Update on SVLDRS in the case of Assam Cricket Association-Gauhati High Court 84/2020-21

The Government has formulated a policy the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to end the disputes under the old regime of Central Excise and service tax. The scheme was framed to swiftly closure of pending cases under such indirect tax laws grant a waiver of pending dues ranging between 40 percent to 70 percent along with interest and penalty depending on the amount and reason of dispute of the tax. This was wonderful scheme wherein the waiver of tax amount was also proposed. In earlier immunity schemes, the Government has proposed the waiver of interest, penalty and prosecution but never proposed the reduction in amount of tax. But this scheme proposed to waive the tax also. This was the reason that this scheme received overwhelming response from trade and industry.

In present update we seeks to discuss about the recent judgment of the Gauhati High Court in the case of M/s Assam Cricket Association WP(C) 2149/2020 dated 4^th May 2020 where the petitioner preferred an appeal before CESTAT against demand of service tax and imposition of penalty. During the pendency of appeal, the Petitioner filed form SVLDRS-1 to avail the benefit of the scheme, although the column provided for disclosure of penalty imposed upon the Petitioner, he inadvertently mentioned as “Zero.”

The authority rejected the claim of the Petitioner under SVLDRS scheme due to disclosure of penalty as “Zero” in form SVLDRS - 1. The Petitioner filed writ petition before High Court against the said decision. The issue before Hon’ble High Court for consideration was whether claim of the Petitioner for the benefit under SVLDRS scheme would stand rejected because of aforesaid unintentional mistake.
The judiciary held that the matter is required to be looked from the perspective of, whether by not mentioning the penalty in Form SVLDRS -1, the Petitioner had committed an incurable mistake so as to disentitle him from the benefits under the scheme or, mistake can be allowed to be rectified.

In view of this, it can be observed that mistake made by the Petitioner by not stating the penalty imposed in Form SVLDRS-1 cannot be said to be a mistake by which the Petitioner claimed an undue benefit which they otherwise are not entitled under the law. It does not find any provision which provides that a person upon whom a penalty is imposed would not be entitled to the benefit under the scheme. The decision pronounced by the Hon’ble High Court is that the mistake made by the Petitioner is inadvertent in nature and the application filed by the Petitioner under SVLDRS-1 should be accepted.
In view of the decision pronounced by the Gauhati High Court the it can be said that the vested right cannot be affected by a mere procedural mistake of mentioning of wrong amount in the form, a similar decision was also pronounced in the GST regime in the case of M/s Optival Health Solutions Private Limited pertaining to revision of the Form TRAN-2 where the Calcutta High Court also held that the petitioner shall be allowed revise Form TRAN-2 either electronically or manually on the basis that law cannot take away the right of a person to explain his actions and correct them if he has valid proof. The Hon’ble High Court held that there is no ground on which the petitioner shall be denied the facility to revise the form. Even in this case it was held that a person cannot be denied the substantial right of credit as it shall lead to violation of Article 14 of the Constitution.

Hence, it was very categorically maintained that the substantial right of an assessee cannot be taken away by a procedural infraction. Furthermore, the assesee should be given a right to rectify a procedural curable defect. Secondly, there was no appeal mechanism was provided under SLVDRS scheme but assessee can definitely approach the Court for getting the relief. This is in line with VCES scheme-2013. It is not held that the appeal can be filed against the decision under this scheme but we will have such decision very soon on same analogy as held by Delhi High Court in case of FRANKFINN AVIATION SERVICES P. LTD[2014(35)STR165 (Del.)] for VCES scheme.

The content of this GST update is for educational purpose only and not intended for solicitation.
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Update on SVLDRS in the case of Assam Cricket Association-Gauhati High Court 84/2020-21

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