Schlumberger Solutions Private Limited vs. Commissioner Central GST And Others

Facts

Schlumberger Solutions Private Limited (petitioner) was audited for service tax for the period 2013-14 to 2016-17. Objections were raised regarding CENVAT credit on trading of goods. The petitioner paid Rs. 2,29,61,536/- towards service tax, Rs. 1,16,51,272/- as interest, and Rs. 24,44,227/- as penalty. A show cause notice dated 12.04.2019 sought recovery of Rs. 9,86,53,074/-. The petitioner availed the amnesty scheme under the Finance (No.2) Act, 2019, by filing Form SVLDRS-1. The Designated Committee (respondent No.2) issued Form SVLDRS-2 on 28.01.2020, calculating a difference of Rs. 1,50,95,499/- payable, disagreeing with the petitioner's computation. The petitioner challenged this computation and a subsequent order-in-original dated 23.03.2021 passed by respondent No.1.

Held

The Court held that Section 124(2) of the Finance (No.2) Act, 2019, clearly states that any amount paid as pre-deposit or deposit during enquiry, investigation, or audit shall be deducted when issuing the statement indicating the amount payable. The provision uses the phrase 'any amount paid' and does not distinguish between amounts paid under different heads like tax, interest, or penalty. Therefore, the petitioner is entitled to have the amounts paid towards interest and penalty deducted. The Court found the view taken by the Designated Committee unsustainable. The Court quashed the comments in SVLDRS-2 and SVLDRS-3 and directed the Designated Committee to re-consider the petitioner's claim, adjusting amounts paid towards interest and penalty. The petitioner was directed to make the payment within two weeks of the revised SVLDRS-3 issuance.

Key Issues

1. Whether the petitioner is entitled to deduct amounts paid towards interest and penalty prior to the issuance of the show cause notice while calculating the amount payable under the amnesty scheme, as provided under Section 124 of the Finance (No.2) Act, 2019? The petitioner argued that Section 124(2) of the Finance Act, 2019, mandates the deduction of 'any amount paid' during enquiry, investigation, or audit, irrespective of the head under which it was paid, including interest and penalty. They contended that the term 'pre-deposit' in Section 124(2) encompasses such prior payments. The respondents argued that duty, interest, and penalty are distinct under indirect tax laws, and payments made under one head cannot be adjusted against another. They asserted that only tax payments can be adjusted during the calculation of tax dues under the scheme.