Delhi High Court Denies SVLDR Scheme Benefit for Post-Cut-Off SCN

The Delhi High Court has held that a show cause notice (SCN) issued after the cut-off date of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme) cannot be treated as a continuation of an earlier notice to claim amnesty benefits. However, granting limited relief, the bench of Justice Prathiba M. Singh and Justice Shail Jain has permitted the taxpayer to file a statutory appeal against the confirmed service tax demand without being barred by limitation The case arose from a writ petition challenging two key orders an adjudication order dated 30 June 2023 confirming a service tax demand of ₹46.86 lakh along with interest and penalties under the Finance Act, 1994; and an order dated 2 March 2020 rejecting the taxpayer’s declaration under the SVLDR Scheme. The dispute has its origins in refund claims filed between March and December 2017 for accumulated and unutilised CENVAT credit under the CENVAT Credit Rules, 2004. The total refund claimed amounted to ₹8.95 lakh for various periods between January 2016 and June 2017. These refund claims were rejected by the department in September 2018 Following rejection of refunds, the department issued the first show cause notice (SCN-I) in October 2018, covering the period from October 2015 to September 2016, alleging that the services rendered did not qualify as “export of services” and raising a demand of ₹33.64 lakh. While the challenge to the refund rejection and SCN-I was pending, the Government introduced the SVLDR Scheme in September 2019. The taxpayer applied under the scheme for SCN-I and was granted substantial relief by the department on 31 December 2019. However, a second show cause notice (SCN-II) was issued on 19 December 2019 for subsequent periods—October 2016 to March 2017 and April 2017 to June 2017. When the taxpayer attempted to avail the SVLDR Scheme for SCN-II as well, the department rejected the application on the ground that the notice was issued after the scheme’s cut-off date of 30 June 2019. The taxpayer contended that SCN-II was merely a continuation of SCN-I since both arose from the same refund proceedings. It was argued that the department had artificially split the demand into two notices and that such bifurcation should not deprive the taxpayer of the scheme’s benefit. Reliance was also placed on a CBIC circular issued in December 2019, which clarified certain aspects of eligibility under the SVLDR Scheme. The department countered that eligibility under the SVLDR Scheme is strictly governed by statutory timelines. According to them, SCN-II was a separate and independent proceeding, issued well after the cut-off date, and therefore outside the ambit of the scheme. They emphasized that mere reference to an earlier SCN does not convert a later notice into a continuation eligible for amnesty. The court examined the definition of “tax dues” under Section 123 of the Finance Act, 2019 and noted that only show cause notices issued on or before 30 June 2019 could qualify for settlement under the SVLDR Scheme. The court held that SCN-II, dated 19 December 2019, stood on its own footing, as it was the notice that actually quantified the demand for the later period. The fact that SCN-II referred to SCN-I or arose from the same refund dispute did not alter its independent character. Consequently, the rejection of the SVLDR application for SCN-II was found to be legally valid. The Court also relied on the FAQs issued by the CBIC, which clearly state that SCNs issued beyond the prescribed cut-off date are not eligible under the scheme. While upholding the denial of SVLDR benefits, the Court took note of the fact that the writ petition had been pending since September 2023. To prevent prejudice to the taxpayer, it granted liberty to file a statutory appeal against the adjudication order dated 30 June 2023 by 31 January 2026. Case Details Case Title: Varner Retail Services South Asia Pvt. Ltd. Versus Assistant Commissioner Division Case No.: W.P.(C) 12049/2023 & CM APPL. 47300/2023 Date: 18/12/2025 Counsel For Petitioner: Sunil Agarwal Counsel For Respondent: Aditya Singla Click Here To Read Order Read More: Absolute Confiscation of Undeclared Gold Bar Carried Through Green Channel Upheld: Delhi HC

Delhi High Court Denies SVLDR Scheme Benefit for Post-Cut-Off SCN

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