Case Note & Summary
The Petitioner, National Centre for the Performing Arts, a public trust registered under the Societies Registration Act, 1860, and engaged in providing various services, was issued a Show Cause Notice dated 14 February 2019 by the Principal Commissioner, CGST, Audit-I, Mumbai, demanding Rs. 2,93,47,926/- as service tax for alleged wrong availment of CENVAT credit, along with interest and penalty under Section 78 of Chapter V of the Finance Act, 1994. Prior to the issuance of the Show Cause Notice, during pre-Show Cause Notice consultations, the Petitioner had paid Rs. 1,49,35,618/- electronically, out of which Rs. 1,09,06,948/- was tax and Rs. 40,28,670/- was interest, paid under protest. Subsequently, the Petitioner applied under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) to settle the dispute. The Designated Committee issued Form SVLDRS-3 dated 19 February 2020 demanding Rs. 37,67,015/-, calculating the tax dues as only the duty amount (Rs. 1,09,06,948/-) and not including the interest paid. The Petitioner challenged this demand, arguing that the interest paid under protest should be considered as part of the tax dues for the purpose of the scheme. The Court analyzed Section 124(2) of the Finance Act, 2019, which defines 'tax dues' and the provisions of the SVLDRS. The Court held that the interest paid under protest prior to the show cause notice is part of the amount payable and must be considered as tax dues for computation under the scheme. The Court found that the Designated Committee erred in not including the interest component, and accordingly allowed the writ petition, setting aside the Form SVLDRS-3 and directing the Designated Committee to re-compute the amount payable by including the interest paid under protest.
Headnote
A) Service Tax - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Section 124(2) of Finance Act, 2019 - Interpretation of 'tax dues' - Whether interest paid under protest prior to show cause notice forms part of tax dues for computation under SVLDRS - Held that interest paid under protest is part of the amount payable and must be considered as tax dues for the purpose of the scheme, and the Designated Committee's demand of only duty amount was erroneous (Paras 1-30).
Issue of Consideration
Whether interest paid under protest prior to issuance of show cause notice can be considered as part of 'tax dues' for the purpose of determining the amount payable under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, and whether the Designated Committee erred in issuing Form SVLDRS-3 demanding only the duty amount without considering the interest component.
Final Decision
The Court allowed the writ petition, setting aside the Form SVLDRS-3 dated 19 February 2020 and directing the Designated Committee to re-compute the amount payable under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by including the interest paid under protest as part of tax dues.
Law Points
- Interpretation of Section 124(2) of Finance Act
- 2019
- Sabka Vishwas (Legacy Dispute Resolution) Scheme
- Interest as part of tax dues
- Pre-deposit under SVLDRS
Case Details
2023 LawText (BOM) (01) 206
WRIT PETITION NO. 2784 OF 2021
NITIN JAMDAR, ABHAY AHUJA
Mr. Chirag Shetty i/b Economic Laws Practice for the Petitioner, Mr. Vijay Kantharia with Mr. Ram Ochani for Respondents No. 1 to 4
National Centre for the Performing Arts
Union of India through Joint Secretary, Department of Revenue, Ministry of Finance; Designated Committee, Mumbai (South) Sabka Vishwas (Legacy Dispute Resolution) Scheme; Assistant Commissioner of Goods and Services Tax, Mumbai (South); E-pay and Accounts Officer (e-PAO)
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Nature of Litigation
Writ Petition under Article 226 of the Constitution of India challenging the issuance of Form SVLDRS-3 by the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
Remedy Sought
Petitioner sought quashing of Form SVLDRS-3 dated 19 February 2020 and direction to the Designated Committee to re-compute the amount payable under the scheme by including the interest paid under protest as part of tax dues.
Filing Reason
The Designated Committee issued Form SVLDRS-3 demanding only the duty amount (Rs. 37,67,015/-) without considering the interest component of Rs. 40,28,670/- paid under protest, which the Petitioner argued should be part of tax dues under Section 124(2) of the Finance Act, 2019.
Issues
Whether interest paid under protest prior to issuance of show cause notice forms part of 'tax dues' under Section 124(2) of the Finance Act, 2019 for the purpose of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
Whether the Designated Committee erred in issuing Form SVLDRS-3 demanding only the duty amount without including the interest component.
Submissions/Arguments
Petitioner argued that the interest paid under protest is part of the amount payable and should be considered as tax dues for computation under the SVLDRS scheme.
Respondents argued that the tax dues comprise only the duty amount and only deposit of any stage is allowed under Section 124(2) of the Finance Act, 2019.
Ratio Decidendi
Interest paid under protest prior to the issuance of show cause notice is part of the 'tax dues' under Section 124(2) of the Finance Act, 2019, and must be considered for computation of the amount payable under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Designated Committee cannot exclude the interest component and demand only the duty amount.
Judgment Excerpts
By this Writ Petition, filed under Article 226 of the Constitution of India, the Petitioner is aggrieved by issuance of Form SVLDRS-3 dated 19 February 2020 by the Designated Committee making a demand of Rs. 37,67,015/- on the ground that the tax dues comprise of only duty amount and, therefore, only deposit of any stage is allowed under Section 124 (2) of the Finance Act, 2019 pertaining to the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 ( 'SVLDRS').
It is submitted that before issuance of Show Cause Notice, during the course of pre-Show Cause Notice consultations, Petitioner had already paid the amount of Rs. 1,49,35,618/- electronically. It is submitted that out of this amount, a sum of Rs. 1,09,06,948/- was the amount of tax and a sum of Rs. 40,28,670/- was interest. According to the Petitioner, the said amount of Rs. 40,28,670/- of interest was paid under protest.
Procedural History
The Petitioner was issued a Show Cause Notice dated 14 February 2019 demanding service tax for alleged wrong availment of CENVAT credit. Prior to the notice, the Petitioner paid Rs. 1,49,35,618/- (including tax and interest under protest). The Petitioner applied under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Designated Committee issued Form SVLDRS-3 dated 19 February 2020 demanding Rs. 37,67,015/- based on duty amount only. The Petitioner filed the present Writ Petition under Article 226 of the Constitution of India challenging the Form SVLDRS-3.
Acts & Sections
- Finance Act, 2019: Section 124(2)
- Finance Act, 1994: Section 78
- Constitution of India: Article 226
- Societies Registration Act, 1860:
