Case Law Details
Cradle Runways Pvt. Ltd. Vs Union of India (Bombay High Court)
The Bombay High Court recently ruled in Cradle Runways Pvt. Ltd. vs Union of India, addressing the denial of benefits under the Sabka Vishwas (Legal Dispute Resolution) Scheme, 2019 (SVLDRS). The petitioner, engaged in fabrication services, filed a declaration under the scheme for settling disputed service tax liabilities. The payment deadline under the scheme was extended to June 30, 2020, due to the COVID-19 pandemic. However, the petitioner paid on July 1, 2020, based on a challan indicating that date as valid, leading to the Revenue’s refusal to issue Form SVLDRS-4.
The High Court quashed the denial, emphasizing the scheme’s objective to resolve past disputes and noting the absence of malafide intent in the delay. The court held that procedural irregularities, such as a minor delay caused by technical glitches, should not obstruct substantive justice. It clarified that payment through either an SVLDRS challan or a service tax challan was acceptable as long as the Revenue received the funds. The court distinguished this case from Yashi Construction, where delays were due to financial constraints, and relied on precedents like Innovative Antares and Arjun Rampal.
Ultimately, the court directed the Revenue to issue Form SVLDRS-4 within four weeks, reaffirming that the scheme’s purpose and fairness must take precedence over technicalities.
The Hon’ble Bombay High Court allows the petition and directs the department to issue Form SVLDRS-4.
The matter was argued by Ld. Counsel Bharat Raichandani
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule made returnable forthwith. By consent of the parties, heard finally.
2. By this petition under Article 226 of the Constitution of India, Petitioner challenges communication dated 6th September 2021 issued by Respondent No.5 directing Petitioner to pay whole of service tax liability along with interest and penalty. According to Respondent No.5, Petitioner is not entitled to the benefit of Sabka Vishwas (Legal Dispute Resoution) Scheme 2019 (SVLDRS) because tax dues as per the said scheme was paid on 1st July 2020 which is after due date of 30th June, 2020.
3. Petitioner is engaged in business of providing solutions for accessing all kinds of facades which involves designing, fabrication, procurement, installation, etc.
4. On 22nd May 2018, Respondents initiated an enquiry against Petitioner alleging short payment of service tax amounting to Rs.32,05,890/- tax for the period April 2017 to June 2017.
5. On 31st December 2019, Petitioner filed Form SVLDRS 1 for availing the benefit of the SVLDR Scheme and declared 32,05,890/- as amount of tax dues. On 22nd February 2020, Respondents issued Form SVLDRS directing Petitioner to make payment of Rs.12,82,356/- to avail the benefit of the scheme. Petitioner generated challan on the portal for making payment which challan expired on 31st March 2020 but Petitioner did not make any payment. Meanwhile, payment to be made under SVLDR Scheme was extended to 30th June 2020 on account of global covid pandemic. Petitioner, therefore, regenerated the challan for making the payment. The challan so generated stated that it would expire on 1st July 2020 at 12:00 a.m. Petitioner made the payment of Rs.12,82,356/- pursuant to the said challan on 1st July 2020 at around 01:00 p.m. However, Respondents refused to issue final certificate in form SVLDRS 4 on the ground that the payment has been made after 30th June 2020 and, hence, Petitioner is not eligible for the benefit of the Scheme. Consequently, Respondents called upon Petitioner to make the payment of service tax liability along with interest and penalty. It is on this backdrop that Petitioner has challenged the rejection of SVLDR application and action of Respondents in calling upon Petitioner to pay the demand along with interest and penalty.
6. Petitioner submits that in paragraph 4.20 of the petition, they have averred that on account of technical glitches on the portal, they could not make the payment before 30 June 2020. Petitioner further submitted that they had addressed a letter dated 11th September 2021 to Respondents bringing to their notice the technical difficulties faced by them in making the However, Respondents did not reply to the said letter. Petitioner submits that there is no benefit accruing to them in delaying the payment by one day and, therefore, no malafide can be attributed. Petitioner, inter alia, has relied upon following decisions in support of its submissions that the declaration made under SVLDR Scheme be accepted and Respondents be directed to issue final certificate in SVLDRS 4 Form. Those are:-
(i) Innovative Antares Union of India & Ors.1,
(ii) Arjun Rampal Union of India & Ors.2,
(iii) Sitec Labs Vs. Union of India3,
(iv) Reliance Infrastructure Union of India4.
7. Per contra, Respondents have opposed the petition on the ground that admittedly there is a delay of one day in making the payment by Petitioner and, therefore, this Court should not entertain the present Respondents have relied upon the decision of the Supreme Court in M/s. Yashi Construction Vs. Union of India & Ors.5, in support of this submission and decision of Madhya Pradesh High Court in M/s. Dinesh Kumar Yadav Vs. Commissioner CGST & Ors.6 Respondents have further submitted that the challan under which payment is made by Petitioner is not a challan under SVLDR Scheme but a service tax challan and, therefore, Petitioner could not contend that the payment has been made under SVLDR Scheme. Respondents have, therefore, prayed for dismissal of the petition.
8. There is no dispute that Petitioner is otherwise eligible to make a declaration under SVLDR The only issue which arises for our consideration is whether payment made on 1st July 2020 can be said to have been made as per SVLDR Scheme.
9. The objective of SVLDR Scheme has been culled out by the Co-ordinate Bench of this Court in the case of Cap gemini Technology Services India Limited Vs. Union of India7, wherein the High Court has observed as under:-
“From the above, we find that as a one time measure for liquidation of past disputes of Central Excise and Service Tax, the SVLDR Scheme has been issued by the Central Government. The SVLDR Scheme has also been issued to ensure disclosure of unpaid taxes by an eligible person. This appears to have been necessitated as the levy of Central Excise and Service Tax has now been subsumed in the new GST Regime. From a reading of the statement of object and reasons, it is quite evident that the scheme conceived as a one time measure, has the twin objectives of liquidation of past disputes pertaining to central excise and service tax on the one hand and disclosure of unpaid taxes on the other hand. Both are equally important: amicable resolution of tax disputes and interest of revenue. As an incentive, those making the declaration and paying the declared tax verified as determined in terms of the scheme would be entitled to certain benefits in the form waiver of interest, fine, penalty and immunity from prosecution. This is the broad picture the concerned authorities are to keep in mind while dealing with a claim under the scheme.”
10.The payment whether made under a challan generated under service tax or under SVLDR Scheme would not make any difference, inasmuch as, admittedly in both the cases, it is only the correct challan which has not been filled, but the payment has admittedly been received in the coffers of Respondents’, i.e., Union of India. It is settled position that procedural irregularities cannot come in the way of substantial Looking at the objective for which the SVLDR Scheme was introduced and the fact that there was a technical glitch in making the payment cannot be ignored. Furthermore, Petitioner could not be said to have had any malafide intention in delaying the payment by one day, since the challan generated stated the expiry date as 1st July 2020. Petitioner was, therefore, under a bonafide belief that he could make the payment on 1st July 2020 which admittedly he has paid on said date.
11. In our view, therefore, on the facts of the present case denying the benefit of SVLDR Scheme would not only be contrary to the objective of the Scheme, but also would be injustice to Petitioner declarant who otherwise is eligible. The decision relied upon by Respondents in Yashi Construction (supra) is not applicable to the facts of the present case, since in the case before the Supreme Court, the payment was not made on account of financial constrain, whereas in the case before us the payment has been made but on account of technical glitch could not be made on 30th June 2020, but was made on 1st July 2020. Respondents have also not refunded the said amount till today thereby accepting the payment.
12. Petitioner is justified in placing reliance on decisions of Co- ordinate Bench of this Court in the case of Innovative Antares (supra), Arjun Rampal (supra) and Sitec Labs Ltd. (supra), wherein on similar facts and after considering the decision of Supreme Court in M/s. Yashi Constructions (supra) directed revenue to accept SVLDRS declaration when payment could not be made due to technical glitch before 30 June 2020 in contrast to decision of Single Judge of Madhya Pradesh High Court in M/s. Dinesh Kumar Yadav (supra). We are bound by the decisions of the Co-ordinate Bench of this Court.
13. In the light of above, we pass the following order:-
(i) Communications dated 6th September 2021 and 27th September 2021 are quashed and set aside.
(ii) Respondents are directed to issue Form SVLDRS 4 to Petitioner within a period of four weeks from the date of uploading of the present order.
(iii) Petition disposed.
Notes:
1 2023-TIOL-160-HC-MUM-ST
2 2023-TIOL-672-HC-MUM-ST
3 Writ Petition 828 of 2021
4 2023 (69) S.T.L. 25 (Bom.)
4 SLP/2070/2022
5 WP/6488/2022 4th November 2022
6 (2020) 121 com 107 (Bom.)
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