Facts of the Case

The petitioner, Carpet Export Promotion Council, a Section 25 company set up by the Ministry of Textiles to promote export of Indian handmade carpets, was subjected to a service tax audit for the period 2013-14 to June 2017. The audit raised four issues: wrongful availment of cess (Rs. 3,16,946/-, already reversed), a service-tax shortfall on ST-3 reconciliation (Rs. 92,385/-, already deposited), wrongly availed Cenvat Credit on rent-a-cab, medical insurance and hotel accommodation (Rs. 8,05,654/-, already reversed), and wrongly availed Cenvat Credit on exempted grant-in-aid income under Rule 6(3) of the Cenvat Credit Rules (Rs. 82,81,915/-, also deposited) — with interest and penalty remaining outstanding on all four heads. After the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 ("SVLDRS") came into force from 01.09.2019, the petitioner filed a declaration seeking waiver of interest and penalty, but its application was rejected on the ground of "ineligibility" for "incomplete and selective declaration" — the department contending that the duty-details column of the declaration erroneously reflected only Rs. 82,81,915/- instead of including all four components.

Issues Involved

  1. Whether the rejection of the petitioner's SVLDRS declaration was justified merely because the amount mentioned under "duty details" did not separately list all four components of duty, even though the correct total amount of duty had in fact been deposited.
  2. What weight should be given to the Scheme's stated objective of liberally resolving pre-GST indirect-tax litigation.

Petitioner's Arguments

  • The declaration, though imperfectly itemised, covered all the liabilities identified in the audit, and the actual duty deposited matched what was ultimately due; only interest and penalty remained in dispute, which the Scheme was designed to waive.

Respondent's Arguments

  • The amount shown under "duty details" and "pre-deposit of duties" was erroneously reflected only as Rs. 82,81,915/-, when it ought to have separately included the cess, service-tax shortfall and Cenvat Credit amounts as well, rendering the declaration incomplete and selective, and therefore ineligible.

Court Order / Findings

  • The Court traced the legislative purpose of the SVLDRS Scheme — introduced via the Finance (No. 2) Act, 2019 to clear a massive backlog of pre-GST indirect-tax litigation (over Rs. 3.75 lakh crore, per the Finance Minister's 2019 Budget speech) and enable businesses to transition into the GST regime unencumbered by legacy disputes.
  • Given the Scheme's remedial, liberal-construction purpose, the Court held that excluding a taxpayer merely for an obvious, non-material error in itemising the duty details — where the correct total duty had actually been deposited — would defeat the object of the Scheme.
  • The impugned rejection order was set aside, and the designated authority was directed to process the petitioner's declaration under the SVLDR Scheme within eight weeks.

Important Clarification

This ruling interprets the Sabka Vishwas Scheme, a one-time service tax/Central Excise amnesty that closed in 2020 — it is not a GST-law decision, though the judgment situates the Scheme explicitly as a bridge clearing pre-GST litigation ahead of the GST regime. It remains useful precedent, however, for the general principle that minor clerical mismatches in a tax amnesty declaration should not defeat substantive eligibility where the underlying tax has genuinely been paid.

Sections Involved

  • Sections 120 to 135, Chapter V, Finance (No. 2) Act, 2019 (Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019)
  • Rule 6(3), Cenvat Credit Rules, 2004

Decision – In Favour of

Decided in favour of the petitioner; the rejection of the SVLDRS declaration was set aside and the department was directed to process it within eight weeks. No GST-law question was decided.

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case No.: W.P.(C) 3624/2021
  • Neutral Citation: 2023:DHC:3549-DB
  • Coram: Hon'ble Mr Justice Vibhu Bakhru and Hon'ble Mr Justice Amit Mahajan
  • Date of Judgment: 22 May 2023

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