Bombay HC: SVLDRS Declaration Must Be Treated Under Litigation Category When Duty Stands Unfinalised

M/s Unique Enterprises approached the Bombay High Court challenging Form SVLDRS-3 issued by the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Committee had treated the petitioner’s case as falling under the “Arrears” category, quantifying tax dues at Rs. 12,93,408 after applying 60% relief. The petitioner, however, argued that the matter fell squarely under the “Litigation” category since the 1993 show cause notice remained pending for re-quantification pursuant to multiple remand orders. The petitioner had already deposited Rs. 10 lakh as a pre-deposit in 1998, which the department itself had recognised while issuing SVLDRS-2 earlier.

The dispute arose from an old excise demand of Rs. 39,53,517 along with penalties. Over the years, the Tribunal and the High Court had repeatedly remanded the matter for de novo quantification. In 2014, the Tribunal dropped a portion of the demand, leaving the balance to be determined. Since this re-quantification remained unresolved as of 30 June 2019, the petitioner treated the case as ongoing litigation and filed its SVLDRS-1 accordingly. Still, the Committee shifted the case to the Arrears category, leading the petitioner to seek judicial review.

Main Issue: Whether the petitioner’s SVLDRS declaration should be treated under the Litigation category under Section 124(1)(a) or under the Arrears category under Section 124(1)(c) of the Finance Act, 2019.

HC Decided: The High Court held that the petitioner’s case clearly fell under the Litigation category because the duty demand had not attained finality by 30 June 2019. The Tribunal’s 2010 remand order had revived the proceedings back to the stage of the show cause notice, and even though part of the demand was dropped in 2014, the remaining portion was still pending re-quantification. The Court observed that such a pending adjudication cannot be treated as “arrears”, and applying the arrears provision would contradict the scheme’s objective. It relied on earlier decisions, including UCN Cable Network and Morde Foods, which clarified that remand orders restore matters to the stage of adjudication, thereby falling within the Litigation category.

The Court further noted that the petitioner’s Rs. 10 lakh pre-deposit was acknowledged by the department in SVLDRS-2, and there was no contrary material to dispute the genuineness of the challans. Hence, the denial of adjustment in SVLDRS-3 reflected clear non-application of mind. The Court quashed SVLDRS-3 and directed the Designated Committee to re-determine the petitioner’s dues under the Litigation category, granting relief of 70% as contemplated under Section 124(1)(a). The exercise must be completed within two months.

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