The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has held that delay in payment under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) due to COVID does not revive amnesty benefits.
The bench of Dr. Rachna Gupta (Judicial Member) has observed that the benefits available under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) automatically lapse when the declarant fails to make payment within the statutory time limit prescribed under the scheme. However, taking note of the extraordinary circumstances arising from the COVID-19 pandemic, the Tribunal granted partial relief by setting aside the penalty imposed on the assessee.
The appellant/assessee was registered under the service tax regime for providing Works Contract Services. During the operation of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, the assessee voluntarily disclosed an unpaid service tax liability of ₹2,90,031 and filed a declaration under the voluntary disclosure category on December 31, 2019. The declaration was accepted, and Form SVLDRS-3 was issued on January 30, 2020, requiring payment of the declared amount within the prescribed period.
Although the Government subsequently extended the payment deadline up to June 30, 2020 due to the COVID-19 pandemic, the assessee failed to deposit the amount within the extended timeline. Consequently, the department issued a show cause notice demanding recovery of the disclosed service tax along with applicable interest and penalties. The demand was confirmed by the adjudicating authority and later upheld by the Commissioner (Appeals).
The assessee contended that the payment process had been initiated through the bank before the expiry of the deadline. However, owing to disruptions caused by the COVID-19 pandemic, the payment could not be credited within the stipulated period and was eventually made in October 2020.
The appellant argued that the very objective of the SVLDRS was to settle legacy disputes and provide closure to old indirect tax matters. Therefore, denying the benefit merely because of delayed payment constituted a hyper-technical approach that defeated the purpose of the amnesty scheme. Reliance was placed on several High Court judgments that had adopted a liberal interpretation in similar circumstances.
The department maintained that the SVLDRS was a time-bound statutory amnesty scheme offering substantial relief in the form of waiver of penalties and interest. Since the appellant admittedly failed to make payment within the extended deadline of June 30, 2020, the declaration automatically lapsed under Section 127(5) of the Scheme.
The Revenue emphasized that the statutory provision was mandatory and left no discretion to authorities once the prescribed payment period expired.
The Tribunal observed that the appellant had indeed made a voluntary disclosure and that the declaration was accepted under the SVLDRS framework. However, Section 127(5) expressly mandates that the amount specified in Form SVLDRS-3 must be paid within the prescribed period, failing which the declaration shall be treated as lapsed.
The Tribunal noted that the payment was admittedly made only in October 2020, well after the final extended deadline of June 30, 2020. Therefore, the payment could not be treated as compliance with the scheme requirements.
The Tribunal held that where the language of a statute is clear and unambiguous, courts are bound to give effect to its plain meaning. Hardship or inconvenience cannot justify rewriting a statutory provision or extending a benefit contrary to the express legislative mandate.
The Tribunal ruled that the benefit of the SVLDRS had automatically lapsed on June 30, 2020 and the service tax demand along with applicable interest was rightly confirmed by the departmental authorities.
While upholding the tax demand and interest liability, the Tribunal adopted a more equitable approach regarding penalties. It observed that the delay occurred during the unprecedented COVID-19 period and there was no evidence of any mala fide intention on the part of the assessee. The fact that the appellant had voluntarily come forward under the amnesty scheme indicated an intention to settle the dispute rather than evade tax.
The Tribunal set aside the penalty imposed upon the assessee while sustaining the service tax and interest demand.
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