Big Win! HC Allows SVLDRS Claim for Pre-June 2019 Dues

The petitioner applied to the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS), declaring a quantified service tax liability of Rs. 1.21 crore based on a statement recorded during a summons on 4 January 2019. The application was rejected on the ground that tax dues were not “quantified” as on 30 June 2019, as per a DGGI communication dated 3 February 2020. The petitioner challenged this rejection, arguing that the quantification requirement under Section 2(r) of the Finance (No. 2) Act, 2019, was satisfied and that CBIC Circular dated 27 August 2019 and FAQs dated 24 December 2019 supported their claim. The petitioner also contended that the rejection failed to consider the departmental materials, including the recorded admission of tax dues and the reduced final liability assessed later at Rs. 1.16 crore.

Issue raised: Whether the petitioner’s declaration under SVLDRS could be rejected on the ground that tax dues were not quantified as on 30 June 2019, despite earlier admissions of liability during investigation and clarifications in CBIC Circulars and FAQs.

HC’s Decision: According to the Hon’ble High Court, the petitioner was eligible under the SVLDRS. The court noted that tax dues had been quantified before 30 June 2019 through the director’s recorded statement and investigation proceedings. It ruled that this quantification met the requirement under Section 2(r), as clarified by the CBIC Circular dated 27 August 2019 and FAQs dated 24 December 2019. As a result, the rejection was quashed, and the matter was sent back for a fresh calculation of the dues. The court directed that if the petitioner pays the revised amount, including 6% simple interest from 1 February 2020, the show cause notice will be quashed.