Technical glitch in Payment: HC directs department to issue Form SVLDRS-4

Sitec Labs Limited Vs Union of India (Bombay High Court)

Technical glitch in Payment: HC allows declarant to make payment and avail benefit of SVLDR scheme

In a significant legal development, the Bombay High Court ruled on a case involving Sitec Labs Limited versus Union of India, concerning the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS). The court’s decision centered around a technical issue hindering the petitioner from completing the scheme’s payment requirements within the stipulated timeframe.

Sitec Labs, engaged in technical testing services, faced a demand notice following an Order-In-Original (O-I-O) in 2017. The company opted for the SVLDR scheme in 2019 to resolve the dispute, subsequently withdrawing their writ petition challenging the O-I-O.

The crux of the case revolved around Form SVLDRS-3 issued to Sitec Labs on 25th February 2020, demanding payment of Rs. 25,68,362.50 within 30 days. Despite generating a payment challan promptly on 26th March 2020, Sitec Labs encountered a technical glitch preventing actual payment through the portal. This issue led to an extension until 30th June 2020, granted by legislative amendment.

However, despite efforts to rectify the situation, Sitec Labs received communication from the authorities on 9th November 2020, stating their application couldn’t proceed due to non-payment. The petitioner contended that the glitch was beyond their control, emphasizing their compliance efforts and the scheme’s objective to reduce litigation.

In response, the respondents argued against granting leeway, citing precedent and legal provisions requiring timely payments under the SVLDR scheme. They referenced decisions from higher courts and previous cases to support their stance.

Upon review, the court acknowledged the technical challenges faced by Sitec Labs, citing documented instances and administrative acknowledgments of systemic issues affecting various declarants. Notably, the court highlighted a specific affidavit-in-reply from the respondents affirming Sitec Labs’ willingness to fulfill their obligation.

Drawing on similar cases and distinguishing relevant precedents where technical issues led to non-payment, the court found merit in Sitec Labs’ plea. They invoked principles of fairness and non-discrimination under Article 14 of the Constitution, ensuring equitable treatment for all affected parties.

Ultimately, the Bombay High Court ruled in favor of Sitec Labs, directing the authorities to accept the overdue payment and issue the SVLDRS-4 certificate promptly. This decision underscores judicial sensitivity to systemic challenges and upholds the scheme’s intent to resolve tax disputes expeditiously.

The Sitec Labs Limited vs. Union of India case before the Bombay High Court exemplifies the judiciary’s role in balancing legal obligations with practical challenges faced by taxpayers. By allowing relief despite a technical glitch, the court reinforces the SVLDR scheme’s objective of minimizing litigation and promoting resolution through conciliation.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1. Rule made returnable forthwith. By consent of the parties taken up for final hearing at the admission stage.

2. By this Petition under Article 226 of the Constitution of India, the Petitioner challenges letters dated 9^th November 2020 and ₅th January 2021 issued by Respondent No.4-Deputy Commissioner, CGST & Central Excise, Belapur, Navi Mumbai whereby Respondent No.4 has informed the Petitioner that the application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (“SVLDRS”) cannot be processed since the Petitioner has failed to make the payment of the amount mentioned in SVLDRS-3 form and, therefore, the Petitioner is directed to make the payment of the demand raised vide Order-In­-Original (“O-I-O”) dated 9^th February 2017 and issued on 21^st June

3. The Petitioner is engaged in the business of providing technical testing and analysis certification services. Pursuant to the show cause notice issued in the year 2015, an O-I-O came to be passed on 9^th February 2017 raising a demand notice of Rs.64,20,907/-. The said O-I-O was challenged before this Court in Writ Petition No.1530 of 2019.

4. While the aforesaid writ petition was pending, Respondent 1 introduced the SVLDRS. The object of the scheme was to give an opportunity to the assessees to pay up the demand and reduce litigation. On 31^st December 2019, the Petitioner filed a declaration in form SVLDRS-1 to avail the benefit of the scheme. As a pre-condition for availing the benefit of the scheme, the Petitioner also withdrew the above referred Writ Petition No.1530 of 2019.

5. On 25^th February 2020, Respondent No.3 issued Form SVLDRS-3 informing the Petitioner to make payment of 25,68,362.50/- within 30 days to avail the benefit of the scheme. On 26^th March 2020, Petitioner generated challan for making the said payment and after the said challan was generated on the portal of the Respondents, the Petitioner was directed to another portal for making the payment. However, a technical error appeared and, therefore, Petitioner was not able to make the payment. The date for making the payment was thereafter extended by the Respondents upto 30^th June 2020 by the Taxation and Other Laws (Relaxation of Amendment of Certain Provisions) Act, 2020. The Petitioner informed the Respondents about the said error. On 9^th November 2020, Respondent No.3 informed the Petitioner that since they have not made payment, their application cannot be processed further.

6. It is on the aforesaid backdrop that the Petitioner is before us today.

7. The Petitioner submits that it had generated the challan on the portal within 30 days of the issue of Form SVLDRS-3 and further clicked the “make payment” option, but an error was shown on the screen and, therefore, they could not make the payment within 30 days from the date of issue of Form SVLDRS-3. The Petitioner relied upon averments made in paragraphs 18 to 28 of the petition to submit that they had brought this error due to technical glitch to the notice of the The Petitioner submits that since non-payment cannot be attributed to them on account of technical glitch on the portal of the Respondents, the Petitioner cannot be denied the benefit of the SVLDR scheme more so looking at the objective for which the said scheme was introduced, that is, to reduce the litigation. The Petitioner further submitted that on similar facts the Co-ordinate Bench of this Court in the case of Jai Sai Ram Mech & Tech India P. Ltd. vs. Union of India1and Innovative Antares Pvt. Ltd. vs. Union of India²has granted relief to the applicants. The Petitioner, therefore, prayed that the Respondents be directed to accept payment of Rs.25,68,362.50/- to be made by the Petitioner as per SVLDRS-3 and to issue the SVLDRS-4 certificate.

8. Per contra, the counsel for the Respondents submitted that since the payment has not been made within prescribed time the Petitioner cannot avail the benefit of the SVLDR scheme. To support their stand, the Respondents further relied upon the decision of the Supreme Court in the case of M/s. Yashi Constructions vs. Union of India & Ors.³ and the decision of Coordinate Bench of this Court in the case of Hakim Abbas Lakdawala vs. Union of India & Ors.⁴ and prayed for dismissal of the petition.

9. We have heard the learned counsel for the Petitioner and the learned counsel for the Respondents and with their assistance have perused the documents annexed to the petition.

10. Admittedly, the SVLDRS-3 was issued by Respondent No.3 on 25^th February 2020 calling upon the Petitioner to make payment of Rs.25,68,362.50/- within 30 days. The Petitioner generated a challan on the portal of the Respondents on 26^th March 2020 which is within 30 days and again on 30^th June 2020, but on account of technical glitch on the portal of the Respondents, the Petitioner could not make the payment. The averments to this effect has been made by the Petitioner in paragraphs 18 to 28 of the petition and admittedly same has not been denied by the Respondents in their reply. Furthermore in a letter issued by Ministry of Finance dated 14^th July 2020 addressed to the Principal Chief Commissioner, the Respondents have admitted that due to many difficulties various declarants could not make the payment and avail the benefit of the scheme. Judicial note of the said technical glitches is also taken by the Co-ordinate Bench of this Court in the case of Jai Sai Ram Mech & Tech India P. Ltd. (supra) and Innovative Antares Pvt. Ltd. (supra).

11. It is also important to note paragraph 22 of the Affidavit-in-­Reply of the Respondent No.4 affirmed on 29^th October 2021 which reads thus:-

”22. With reference to statements made in Paragraph No. 33 D2, I say that the information was sought verbally and the report was sent by this office that the Petitioner is willing to make the payment. The survey regarding details of declarants under SVLDRS Scheme who was willing to pay dues as per SVLDRS-3 after due date 30.06.2020 has been conducted vide Circular F.No.267/65/2020-CX-8 dated 14.07.2020 issued by Respondent No.2. The analysis after the receipt of data has to be done on the higher level and if any decision would be taken in this matter, the same would be applicable to all taxpayers of the taxable territory irrespective of whether they are major or small declarants. So, there is no point of violation of Article 14 in this matter as benefits if any would have been extended to all declarants, who could not made the payment by 30.06.2020.”

[emphasis supplied]

12. The Respondents having not rebutted the averments made by the Petitioner in paragraphs 18 to 28 which states that on account of technical glitch, the Petitioner could not make the payment and a grievance was raised by the Petitioner with the Respondents on this count and the admitted fact, as stated in paragraph 22 of the affidavit­-in-reply that Petitioner is willing to make payment, in our view the Petitioner should not be denied the benefit of the SVLDRS when no fault can be attributed to the Petitioner.

13. The Petitioner is justified in relying upon the decision of the Co-ordinate Bench of this Court in the case of Jai Sai Ram Mech & Tech India P. Ltd. (supra) and Innovative Antares Pvt. Ltd. (supra) wherein on identical facts situation this Court had permitted declarant to make the payment and avail the benefit of SVLDR scheme. We do not find any reason for taking a different view.

14. The decision of the Supreme Court relied upon by the Respondents in the case of M/s. Yashi Constructions (supra) has been considered by the Co-ordinate Bench of this Court in the case of Jai Sai Ram Mech & Tech India P. Ltd. (supra). The decision of the Supreme Court is further distinguishable since the facts before the Supreme Court was not a case where the payment could not be made on account of technical glitch on the portal of the Respondents. Therefore, the said decision is distinguishable on facts. Similarly the decision in the case of Hakim Abbas Lakdawala (supra) was a case where the declarant could not make payment due to financial constraints and, therefore, this Court did not permit the declarant to avail the benefit of the scheme. In the case at hand as noted above, the payment could not be made on account of technical glitch on the portal of the Respondents. Therefore, even this decision cannot be of any assistance to the Respondents. In view of above, we pass the following order:-

O R D E R

(i) Rule is made absolute in terms of the prayer clauses (a) and

(c) which reads thus:-

”(a) that this Hon’ble Court be pleased to issue a Writ of Certiorari or a Writ of Mandamus or any other Writ, order or direction under Article 226 of the Constitution of India to quash and set aside letter dated 9.11.2020 (Exhibit ‘A) issued by the office of Respondent No. 4 through the Superintendent, CGST & Central Excise, Range-V, Division-IV, Belapur and letter dated 5.1.2021 issued by the Respondent No. 4;

(c) that this Hon’ble Court be pleased to direct the Respondents to allow the Petitioner to make payment either in the system or offline against Form SVLDRS-3 dated 25.2.2020 issued by Respondent No. 3 and also direct Respondents to issue discharge certificate in Form SVLDRS-4 under the Scheme;”

(ii) The Respondents are directed to accept the payment of 25,68,362.50/- to be made by the Petitioner within four weeks from the date of uploading of this order.

(iii) Thereafter Respondents are directed to issue SVLDRS-4 certificate within a period of four weeks from the date of the Petitioner having made the payment.

15. Rule is made absolute in above terms. No order as to costs.

Notes:

¹ 2024 (4) TMI 236

² 2023 (74) G.S.T.L. 226 (Bom.)

³ Special Leave to Appeal (C) No.2070 of 2022

⁴ Writ Petition No.780 of 2022