Case Note & Summary
The petitioner, Nabeel Construction Pvt. Ltd., engaged in construction services, was subjected to an investigation by the Directorate General of GST Intelligence in February 2019. During the investigation, the petitioner's director admitted a total tax liability of Rs.1,28,88,541/- for the period 2013-14 to 2016-17. The petitioner paid Rs.25,00,000/- on 28th February 2019 and Rs.10,00,000/- on 8th March 2019. Subsequently, the petitioner filed a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) on 30th December 2019, but did not pay the required 50% of the disputed tax before filing. The Designated Committee rejected the declaration via email dated 14th February 2020, citing non-compliance with the proviso to Rule 6(2) of the SVLDRS Rules, 2019. The petitioner challenged this rejection by way of a writ petition under Article 226 of the Constitution of India, seeking quashing of the order and a direction to accept the declaration. The court examined the scheme and rules, noting that the proviso to Rule 6(2) requires a declarant to pay 50% of the estimated amount of duty before filing the declaration. However, the court held that this requirement is directory and not mandatory, as the scheme is beneficial in nature and aims to resolve legacy disputes. The court found that the petitioner had made substantial payments and that the committee should have given an opportunity to comply rather than outright rejecting the declaration. The court allowed the petition, quashed the impugned order, and directed the committee to accept the declaration and process it in accordance with the scheme.
Headnote
A) Constitutional Law - Writ Jurisdiction - Article 226 - Certiorari - The High Court can quash an order of a designated committee if it is based on a misinterpretation of rules and causes injustice. (Paras 1-2)
B) Tax Law - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Section 125 - Declaration - The proviso to Rule 6(2) requiring pre-deposit of 50% of disputed tax before filing declaration is directory, not mandatory, and substantial compliance is sufficient. The Designated Committee's rejection of the declaration for non-compliance with the pre-deposit requirement was set aside. (Paras 10-15)
C) Tax Law - SVLDRS Rules, 2019 - Rule 6(2) proviso - Pre-deposit - The requirement of pre-deposit under the proviso to Rule 6(2) is procedural and can be complied with after filing the declaration; the committee should give an opportunity to comply. (Paras 12-14)
Issue of Consideration
Whether the proviso to Rule 6(2) read with Rule 6(3) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 is mandatory or directory, and whether the Designated Committee was justified in rejecting the petitioner's SVLDRS-1 declaration for non-compliance with the pre-deposit requirement.
Final Decision
The court allowed the writ petition, quashed the impugned order dated 14th February 2020, and directed the Designated Committee to accept the petitioner's SVLDRS-1 declaration and process it in accordance with the scheme.
Law Points
- Sabka Vishwas (Legacy Dispute Resolution) Scheme
- 2019
- Section 125
- Rule 6(2) proviso
- Rule 6(3)
- SVLDRS Rules 2019
- Article 226
- writ of certiorari
- mandatory vs directory
- substantial compliance
- procedural irregularity
- designated committee
- declaration
- pre-deposit
Case Details
2022 LawText (BOM) (01) 81
Writ Petition No. 96 of 2022
R. D. Dhanuka, S. M. Modak
Mr. Abhishek A. Rastogi a/w Mr. Pratyushprava Saha and Ms. Kanika Sharma i/by M/s. Khaitan & Co. for the Petitioner; Mr. Pradeep S. Jetly, Senior Advocate a/w Mr. Jitendra B. Mishra for the Respondents
Nabeel Construction Pvt. Ltd.
Union of India, through its Secretary, Department of Revenue, Ministry of Finance, Government of India, North Block, New Delhi – 110001; The Designated Committee – I (SVLDRS) [Comprising of the Principal Commissioner or Commissioner and Additional Commissioner or Joint Commissioner], CGST & Central Excise, Commissioner – Thane, Navprabhat Chambers, Ranade Road, Dadar (West), Mumbai – 400028; The Principal Additional Director General, Directorate General of GST Intelligence, Mumbai Zonal Unit, N.T.C. House, III Floor, N.M. Road, Ballard Estate, Mumbai – 400001
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Nature of Litigation
Writ petition under Article 226 challenging rejection of SVLDRS-1 declaration by Designated Committee.
Remedy Sought
Quashing of order dated 14th February 2020 rejecting declaration and direction to accept declaration as valid under Section 125 of the Scheme.
Filing Reason
Rejection of declaration for non-compliance with proviso to Rule 6(2) requiring pre-deposit of 50% of disputed tax before filing.
Previous Decisions
Designated Committee rejected the declaration via email dated 14th February 2020.
Issues
Whether the proviso to Rule 6(2) read with Rule 6(3) of the SVLDRS Rules, 2019 is mandatory or directory.
Whether the Designated Committee was justified in rejecting the petitioner's declaration for non-compliance with the pre-deposit requirement.
Submissions/Arguments
Petitioner argued that the proviso to Rule 6(2) is directory and not mandatory, and that substantial compliance was made by paying Rs.35,00,000/-.
Respondents argued that the requirement is mandatory and the declaration was rightly rejected.
Ratio Decidendi
The proviso to Rule 6(2) of the SVLDRS Rules, 2019 requiring pre-deposit of 50% of disputed tax before filing declaration is directory, not mandatory. The Designated Committee should consider substantial compliance and give opportunity to comply rather than reject the declaration outright.
Judgment Excerpts
By this petition filed under Article 226 of the Constitution of India, the petitioner prays for a writ of certiorari for quashing and setting aside the order of Designated Committee-I ... communicated through email dated 14th February, 2020 whereby rejecting the SVLDRS-1 Declaration dated 30th December, 2019 filed by the petitioner.
The proviso to Rule 6(2) read with Rule 6(3) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 be read down and to accept the Declaration filed by the petitioner as the valid Declaration under Section 125 of the said Scheme.
Procedural History
The petitioner filed SVLDRS-1 declaration on 30th December 2019. The Designated Committee rejected it via email dated 14th February 2020. The petitioner then filed the present writ petition on an unspecified date. The petition was reserved on 10th January 2022 and pronounced on 21st January 2022.
Acts & Sections
- Constitution of India: Article 226
- Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019: Section 125
- Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019: Rule 6(2), Rule 6(3)
