Facts of the Case

The Petitioners, including Celerity Infrastructure Pvt. Ltd. and other group entities, filed declarations under the DTVSV Act through Forms 1 and 2 on 26 March 2021. However, while declaring the tax paid through challans, the Petitioners inadvertently excluded the interest component.

Subsequently, the Respondent accepted Forms 1 and 2 but issued Forms 3 on 22 April 2021 without granting credit for taxes deposited, citing “mismatch” issues. In certain cases, no reasons were provided for denial of credit.

The Petitioners filed multiple representations seeking rectification, but the same were rejected on the ground that the taxes were deposited under the wrong minor head (“200” instead of “400”).

Further, when Petitioners attempted to file Form 4, the system generated errors, preventing completion of the process.

Issues Involved

  1. Whether credit of taxes deposited can be denied under the DTVSV Act due to incorrect minor head classification (200 instead of 400).
  2. Whether technical/system limitations can override substantive legal rights of taxpayers.
  3. Whether the Respondent is obligated to rectify Form 3 to reflect correct tax credit.

Petitioner’s Arguments

  • The Petitioners had duly deposited the taxes, and denial of credit was unjustified.
  • The error in minor head classification was inadvertent and procedural.
  • The Respondent had already accepted Forms 1 and 2; therefore, denial at a later stage was arbitrary.
  • Technical glitches and software limitations cannot defeat statutory rights under the DTVSV Act.
  • Representations were wrongly rejected despite clear proof of tax payment.

Respondent’s Arguments

  • The credit could not be granted as the taxes were deposited under the incorrect minor head (“200” instead of “400”).
  • The system/software did not permit correction of challan codes at the Assessing Officer level.
  • Relief may not be feasible if the system does not allow such correction.

Court’s Findings / Judgment

The Delhi High Court held:

  • There was no dispute that taxes were actually deposited by the Petitioners.
  • Denial of credit on the basis of incorrect minor head is a hyper-technical ground.
  • Such rejection is unfair, illegal, and contrary to the objective of the DTVSV Act.

The Court emphasized that:

Technology is meant to facilitate compliance and cannot be used to defeat legal rights.

The Court further held that software limitations cannot override statutory entitlements of taxpayers.

Court Order / Directions

  • The Respondents were directed to:
    • Correct the challan/payment heads
    • Grant credit of taxes deposited
    • Issue revised Forms 3 within four weeks
  • Petitioners were permitted to file Forms 4 within two weeks thereafter

The writ petitions were disposed of accordingly.

Important Clarification by Court

  • Procedural or technical errors (such as wrong minor head) cannot invalidate genuine tax payments.
  • Government systems/software must adapt to legal requirements, not vice versa.
  • The objective of beneficial legislation like DTVSV Act must not be defeated by rigid technicalities.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:2743-DB/MMH19072022CW85902022_175937.pdf

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