delhi-1. The petitioner was imposed a total demand of Rs.1,00,89,786/- along with interest and penalty of Rs.1,00,89,786/-. Needless to state the petitioner had a statutory right to file appeal within a period of two months from the date of receipt of the order (received on 19.06.2019) under Section 85(3A) of the Finance Act, 1994 ("the Act") which was to expire on 18.08.2019. However, in the meanwhile on 05.07.2019 the Hon`ble Finance Minister announced the Sabka Vishwas (Legacy Dispute Resolution) [SVLDR Scheme] Scheme Rules, 2019 during the Budget Speech of 2019-2020 and later on the Finance Bill 2019-2020 received assent of the President on 01.08.2019, and the SVLDR Scheme was eventually made operational vide Notification No. 4/2019 CE-NT on 21.08.2019 effective w.e.f. 01.09.2019.
3. Initially, the grievance of the petitioner company was that the benefit of the Scheme was confined to all of such cases where the appeal was pending or had been decided prior 30.06.2019 (read 01.07.2019, as modified vide para (iv) of Circular dated 12.12.2019) and although the petitioner company was desirous of availing the benefit under the SVLDR Scheme, an appeal was filed on 16.08.2019; but the SVLDR Scheme excluded such category of cases where no appeal was pending before the `cut off date` although the said appeal was statutorily available by the end date i.e. 30.06.20119 (read 01.07.2019, as modified vide para (iv) of Circular dated 12.12.2019).
4. Aggrieved, the petitioner filed Writ Petition (C) No. 11001/2019 titled as Ideal Broadcasting India Pvt. Ltd. v. Union of India & Ors., and suffice to state that an order dated 16.10.2019 was passed directing that the respondents should seriously examine the issue of extending the benefit of the Scheme to the petitioner company, which had filed the statutory appeal after the "cut off date". Respondent no. 2 in their follow up action issued the Circular No. 1073/06/2019CX dated 29.10.2019 that inter alia allowed the declarant to file declaration under the Scheme who had filed appeal post 30.06.2019 (read 01.07.2019), subject to furnishing an undertaking with the department that the appeal shall be withdrawn. As the grievances of the petitioner were addressed, the said Writ Petition was disposed of vide order dated 03.12.2019. It is an admitted fact that the petitioner company withdrew the appeal in terms of Circular dated 29.10.2019 vide order reference no. 06/ST/DLH/2020 dated 27.01.2020 although prior thereto it had submitted Form SVLDRS-1 dated 30.12.2019 declaring total "tax dues" to the tune of Rs.17,37,932/- under "litigation" category, as it was canvassed that its case was not covered under the definition of
"amounts in arrears" since it had filed appeal post 01.07.2019 and before the expiry of the period of time for filing appeal.
SECOND ROUND OF THE LITIGATION
5. In the aforesaid background, the petitioner company has now approached this Court second time stating that on filing of SVLDRS-1 on 30.12.2019, the respondents issued Form SVLDRS-2, dated 13.03.2020 objecting to the classification of "tax dues" adopted by the petitioner under "litigation" catego
The main legal point established is that under the SVLDR Scheme, cases with finality in duty/tax dues as on the 'cut off date' are classified under the 'arrears' category, and voluntary withdrawal of....
The main legal point established in the judgment is that a declarant under the SVLDR Scheme can file a declaration under the 'arrears' category if the assessment order has already determined the tax ....
The main legal point established in the judgment is that the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, does not have the jurisdiction to deny the benefit ....
The court confirmed a tax demand pending finalization qualifies for relief under the Litigation category rather than the Arrears category, entitling the petitioner to a higher relief percentage under....
The main legal point established in the judgment is the need for a liberal interpretation of remedial statutory schemes like the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 to achieve their ....
The eligibility for SVLDRS requires that no audit quantification occurs before the cutoff date, and adjustments of refunds must follow due process.
Eligibility for the benefits of the SVLDRS Scheme is confirmed when service tax liability is quantified and admitted prior to the cut-off date, regardless of ongoing investigations.
The rejection of an application under the SVLDR Scheme without affording an opportunity to be heard violates the principles of natural justice and offends Article 14 of the Constitution of India. The....
The court established that pre-deposits should be deducted only after calculating the relief under the SVLDRS, ensuring accurate determination of tax dues.
Show cause notices pending adjudication as on 30th June 2019 are eligible for relief under the SVLDRS 2019 scheme.
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