Ideal Broadcasting INDIA PVT LTD vs. Union Of INDIA & Ors.

Held

The Court held that the classification of the petitioner's tax dues under the 'arrears category' was correct. The reasoning was that once the pending litigation was withdrawn as a pre-condition for availing the SVLDR Scheme, the demand of duty raised by the tax authorities attained finality. Consequently, it fell under the definition of 'amount in arrears'. The Court reasoned that if the duty amount has not attained finality or has not been admitted by the declarant, it would fall under the 'litigation' category. However, if the duty amount has attained finality, either due to the expiry of the limitation period for filing an appeal, the appellate order having attained finality, or the amount being admitted by the declarant, it would fall under the 'arrears' category. The Court found no merit in the petitioner's plea of being unduly prejudiced, noting that the entire penalty was wiped out and the petitioner accepted the calculation and paid the amount without protest. The Court relied on the Bombay High Court's decision in UCN Cable Network (P) Ltd. v. Designated Committee and its own previous decisions in Nidhi Gupta v. Union of India and Karan Singh v. Designated Committee Sabka Vikas Legacy Dispute Resolution Scheme to support its reasoning. The ratio decidendi is that a tax demand attains finality and falls under the 'arrears' category of the SVLDR Scheme once the declarant withdraws any pending appeal or fails to file an appeal within the prescribed period, thereby relinquishing their right to challenge the demand further.

Facts

The petitioner, Ideal Broadcasting India Pvt. Ltd., is challenging an order dated 18.05.2020 issued under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme). This is the second round of litigation. In the first round, an order dated 14.06.2019 imposed a demand of Rs. 1,00,89,786/- along with interest and penalty. The petitioner filed an appeal on 16.08.2019, after the initial cut-off date of 30.06.2019 for the SVLDR Scheme. Following a previous writ petition and a subsequent circular dated 29.10.2019, the petitioner withdrew its appeal and filed a declaration under the SVLDR Scheme on 30.12.2019, classifying its tax dues as 'litigation'. The respondents, however, classified the tax dues under the 'arrears' category, leading to a lesser rebate and a quantified tax demand of Rs. 41,30,697/-.

Key Issues

1. Whether the classification of the petitioner's tax dues under the 'arrears category' by the respondents, despite the petitioner withdrawing its appeal as a pre-condition for filing a declaration under the SVLDR Scheme, is arbitrary and in violation of Section 127(4) read with Rule 6(2) of the SVLDR Scheme Rules and the FAQs. Petitioner's arguments: The petitioner contends that the respondents arbitrarily classified its tax dues under the 'arrears category' despite the withdrawal of its appeal being a mandatory pre-condition for availing the SVLDR Scheme. It argues that the Circular dated 29.10.2019 failed to clarify the category for tax dues in such circumstances, leading to the respondents misconstruing the provisions and conferring benefit with one hand while taking it away with the other. The petitioner also argues that this classification extinguishes its right to appeal, making the Scheme oppressive. Furthermore, it claims the FAQs, particularly Q. No. 6, are harsh and contrary to the Scheme's objectives. The petitioner asserts that its case should have been classified under the 'litigation' category, seeking a rebate up to 50% of the tax dues. Respondents' arguments: The respondents argue that once the pending litigation was withdrawn, the demand of duty attained finality and consequently fell under the definition of 'amount in arrears'. They contend that if the duty amount has not attained finality or has not been admitted by the declarant, it would fall under 'litigation', but where it has attained finality due to the expiry of the appeal period or the appellate order attaining finality, or the amount being admitted, it falls under 'arrears'. The respondents also point out that the entire penalty imposed was wiped out, and the petitioner accepted the calculation and paid the amount without demur.