Facts of the Case

George Joseph Kanjamala, owner of a commercial building ('KM Tower') at Alakode, Kannur, was assessed to Service Tax arrears (under the pre-GST 'Renting of Immovable Property' taxable category, Finance Act, 1994) for 2011-12 to 2014-15. He had opted for the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS), with the department issuing Form No. 3 fixing payable amounts of Rs.1,75,897.50 and Rs.86,151.30. The scheme's payment deadline was 30.06.2020, but payment was actually credited via two bank challans dated 01.07.2020, with the dispute centred on whether that payment was made before or after 12 a.m. on 01.07.2020. Based on treating the payment as late, the Assistant Commissioner, Central GST and Central Excise, Kannur Division, passed an Order-in-Original and penalty order (Ext.P9, Ext.P10) reviving the original Service Tax demand.

Issues Involved

  1. Whether the SVLDRS payment made on 01.07.2020 should be treated as timely, given the scheme's deadline of 30.06.2020 and the bank's crediting of the amount after midnight.

Petitioner's Arguments

  • The petitioner had remitted the SVLDRS amount via bank challans on 01.07.2020, the very next possible working day after the scheme deadline of 30.06.2020, and since payment had been made, the department's revival of the original Service Tax demand through Ext.P9 and Ext.P10 was illegal and liable to be quashed.

Respondent's Arguments

  • The Revenue submitted that the petitioner had not paid the amount before 12 a.m. on 01.07.2020, and was therefore not entitled to the benefit of the SVLDRS Scheme.

Court Order / Findings

  • The Court found it undisputed that the SVLDRS amount had been paid by the petitioner on 01.07.2020, and held that whether the bank's system uploaded the payment before or after 12 a.m. on the last permissible date should not make a material difference, given that the payment was made on the last date of payment itself.
  • Treating the payment as validly made under the SVLDRS Scheme, the Court held there was no basis for the impugned recovery orders and quashed Ext.P9 and Ext.P10, allowing the writ petition.

Important Clarification

This is a Service Tax/SVLDRS matter under the pre-GST Finance Act, 1994 regime — it decides a Legacy Dispute Resolution Scheme payment-timing question, not any GST-law issue, even though the respondent department bears the composite modern title 'Central GST and Central Excise' (reflecting the department's post-GST reorganisation). Businesses with SVLDRS-related disputes over exact payment timing may find the reasoning here — that a same-day bank credit should not be treated as a missed deadline merely due to the hour of processing — useful, but it has no application to GST payment-deadline questions, which are governed by different rules.

Sections Involved

  • Finance Act, 1994 — levy of Service Tax on 'Renting of Immovable Property' services.
  • Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 — one-time settlement scheme for pre-GST indirect tax disputes.

Decision – In Favour of

Decided in favour of the petitioner (George Joseph Kanjamala) — the recovery orders were quashed and the writ petition allowed, on a Service Tax/SVLDRS payment-timing question unrelated to GST.

Case Details

  • Court: High Court of Kerala at Ernakulam
  • Case No.: WP(C) No. 29705 of 2022
  • Coram: Hon'ble Mr. Justice Dinesh Kumar Singh
  • Date of Judgment: 18 October 2023

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