The Punjab and Haryana High Court has quashed an order rejecting a taxpayer’s application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS), holding that the claim required fresh consideration in light of subsequent instructions issued by the Ministry of Finance clarifying eligibility for waiver of interest where tax dues had already been paid.

The bench of Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor has observed that petitioner’s claim required fresh consideration.

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The petitioner had approached the High Court challenging an order dated February 21, 2020, by which the authorities had rejected its application for settlement under the SVLDRS.

The rejection was primarily based on the Revenue’s view that tax voluntarily deposited before the introduction of the SVLDRS could not be considered for waiver of interest under the scheme. The authorities had also contended that the payment of tax in the petitioner’s case did not constitute voluntary disclosure for the purposes of the scheme. 

The petitioner subsequently relied upon instructions issued by the Ministry of Finance, Department of Revenue, on October 6, 2022, which clarified the position concerning cases where tax dues had already been paid in full.

The High Court noted that the Ministry’s subsequent instructions were issued after the issue of eligibility for interest waiver in cases involving payment of tax dues had been considered by the Madhya Pradesh High Court in M/s Sigma Construction Co. v. UOI & Ors., W.P. No. 16411/2021.

The Madhya Pradesh High Court, by its order dated August 5, 2022, had directed the CBIC to examine the issue and issue a clarification to remove the prevailing ambiguity. 

Following this, the Department examined the matter and referred to Circular No. 1073/06/2019-CX dated October 29, 2019.

The clarification specifically stated that where an assessee had filed the ST-3 return on or before June 30, 2019, and had paid the tax dues in full before filing the SVLDRS application, the declarant would be eligible to avail the benefit of the scheme for waiver of interest.

Importantly, the clarification also covered cases where interest had been demanded through a show cause notice or an Order-in-Original. 

During the proceedings, the petitioner relied upon the October 6, 2022 instructions to contend that its voluntary tax deposit made in August 2018 should not disqualify it from consideration under the SVLDRS.

The matter had earlier been adjourned on September 16, 2026, to enable counsel appearing for the Revenue to obtain instructions regarding the applicability of the subsequent clarification. 

When the matter came up again on September 18, 2026, counsel for the Revenue informed the Court that, upon instructions, paragraph 3 of the Department’s instructions would be applicable to the case.

The Revenue consequently accepted that the petitioner’s claim was entitled to consideration in terms of the subsequent departmental clarification. 

Accordingly, the Bench allowed the writ petition; quashed the order dated February 21, 2020, rejecting the petitioner’s SVLDRS application; and remitted the matter to the concerned authority for taking a fresh decision in light of the instructions dated October 6, 2022.

The Court directed the authority to take the fresh decision within six weeks from the date of the judgment. 

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