Win Power Engineering (P) Ltd. Vs Designated Committee (Madras High Court)
Self-assessment of tax liability during Audit before June 30, 2019 can be consider as Quantification’ under SVLDR Scheme, 2019
The Hon’ble Madras High Court (“the High Court”) in the case of M/s. Win Power Engineering Pvt. Ltd. v. The Designated Committee (W.P. No. 11785 of 2020) dated November 30, 2022 held that benefit under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (“the SVLDR Scheme”) could not be denied on the ground that the quantification required to be done under the SVLDR Scheme is actually the self-assessment done during the duration of Audit.
Facts:
M/s. Win Power Engineering Pvt. Ltd. (“the Petitioner”) filed the Writ Petition before the Hon’ble High Court against the rejection order passed by the Designated Committee (“the Respondent”) in respect of the application filed by the Petitioner under the SVLDR Scheme.
At this juncture, it is important to understand the SVLDR Scheme and its structure. The SVLDR Scheme was brought into force by the Finance Act, 2019 with effect from September 01, 2019, with the objective of reducing litigation and disputes relating to legacy taxes namely, Central Excise and Service Tax so that taxpayers could focus on GST. The SVLDRS Scheme provided taxpayers relief in payment of disputed tax amounts ranging from 70% (of the tax amount) to 40%. It also provided for full waiver of interest and penalty.
Under the SVLDR Scheme, taxpayers must declare an amount of duty payable in a written communication. The said process is termed as ‘quantification’ under Section 121 (r) of the SVLDR Scheme.
In terms of Section 123 (c) of the SVLDR Scheme, the quantification of amount must be done on or before June 30, 2019 (“the Last Date”) in case, where any enquiry or investigation or audit is pending against the taxpayer who wish to seek the benefit of the SVLDR Scheme.
The dispute resolution and amnesty granted is subject to conditions mentioned under Section 125 of the SVLDR Scheme.
In the present case, the tax authorities commenced the audit of the Petitioner for the period of April 2015 to June 2017 on September 25, 2018. During the Audit, the Petitioner, on its own, by written communication dated October 24, 2018, expressed the liability of services tax dues amounting to Rs. 1,98,86,089/- for the period of April 2017 to June 2017.
Pursuant to the Audit, the Commissioner of GST and Central Excise (“the Authority”) issued a demand cum Show Cause Notice (“the SCN”) dated February 26, 2020 and raised a demand of Rs. 2,98,27,857/- for the period of March 2016 to June 2017. However, for the period of April 2017 to June 2017 the demand of Rs. 1,94,86,715/- was raised, which was near to the tax dues which were disclosed by the Petitioner.
During the Audit, the Petitioner filed first application under the SVLDR Scheme, which was rejected on the ground that the quantification was not done prior to the last date. However, the Petitioner contended that since the written communication dated October 24, 2018, had quantified the tax dues prior to June 30, 2019, therefore, rejection of application was not valid on the aforementioned ground. The Petitioner also relied on Circular No. 1071/4/2019-CX.8, dated August 27, 2019 (“the Circular”), issued by the Central Board of Indirect Taxes and Customs (“CBIC”) which clarified that a written communication by the taxpayer would amount to quantification for the purpose of Section 2(r) of the SVLDR Scheme.
The revenue on the other side argued that even if the amount assessed by the Petitioner is to be considered as amount calculated before the last date, such self assessment cannot be termed as quantification because self the assessment of the tax by the Petitioner was only for the period of April 2017 to June 2017, whereas the Audit was for the duration of period from April 2015 to June 2017. Therefore, the tax liability disclosed by the Petitioner is partial and hence cannot be considered as quantification of tax dues.
Hence, the Petitioner filed a Writ Petition before the High Court challenging the order of rejecting the applications under the SVLDR Scheme as mentioned above.
Issue:
Whether the written communication by the Petitioner during the Audit can be considered as a valid quantification under the SVLDR Scheme?
Held:
The High Court held as under:
