M/s Greens And Grows Cannot Adjust Earlier Tax Payment Under Voluntary Disclosure: Rajasthan High Court

The Voluntary Declaration Proves Conclusive: Rajasthan High Court Rejects Adjustment Claim

In a significant ruling clarifying the contours of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 , the Rajasthan High Court has held that a taxpayer who opts for the voluntary disclosure category cannot deduct an earlier tax payment from the amount declared in the declaration form. The Division Bench, comprising Justice Arun Monga and Justice Ashutosh Kumar, ruled that Section 123(d) of the Finance (No. 2) Act, 2019 makes the figure stated by the declarant the conclusive measure of tax dues .

The Case: A Taxpayer's Bid to Net Off Earlier Payment

M/s Greens And Grows, a partnership firm engaged in works contract services, sought to settle its service tax liability for the financial years 2014 to 2017 under the Sabka Vishwas Scheme. The firm filed Form SVLDRS-1 on January 13, 2020 , under the voluntary disclosure category , declaring service tax dues of ₹32,18,746. Simultaneously, it disclosed that it had already deposited ₹19,90,803 on September 30, 2015 , and therefore claimed that only ₹12,27,943 remained payable.

The designated committee, however, declined to adjust the earlier payment, stating that no provision exists for pre-deposit in a voluntary disclosure case. After a personal hearing and issuance of Form SVLDRS-2 and Form SVLDRS-3, the committee maintained its stance, prompting the firm to approach the High Court.

Petitioner's Plea: ' Double Payment is Unjust'

The petitioner argued that the refusal to account for the earlier payment was arbitrary and legally unsustainable. Counsel for the firm submitted that Section 124(2) of the Act mandates the deduction of any amount paid as pre-deposit at any stage of appellate proceedings or as deposit during enquiry, investigation, or audit. The firm contended that the earlier payment of ₹19.90 lakh fell within this provision and should have been set off against the declared liability, preventing the unjust scenario of paying the same amount twice. The petitioner also relied on Circulars dated September 25, 2019 , and October 29, 2019 , which, according to them, supported a liberal approach toward declarations.

Revenue's Stand: Statutory Scheme Leaves No Room

The Revenue countered that the petitioner itself chose the voluntary disclosure category and declared ₹32,18,746 as its tax dues . Section 123(d) unequivocally defines tax dues in such cases as " the total amount of duty stated in the declaration ." The earlier payment, made in 2015, did not constitute a pre-deposit in any appellate proceeding or a deposit during an enquiry, investigation, or audit. The Revenue also pointed out that the scheme forbids the committee from verifying the amount declared in voluntary disclosure cases, as per the proviso to Section 126 . The personal hearing was afforded, and the committee's estimate was communicated through Form SVLDRS-2, yet the petitioner failed to establish any legal entitlement to the adjustment.

Court's Verdict: The Declared Amount is the Tax Due

The High Court dismissed the writ petition, finding no illegality or procedural unfairness in the committee's decision. The Bench emphasized that the language of Section 123(d) is plain and unambiguous. "In a voluntary disclosure the measure is the declarant's own statement. The statute fixes the tax dues at the total amount of duty stated in the declaration . It does not speak of the duty net of past payments . It does not speak of a balance. It speaks of the total amount stated," the Court observed.

Turning to Section 124(2) , the Court noted that its application is narrow. The deduction is confined to amounts paid as pre-deposit in appellate proceedings or as deposits during enquiry, investigation, or audit. The ₹19.90 lakh payment made in September 2015 did not fit either description. "No appeal was pending, for there was no order to appeal against. No enquiry, investigation or audit was alive," the Court clarified, adding that had such proceedings existed, the petitioner would have been excluded from the voluntary disclosure category altogether.

The Court also rejected the claim of denial of hearing, noting that a personal hearing was held on February 3, 2020 , where the petitioner's Chartered Accountant pressed the adjustment claim, and the petitioner later filed Form SVLDRS-2A recording its disagreement. "A hearing does not become illusory merely because the outcome is adverse to the party heard," the Bench remarked.

Key Observations

"The statute fixes the tax dues at the total amount of duty stated in the declaration . It does not speak of the duty net of past payments ."

"The deduction is confined to two described payments. One is an amount paid as pre deposit at a stage of appellate proceedings... The other is an amount paid as deposit during an enquiry, investigation or audit. Both are payments made under compulsion of, or in the shadow of, an existing proceeding."

"Having twice stated a figure that the statute makes conclusive, and having invoked a category to which the statute attaches no relief and forbids verification, the petitioner cannot later resile from that declaration."

Final Order and Implications

The writ petition was dismissed, but the Court granted the petitioner liberty to pursue any other remedy available in law, including recourse to any subsequent amnesty scheme if eligible. The ruling serves as a cautionary tale for taxpayers: once a declaration is made under the voluntary disclosure category , the stated amount is binding and cannot be later adjusted against prior payments not falling within the narrow exceptions of Section 124(2) . The decision underscores the strict interpretation of tax settlement schemes and the importance of accurate self-assessment.