Introduction: In a recent judgment, the Supreme Court of India addressed the issue of whether criminal charges related to delayed payment of self-assessment tax should persist despite the approval of an application under the Direct Tax Vivad Se Vishwas Act, 2020. The case, PCIT vs. Macrotech Developers Ltd., raised significant questions regarding the interplay between the Vivad Se Vishwas Scheme and ongoing criminal prosecutions. This article provides an in-depth analysis of the Supreme Court’s ruling on this matter.
Background of the Case: The case pertained to the delayed payment of self-assessment tax by Macrotech Developers Ltd. The company had applied for relief under the Direct Tax Vivad Se Vishwas Act, 2020, seeking resolution for the additions made in the assessment order. Simultaneously, criminal prosecution proceedings were initiated against the company for the delayed tax payment.
Supreme Court’s Analysis: The Supreme Court, in its judgment, declined to interfere with the impugned judgment. The Court noted that the criminal prosecution was based on the issue of delayed self-assessment tax payment, which was separate and distinct from the matters covered by the Vivad Se Vishwas Scheme. Even if the application under the Act had been accepted, the criminal prosecution would have continued.
Additionally, the Court was informed that the prosecution case had been dismissed. However, the Court emphasized that the dismissal of the prosecution case did not affect the objective and purpose of the Vivad Se Vishwas Act.
Key Takeaways from the Ruling
1. Separate Issues: The Supreme Court clarified that criminal prosecution related to tax matters is distinct from the resolution of tax disputes under the Vivad Se Vishwas Scheme. The acceptance of a Vivad Se Vishwas application does not automatically affect ongoing criminal proceedings.
2. Objective of the Act: The Court underscored that the objective and purpose of the Vivad Se Vishwas Act should not be compromised. The Act aims to provide a framework for resolving tax disputes and reducing litigation.
3. Dismissal of Prosecution: While the prosecution case may have been dismissed, the Court emphasized that this development may not be material or relevant in the context of the Vivad Se Vishwas Scheme.
Conclusion: The Supreme Court’s judgment in the case of PCIT vs. Macrotech Developers Ltd. reaffirms the separation between criminal prosecution for delayed tax payment and the Vivad Se Vishwas Scheme’s objectives. The ruling underscores that the acceptance of a Vivad Se Vishwas application does not automatically impact ongoing criminal charges. This decision provides clarity on the coexistence of tax dispute resolution mechanisms and criminal proceedings in tax-related matters.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
We are not inclined to interfere with the impugned judgment as the criminal prosecution relates to delayed payment of self-assessment tax and the application under the Direct Tax Vivad Se Vishwas Act, 20201 relates to the additions made in the assessment order. Criminal prosecution was on a separate and different issue, and would have continued, even if the application under the Act was accepted. We are informed that the prosecution case has been dismissed. That may not be material and relevant in terms of the objective and purpose of the Act.
Recording the aforesaid, the special leave petition is dismissed.
Pending application(s), if any, shall stand disposed of.