Clean Master Management Services PVT LTD vs. Designated Committee-Svldrs

Held

The Court allowed the petition, holding that in the peculiar and special facts and circumstances of the case, the petitioner's bonafides warranted indulgence. The Court noted that the petitioner had made attempts to deposit the amount before the cut-off date and had repeatedly communicated its inability to do so due to bonafide reasons and unavoidable circumstances, including the COVID-19 lockdown. The Court found that the petitioner was not in a position to re-deposit the amount before the cut-off date after learning of the reversal. The Court reasoned that the petitioner's conduct entitled them to invoke the extraordinary jurisdiction under Article 226 of the Constitution. The Court directed the respondents to adjust the sum of Rs. 9,14,531/- deposited by the petitioner in its service tax account towards the SVLDRS dues and to issue the discharge certificate in Form-4. The Court explicitly stated that this order was passed due to the special circumstances and should not be treated as a precedent.

Facts

The petitioner, Clean Master Management Services Pvt. Ltd., sought to avail the Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS). The scheme required a payment of Rs. 9,14,531/- by June 30, 2020. The petitioner attempted to make this payment on June 29, 2020, using two bank deposits, which were subsequently reversed by the department. The petitioner was informed of this reversal on July 3, 2020, after the due date. The department rejected a subsequent attempt to pay, citing the use of an old challan. The petitioner had also deposited the entire amount in its service tax account on October 5, 2020. The petitioner approached the High Court seeking a declaration that the initial payment was valid, the reversal was unlawful, and for the adjustment of the amount deposited in the service tax account towards the SVLDRS dues.

Key Issues

1. Whether the payment of Rs. 9,14,531/- made by the petitioner through two bank deposits on June 29, 2020, is to be considered a valid and complete payment for the purposes of Section 128(8) of Chapter V of the Finance Act, 2019, under the SVLDRS scheme, and if the reversal of this amount by the department is without basis and bad in law? Petitioner's arguments: The petitioner contended that the inability to make the payment by the due date was unintentional and due to bonafide reasons and unavoidable circumstances. They argued that they were unaware of the reversal until July 3, 2020, after the cut-off date. They further submitted that the amount already paid into their service tax account should be adjusted towards the SVLDRS dues, as they were ready and willing to pay. Revenue's arguments: The respondents argued that the payment was made from two separate accounts, which led to its return by the RBI, and thus, the payment never reached the SVLDRS account. They contended that the petitioner ought to have obtained a fresh challan and made the payment, and that accepting payment under an old challan after the cut-off date was impermissible. They maintained that the petitioner failed to avail the scheme within the cut-off date and therefore was not entitled to its benefits.