SVLDRS Benefits Cannot Be Denied If Payment Falls Within SC's COVID-19 Extended Limitation Period: Kerala High Court

Justice Ziyad Rahman A.A. found that SVLDRS proceedings are quasi-judicial in nature, and hence covered under Supreme Court's suo moto extension orders.

In this case, the assessee is aggrieved by the revenue recovery proceedings initiated against him towards the arrears of service tax payable by him.

Earlier proceedings were initiated against the assessee, demanding service tax as per the show-cause notice.

In the meantime, the Central Government introduced a scheme for settlement of the tax liabilities, including service tax, viz, Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS).

The assessee submitted a declaration as contemplated under section 125 of the Finance Act, and based on the same, the department offered the assessee to settle the liability by paying Rs. 1,05,806/- as per section 127(5) of the Finance Act, 2019.

The said payment ought to have been made by the assessee within a period of 30 days from the date of issue of a settlement accepting the declaration of the assessee.

The due date for the payment was extended by the Government up to 30.06.2020 by amending Rule 7 of SVLDRS. Later, the period was extended up to 30.09.2020. However, the assessee could remit the said amount on 16.11.2020, and the same was accepted by the Department.

Despite the above, the Deputy Tahasildar issued a notice to the assessee, demanding an amount of Rs. 8,30,851/-.

The assessee placed reliance upon the orders passed by the Supreme Court in suo motu proceedings relating to the Covid-19 pandemic, wherein the period of limitation was extended up to 28.2.2022 from 15.3.2020.

It was pointed out that even though the period contemplated under Rule 7 of SVLDRS expired on 30.09.2020, as the assessee affected the payment on 16.11.2020, which falls within the extended time limit as per the order passed by the Supreme Court, the assessee is entitled to get the benefit of the scheme.

The department argued that that the benefit of the order passed by the Supreme Court extending the period of limitation is not applicable to the scheme, in view of the fact that, the extension of time referred to in the said orders are in respect of the judicial or quasi-judicial proceedings, whereas, the proceedings under the Amnesty Scheme is merely administrative in nature.

The bench stated that since the Supreme Court passed an order on 23.9.2021 extending the period of limitation for all proceedings, the assessee is entitled to the benefit. This is particularly because what is extended is the “limitation in respect of a proceeding under the Central and State enactments, including special laws. Going by the scheme, Chapter V of Finance Act, 2019, r/w the rules framed thereunder, it can be seen that the proceeding comes to an end only upon the assessee is issued with a discharge certificate, as contemplated in clause (8) of 127 r/w Rule 9 of SVLDRAS Rules, 2019, in form SVLDRS.

The bench further added that such a discharge certificate can be issued only upon the payment made by the declarant. Therefore, even at the time of payment, the proceedings under the scheme, which is already found to be quasi-judicial in nature, were in existence.

Thus, in the light of the extension of time, the assessee is entitled to the relief sought for, as the assessee has remitted the amount on 16.11.2020, which is within the extended period of limitation.

The bench held that the proceedings are coming within the scope of the period of limitation that is referred to in the relevant orders passed by the Supreme Court in the suo motu proceedings initiated in connection with the Covid-19 pandemic.

The bench directed the competent officer to treat the payment made by the assessee as one in compliance of Chapter V of the Finance Act, 2019 and issue a certificate in SVLDRS-4.

In view of the above, the bench allowed the petition.

Case Title: P.P. Paul v. Union of India

Case Number: WP(C) NO. 26259 OF 2024

Citation: 2025 LiveLaw (Ker) 799

Counsel for Petitioner/Assessee: Sasidharan I.P.

Counsel for Respondent/Department: C. Dinesh