Delhi HC refuses to direct authorities to accept the declaration and issue a discharge certificate in Form SVLDRS-4 [Read Order]

The Delhi High Court refused to direct authorities to accept the declaration and issue a discharge certificate in Form SVLDRS-4.

The Petitioner, Chaque Jour HR Service Pvt. Ltd.  is a Company engaged in the business of providing staffing services and solutions which includes general staffing, recruitment and supply of manpower etc.

It was previously registered under the Finance Act, 1994 and was allotted a Service Tax registration. With the Central Goods and Services Tax Act coming into force, the Petitioner migrated under the said Act and is now allotted a GST registration.

The Principal Commissioner of Central Excise and Service Tax Commissionerate, Delhi-South initiated investigation against it. In connection, pursuant to summons Mr. Shaji Kumar, Director of Petitioner company, appeared before the authorities and tendered his statement acknowledging that the Petitioner had mistakenly reflected the same Service Tax deposit challans in two different half-yearly returns on account of bona fide error committed by one of its employees.

The Petitioner is aggrieved with rejection of its declaration filed under the amnesty scheme- Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) for settlement of Service tax dues and by way of writ petition, it has, inter-alia impugned the reasoned order passed by the Respondents in this regard.

Further, the Petitioner seeks consequential relief of directing the Respondents to accept the declaration and issue a discharge certificate in Form SVLDRS-4 for the amount in question.

The division bench of Justice Manmohan and Justice Sanjeev Narula held that the discharge certificate issued under Section 126 with respect to the amount payable under the Scheme is considered to be conclusive as to the matter and the time period stated therein. Under Clause (b) Sub Section 2 to Section 129, despite issuance of discharge certificate with respect to ‘a matter’ for ‘a time period’, the department is not precluded to issue a show cause notice, for ‘the same matter’, for ‘a subsequent time period’ or for ‘a different matter’ for ‘the same time period’.

The court observed SVLDR is a beneficial scheme and purposive interpretation of its terms is desirable. However, we cannot give an interpretation that would run counter to its objective. The scheme is a one-time measure for liquidation of past disputes under the erstwhile regime and affords an opportunity of voluntary disclosure to non-compliant taxpayers. The declarants are thus expected to come clean in order to take its benefit.

“We cannot construe admitted tax liability to be ‘matter’ and the remainder dues as per show-cause notice to be a ‘separate matter’, especially since the investigation was still on- going on the relevant date. Settlement under the SVLDRS scheme with respect to the Service Tax due, with continuation of parallel proceeding for the remainder or differential amount by way of adjudication of the show cause notice, would also not result in resolution of the legacy dispute, which is the predominant aim of the scheme,” the court said.