Excluding Taxpayer On Basis Of Obvious Errors In Quantum Even When Correct Duty Is Deposited Is Contrary To SVLDR Scheme: Delhi HC
The Delhi High Court has ruled in favor of the Carpet Export Promotion Council (petitioner), stating that excluding a taxpayer merely because there were some obvious and not material errors in the quantum of the duty details filled in the form, despite the correct amount of duty being deposited, goes against the objective of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme).
While noting that the petitioner must have been given an opportunity of being heard before his application to be exempted from paying left over dues as per the SLVDR Scheme was rejected, the Division Bench of Justice Vibhu Bhakru and Justice Amit Mahajan observed that, “excluding a taxpayer merely because there were some obvious and not material errors in the quantum of the duty details filled in the form, although the correct amount of duty was deposited, would run contrary to the object of the SVLDR Scheme.”
Senior Advocate Raman Kapur appeared for the Petitioner, whereas CGSC Vivek Goyal appeared for the Respondents.
In a nutshell, the Petitioner company, set up by the Ministry of Textiles with the object of promoting export of Indian handmade woolen and silk carpets, preferred the present petition impugning the decision of the concerned authority to reject the Petitioner's application under SVLDR Scheme. During audit, an objection was raised regarding wrongful availing of Cenvat Credit on exempted income being the grants-in-aid received from the Ministry of Commerce and the Ministry of Textiles. According to Respondent, the proportionate amount of the Cenvat Credit was required to be reversed. In addition, the Respondents also found that the Petitioner had wrongly availed cesses which were reversed but the interest and penalty remained outstanding. As per the meeting with the Additional Commissioner CGST, it was agreed that if the Petitioner would clear the dues, he would be exempted from interest and penalty. Then came the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, which covered cases like that of the Petitioner retrospectively. The petitioner therefore sought waiver of interest and penalty under the scheme, however, his application was abruptly rejected.
Upon perusal of the submission, the High Court stated that the Petitioner had correctly disclosed that no amount was left to be paid and a minor error that he did not include a duty amount is a curable one and thus, rejection of his application would run contrary to the object of the scheme.
The Bench observed that the legislative intent to enact the SVLDR Scheme was to include all taxpayers for offloading the baggage of disputes, and all taxpayers, except those which were specifically excluded, were entitled to avail the benefit of the said Scheme.
The Bench also stated that SVLDR Scheme also covered cases where no disputes were pending and enabled the taxpayers to voluntarily pay taxes and avail amnesty under the SVLDR Scheme.
Emphasizing that in terms of the SVLDR Scheme, the Petitioner was entitled to waiver of the interest and penalty on deposit of the tax dues, the Bench found that the Petitioner had deposited the tax dues prior to Mar 31, 2019, and there was no amount payable after the tax relief.
Referring to the decision of Thought Blurb v. Union of India & Ors [2020 SCC OnLine Bom 11719], the Bench elucidated that the Petitioner's application had been rejected in violation of the principles of natural justice.
Hence, while disposing of the petition, the High Court directed the designated authority to proceed with the Petitioner’s declaration in accordance with the scheme.
Cause Title: Carpet Export Promotion Council v. Union of India and Ors. [Neutral Citation: 2023: DHC: 3549-DB]
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