Madras High Court Allows Delayed SVLDRS Payment With Interest And Orders Discharge Certificate
1. Background of the Dispute
In R.R. Housing (India) Pvt. Ltd. Vs Designated Committee (SVLDRS) (Madras High Court), the Madras High Court examined whether an assessee who had opted into the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) but missed the extended payment timeline due to the COVID-19 pandemic could still secure the scheme benefits.
The service tax dispute arose from the construction of residential units for landowners under a Joint Development Agreement. During an audit, the authorities took the view that service tax had not been discharged on those flats.
Key factual milestones:
- During the audit, it was noticed that service tax on certain residential flats for landowners was not paid.
- The assessee deposited Rs.44,29,032/- on 02.05.2019, but this was not treated as full compliance by the audit team.
- A show cause notice dated 03.09.2019 proposed a service tax demand of Rs.70,82,343/-, together with interest and penalty. It also proposed appropriation of the earlier payment of Rs.44,29,032/-.
- By Order-in-Original No.09/2019-JC dated 22.11.2019, the Joint Commissioner of GST and Central Excise, Coimbatore confirmed the entire service tax demand as proposed in the show cause notice.
2. Opting Into SVLDRS and Quantification of Liability
Subsequently, the Central Government introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to resolve pending disputes under legacy laws such as service tax and central excise.
Key scheme steps in this case:
- The assessee filed a declaration in Form SVLDRS-1 within the permitted time on the scheme’s electronic portal.
- After verification, the Designated Committee issued Form SVLDRS-3 on 13.02.2020, quantifying the amount payable under the scheme at Rs.14,98,835.20.
- Under the original scheme timelines, this amount was payable within 30 days from the date of issuance of Form SVLDRS-3, i.e., on or before 14.03.2020.
In view of the emerging COVID-19 situation, the Central Government extended the last date for making payment under the scheme to 30.06.2020. Despite this extension, the assessee could not make the payment within that period, citing severe financial constraints because of the lockdown.
3. Impact of COVID-19 and Subsequent Payment
The pandemic and the national lockdown had a direct effect on the assessee’s financial position. Relying upon the general extension of limitation granted by the Supreme Court, the assessee sought more time and later remitted the quantified amount.
Chronology of events:
- The Hon’ble Supreme Court, in W.P.(C) No. 3 of 2020, order dated 23.03.2020, extended the period of limitation in all proceedings under general and special laws with effect from 15.03.2020 until further orders.
- On 30.06.2020, the assessee addressed a letter to the Superintendent, SVLDRS Section, requesting additional time to pay the amount of Rs.14,98,835.20, explaining that its finances were hit by the pandemic and lockdown.
- The Department, through proceedings dated 18.02.2021, insisted on recovery of the entire confirmed dues, including penalty, aggregating to Rs.1,08,29,431/- as per the Order-in-Original dated 22.11.2019.
- On 01.03.2021, the assessee nonetheless deposited Rs.14,98,836/- (effectively the same as the amount determined in Form SVLDRS-3) via a regular challan. The assessee then informed the first respondent of this payment by letter dated 02.03.2021.
- On 02.03.2021, the Department passed the impugned order declining to treat this payment as one made under SVLDRS, and directed payment of the full balance confirmed demand under the Order-in-Original.
Given this stand of the Department, the assessee moved the High Court by way of a Writ Petition seeking a Writ of Mandamus directing:
- That the payment made on 01.03.2021 be treated as a valid payment under SVLDRS, and
- That a discharge certificate in Form SVLDRS-4 be issued.
4. Stand of the Department
In its counter affidavit, the Department took the position that: