Mars Estates PVT LTD vs. Designated Committee Sabka Vishwas (Legacy Dispute Resolution Scheme)

Held

The Court held that the Designated Committee ought to have taken note of all pre-deposits made by the petitioner, including those of Rs. 8,48,618 and Rs. 8,48,617, in addition to the admitted pre-deposit of Rs. 3,81,513. The Court found that Section 124(2) of the Finance Act, 2019, read with the relevant Board Circulars, clearly mandates the adjustment of pre-deposits made at any point of time subsequent to the issuance of a show cause notice. The Court rejected the respondents' contention that the petitioner should have claimed credit in ST-3 returns, stating that the SVLDRS is a self-contained code providing a separate procedure for such adjustments. The Court also addressed the respondents' concern about the time-bound nature of the scheme by noting the Board's communication allowing manual processing of declarations if the High Court decides in favour of the petitioner. Consequently, the Court set aside the estimation in Form SVLDRS-2 and the statement in Form SVLDRS-3. The Court directed the respondent authority to re-work the statement in SVLDRS-3, taking into account the admitted pre-deposit of Rs. 3,81,513 and to decide on the appropriation of the other two pre-deposits of Rs. 8,48,618 and Rs. 8,48,617. The authority was instructed to strictly exercise its powers within the provisions of the Scheme without engaging in any adjudicatory exercise and then issue the Discharge Certificate.

Facts

Mars Estates Pvt. Ltd. (Petitioner) filed a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) on October 26, 2019, relating to a show cause notice dated October 18, 2012. The petitioner sought to declare the tax payable as 'Nil'. The Designated Committee (Respondent No. 1) issued an estimation in Form SVLDRS-2 on November 28, 2019, and subsequently a statement under Section 127 in Form SVLDRS-3 on February 27, 2020. The petitioner contended that the pre-deposits made by them were not adequately considered in these forms. The petitioner had made several pre-deposits, including Rs. 2,44,804, Rs. 2,48,967, Rs. 3,81,513, Rs. 8,48,618, and Rs. 8,48,617, as evidenced by challans. The petitioner argued that Section 124(2) of the SVLDRS mandates the deduction of pre-deposits made at any stage of appellate proceedings or during enquiry, investigation, or audit.

Key Issues

1. Whether the Designated Committee erred in not taking into account the pre-deposits made by the petitioner while issuing the estimation (SVLDRS-2) and statement (SVLDRS-3) under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, as required by Section 124(2) of the Finance Act, 2019? Petitioner's Arguments: The petitioner argued that Section 124(2) of the SVLDRS clearly mandates that any pre-deposit made at any stage of appellate proceedings, enquiry, investigation, or audit must be deducted while calculating the amount payable by the declarant. They relied on Circular No. 1071/4/2019-CX.8 and Circular No. 1074/07/2019-CX, which also indicate that pre-deposits are to be adjusted. The petitioner asserted that the Designated Committee committed an error by not considering the pre-deposits of Rs. 8,48,618 and Rs. 8,48,617, in addition to the Rs. 3,81,513 already acknowledged. Respondents' Arguments: The respondents contended that the information furnished under the RTI Act might not reflect the correct position, as some deposits might have already been appropriated. They also argued that pre-deposits could only be taken note of if they related to the specific show cause notice under settlement and not to other proceedings. The respondents further submitted that payments of Rs. 8,48,618 and Rs. 8,48,617 did not reflect the discharge of any liability and that it was open for the petitioner to claim credit in ST-3 returns.