The Telangana High Court restrained the authority from declaring Company as a defaulter under the SVLDR Scheme and restrained the authority from taking any coercive action against the Directors.
The Petitioner filed an application under the Scheme and the petitioner’s application for settlement of dues under the SVLDRS was accepted by the Designated Committee of the Tax Department. The Committee reviewed the petitioner’s application and issued its approval vide Form No.SVLDRS-3 and the petitioner was asked to remit an amount of Rs.18,91,37,548/- as against the original liability of Rs.59,20,19,079/-.
As per the SVLDRS, payment of the amount mentioned in Form No.SVLDRS-3 should be made as per timelines prescribed (and extended from time to time), failing which the order of the Designated Committee would be deemed to be automatically canceled. The final date for making the above payment was 30, June 2020.
The Petitioner contended that because of the COVID-19 Pandemic situation and its own financial difficulties, the only way the petitioner could discharge its liability as per Form No.SVLDRS-3 was by utilizing the Income-tax refund of Rs.34,65,92,300/- which it was held entitled to.
However, on account of the Garnishee Notice issued by the GST authorities to C.I.T. (C.P.C.), Bengaluru and Principal C.I.T. (Central), Hyderabad on 24, January 2019 and March 22, 2019, to remit Rs.59,02,23,755/- towards Service tax liability of the petitioner, the Income Tax Department did not pay to the petitioner the refund due to it for the Assessment Year 2018-19.
The division bench of Justice M.S.Ramachandra Rao and T.Vinod Kumar held that the Garnishee notice was issued to recover the Service Tax dues payable by the petitioner, and under the SVLDRS, the quantum of Service Tax dues of the petitioner was admittedly reduced from Rs.59,20,19,079/- to Rs.18,91,37,548/-; and any modification of the liability for the benefit of the assessee, ought to result in a modified Garnishee order, which would have enabled the petitioner to utilize the Income Tax refund to pay the reduced Service Tax liability as per SVLDRS.
The court held that the petitioner shall be deemed to have made payment of Rs.18,91,37,548/- determined under Form No.SVLDRS-3 before June 30, 2020.
The court restrained the respondents from declaring that the petitioner had committed a default under the SVLDRS Scheme 2019 and also restrained from taking any coercive action against the Directors, officials of the petitioner, or against the petitioner.
The court directed the respondents to release to the petitioner the amount of Rs.12,01,23,118/- out of the Income Tax refund amount of Rs.30,92,60,666/- payable to it within four (4) weeks.
The court directed the Dy. Commissioner of Income Tax to pay petitioner interest on the sum of Rs.30,92,60,666/- from 21.5.2020 ( the date of expiry of the 3 month period as per Section 243 (1) (b) of the Income Tax Act,1961) till 24.11.2020 at 15% per annum within four weeks.
“The respondents shall also pay petitioner interest at 15% per annum on Rs.12,01,23,118/- from 25.11.2020 till the date of payment within four weeks; costs of Rs.10,000/-shall also be paid by respondents to the petitioner within four weeks,” the bench ordered.
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