HC direct granting of SVLDR benefit subject to Payment with Interest

Veera Mathiamman Foundations (P) Ltd. Vs Designated Committee (Madras High Court)

Introduction: In a pivotal judgment, the Madras High Court extended a helping hand to Veera Mathiamman Foundations (P) Ltd., grappling with financial difficulties, by directing the Designated Committee to reconsider the matter under the Sabka Vishwas Legacy Disputes Resolution Scheme, 2019 (SVLDRS) and issue a discharge certificate accordingly. This decision underscores the judiciary’s recognition of the economic challenges faced by entities and their willingness to provide equitable relief under statutory schemes designed for dispute resolution.

Detailed Analysis: Veera Mathiamman Foundations (P) Ltd. faced a critical challenge when it could not adhere to the payment schedule under the SVLDRS due to financial constraints. Having availed of the scheme for assessment years 2014-2015 to 2017-2018, the company was in a precarious position when it missed the extended payment deadline of 30th June 2020, leading to its exclusion from the SVLDRS benefits. The matter escalated to the Madras High Court, seeking redressal and the issuance of a discharge certificate as initially anticipated under the scheme.

The court, in its deliberation, referenced a Division Bench judgment that had previously extended the benefit of the scheme to another appellant, subject to the payment of accrued interest. The High Court found merit in the petitioner’s argument for a similar concession, acknowledging the principle of parity and the genuine financial hardship faced by the petitioner. Consequently, the court set aside the impugned order and remanded the matter for reconsideration, subject to the payment of interest at 15% per annum for the delayed period.

Conclusion: This judgment by the Madras High Court is a significant milestone in the application of the SVLDRS, particularly for entities struggling with financial hardships. It not only emphasizes the scheme’s intent to provide a one-time resolution opportunity for legacy disputes but also illustrates the judiciary’s role in ensuring that the scheme’s objectives are met without causing undue strain on the taxpayers. The decision to allow the payment of interest as a remedial measure for delayed settlement under the scheme reflects a balanced approach, ensuring compliance while offering a lifeline to those in need. Veera Mathiamman Foundations (P) Ltd.’s case stands as a testament to the potential for leniency within the framework of law, offering hope to similar entities facing financial challenges.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

The petitioner challenges an order dated 31.01.2022 and seeks a consequential direction to the 1^st respondent to issue a discharge certificate in Form SVLDRS-4.

2. In respect of assessment years 2014-2015, 2015-2016, 2016-2017 and 2017-2018, the petitioner availed of the Sabka Vishwas Legacy Disputes Resolution Scheme, 2019 (SVLDRS) and filed Form SVLDRS-1 on 31.12.2019. Upon scrutiny thereof, the Designated Committee issued Form SVLDRS-3 confirming the declared liability of the petitioner. Consequently, the petitioner was required to make the payment within 30 days from the date of issue of SVLDRS-3. The said 30 day period was extended for all eligible assessees up to 30.06.2020. The petitioner asserts that he could not make such payment on account of financial hardship. Eventually, the payment was made on 09.06.2021. Since payment was made beyond 30.06.2020, the petitioner’s case was treated as outside the scope of SVLDRS and the impugned order came to be issued.

3. Learned counsel for the petitioner submits that the petitioner could not make payment on or before 30.06.2020 entirely on account of financial hardship. By relying upon the Division Bench judgment of this Court in N.Sundararajan (Former Partner) v. Union of India and others, W.A.Nos.2097 & 2098 of 2021, judgment dated 26.08.2021, learned counsel submits that the Division Bench permitted the appellant therein to remit tax along with interest on or before 17.09.2021. Since the petitioner herein remitted the tax on 09.06.2021, learned counsel submits that the petitioner should be extended a similar benefit.

4. Mr. Rajnish Pathiyil, learned senior standing counsel, made submissions in response. While admitting that no appeal was filed against the judgment of the Division Bench, learned senior standing counsel submits that the facts of the case before the Division Bench are distinguishable from the facts of the present case. In particular, he points out that paragraph 5 of the judgment of the Division Bench refers to the fact that the writ petitions were filed on 29.09.2020 and 30.09.2020, whereas he submits that the petitioner herein approached this Court on 31.03.2022.

5. The date of filing of the writ petition is only relevant for purposes of determining whether discretionary jurisdiction should be denied on account of laches. In principle, the Division Bench of this Court concluded that the benefit of the SVLDRS should be extended subject to payment of amounts due on or before 17.09.2021 along with interest thereon at 15% from 01.07.2020 till the date of remittance. The petitioner herein is entitled to parity of treatment. Paragraphs 5 & 6 of the Division Bench judgment are as under:

“5. Thus, in terms of the above Act, the time limit prescribed under Chapter- V of the Finance Act for completion of certain actions as stipulated under Chapter-V, stood extended till 30^th September, 2020, and Section 6 of the Act deals with two situations, namely, period for completion and period of compliance. Therefore, the said provision has to be given a liberal interpretation and if we do so, the time limit for payment of taxes can be construed to be a time limit for completion of particular act, as stipulated under Chapter-V of the Finance Act. In fact, the said Act has also made certain amendments in the Direct Tax Vivad Se Vishwas Act, 2020, in Chapter-IV. Thus, the intention of the legislation is to extend the time limit for compliance or completion of certain acts under the Statute, which have been listed therein, and the Direct Tax Vivad Se Vishwas Act, 2020, has also been amended by extending the time limit. Since Chapter- V of the Act, which deals with relaxation of time limit under Indirect Tax Laws, which stipulates four Tax Laws, which includes Finance Act, 1994, we will be well justified in holding that the time limit for completion of the payment of taxes, as quantified in Form-3, also stood extended till 30.09.2020. If that is the date on which the appellants were required to complete the payment, then the appellant’s conduct in approaching this Court by filing the writ petitions on 29.09.2020 and 30.09.2020 can very well be reckoned to be a conduct, which will not be hit by delay and laches.

6. Therefore, we are of the view that the appellant should be permitted to remit the taxes, as quantified in the Form-3 declaration issued to the appellant, subject to of course by also paying interest @ 15% from 01.07.2020 till the date of remittance, which we shall fix as on or before 17.09.2021. If the appellants comply with the said condition, then the appropriate authority under the SVLDR Scheme shall consider the appellant’s application and proceed in accordance with the provisions of the said Scheme. ”

6. By following the judgment of the Division Bench, this writ petition is disposed of with the following directions:

(i) The order impugned herein is quashed and the matter is remanded to the 1^st respondent for reconsideration.

(ii) Subject to the petitioner paying interest at 15% per annum on the amount paid under the SVLDRS for the period running from 01.07.2020 to 2021, the 1^st respondent is directed to treat the petitioner’s case as one the SVLDRS and issue a discharge certificate on that basis. There will be no order as to costs. Consequently, connected miscellaneous petition is closed.