Messrs V I P Enterprise vs. Union Of INDIA

Facts

The petitioner, M/s V I P Enterprise, engaged in providing taxable services, faced a show cause notice dated July 12, 2017, proposing demand and recovery of service tax amounting to Rs. 74,84,453/- under the Finance Act, 1994. The petitioner had deposited Rs. 63,00,000/- during the investigation. An Order-in-Original dated January 19, 2018, by the Additional Commissioner of Central GST & Central Excise, Rajkot, confirmed the demand. The petitioner appealed this order, which was pending. Subsequently, the petitioner opted for the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, and Form SVLDRS-3 was issued on December 12, 2019, determining the payable amount as Rs. 4,73,781.20. The petitioner attempted to make this payment via NEFT on June 30, 2020, but it was returned by the bank. The petitioner then filed a writ petition seeking directions to allow payment under the Scheme and issue a discharge certificate.

Held

The Court held that the petitioner made a bona fide attempt to make the payment as determined under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The attempt to pay via NEFT on June 30, 2020, was unsuccessful and returned by the bank, as evidenced by the bank statement. The Court found that the petitioner could not generate the challan successfully and, out of caution, attempted payment via NEFT/RTGS to demonstrate their bona fides. The Court was of the opinion that the substantive benefit of the Scheme should not be denied on procedural technicalities, especially given the circumstances of the COVID-19 pandemic. The basic object of the Scheme is to reduce litigation. Therefore, the Court invoked its powers under Article 226 of the Constitution of India. The Court directed the respondent authorities to accept the payment of Rs. 4,73,781.20 along with interest at 9% per annum from June 30, 2020, till the date of payment, and to grant the benefit of the Scheme. The impugned Order-in-Original dated January 19, 2018, and the consequential letter dated February 3, 2021, were quashed and set aside.

Key Issues

1. Whether the petitioner, having made a bona fide attempt to pay the determined amount under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, should be denied the benefit of the Scheme due to procedural technicalities, especially considering the COVID-19 pandemic? Petitioner's contention: The petitioner argued that they made a genuine attempt to pay the amount determined under Form SVLDRS-3, but the payment was rejected by the bank due to technical issues. They contended that the Scheme is beneficial and should not be denied on procedural grounds, particularly in light of the pandemic. They relied on various decisions supporting the grant of substantive benefits despite procedural lapses. Revenue's contention: The revenue argued that the Scheme is a beneficial piece of legislation, but its benefits cannot be claimed as a right when mandatory conditions are not complied with. They submitted that extensions were already granted and further extension was a conscious decision not to grant. They cited judgments emphasizing strict interpretation of taxing statutes.