Sigma Construction Company vs. Union Of INDIA

Held

The Court held that the clarificatory instruction dated 06.10.2022 issued by the CBIC is determinative of the issue. This instruction clarifies that interest forms an integral part of 'tax dues' under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Court noted that the instruction reiterates the position stated in Circular No. 1073/06/2019-CX dated 29.10.2019, which provides that declarants are eligible for waiver of interest if they have paid the tax dues in full before filing the application, even if interest was demanded. Consequently, the Court quashed the impugned order dated 15.01.2020 and directed the Revenue to consider the petitioner's case under the Scheme of 2019 expeditiously. The ratio decidendi is that interest is considered part of 'tax dues' for the purpose of the SVLDRS, 2019, and its waiver is permissible under the conditions specified in the scheme and its clarifications.

Facts

The petitioner, Sigma Construction Company, had filed a writ petition challenging an order. The High Court of Madhya Pradesh, in its order dated 05.08.2022, directed the Central Board of Indirect Tax & Customs (CBIC) to consider whether interest arising from delayed tax payments could be waived under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Revenue subsequently moved an application for modification of this order. The Revenue's counsel presented a clarificatory instruction dated 06.10.2022 issued by the CBIC, which addressed the eligibility for waiver of interest under the Scheme. Following this clarification, the High Court quashed the impugned order dated 15.01.2020 and directed the Revenue to consider the petitioner's case under the Scheme of 2019.

Key Issues

1. Whether the component of interest arising out of delayed payment of tax dues can be waived under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019? (Question of law). The petitioner likely argued for the waiver of interest, contending that it should be covered under the dispute resolution scheme. The Revenue, through its application for modification and the subsequent clarificatory instruction, argued that interest is an integral part of 'tax dues' and its waiver is subject to specific conditions outlined in the scheme and its circulars. The Revenue relied on Circular No. 1073/06/2019-CX dated 29.10.2019, specifically clause (iii) of para 2, which clarifies eligibility for waiver of interest in cases where tax dues have been paid in full before filing the application, even if interest was demanded by a Show Cause Notice or Order-in-Original.