The SVLDRS was introduced under the Finance Act, 1994, to resolve pending disputes in indirect tax matters. The petitioner had initiated a dispute in December 2018, following an enquiry into their tax liabilities. They filed a declaration under the SVLDRS in December 2019, wherein they indicated that they had paid Rs. 3,27,81,964/- through CENVAT credit as part of the settlement. The petitioner contended that this payment, made after the commencement of the investigation, should be deducted while calculating the payable amount under Section 124(2) of the SVLDRS.

The petitioner’s counsel, Mr. Raichandani, pointed to Section 124(2) of the Finance Act, 1994, which stipulates that any amounts already paid as pre-deposit during an enquiry, investigation, or audit should be deducted when determining the final payable amount under the scheme. He argued that since the CENVAT credit amount was utilized post-investigation, it should be considered for relief under the SVLDRS.

However, the respondents, represented by Mr. Mishra, disputed the petitioner's claims, asserting that the petitioner had misrepresented facts in their declaration form (SVLDRS 1). The respondents emphasized that the petitioner failed to substantiate the claimed CENVAT credit utilization with proper documentation and that the payment through CENVAT credit had been made prior to the investigation.

The Court examined the arguments put forth by both parties, particularly focusing on the petitioner’s inconsistent statements regarding the utilization of the CENVAT credit. Despite claims in the SVLDRS form that the credit was used for payment on December 31, 2019, the respondents provided evidence from the CENVAT Credit Ledger and service tax returns showing that the credit had been utilized earlier. Additionally, the petitioner failed to produce supporting documentation to verify their claim that the credit was used post-December 2018, further weakening their case.

The Court noted that the object of the SVLDRS was to provide a mechanism for resolving disputes by allowing taxpayers to come clean about past violations. However, the petitioner’s shifting positions on the date of utilization of CENVAT credit and failure to produce necessary documents led the Court to conclude that no relief could be granted. The Court also found that the petitioner’s conduct in making contradictory statements undermined their credibility.

The case highlights the importance of consistency and accuracy in tax declarations, especially under schemes like the SVLDRS, which are designed to settle long-standing tax disputes. A clear and truthful declaration is essential for benefiting from such schemes. The Court underscored the need for petitioners to substantiate their claims with credible evidence, particularly when claiming relief based on prior payments.

Additionally, the Court addressed the issue of CENVAT credit utilization, reaffirming that the timing of the credit’s usage is crucial when determining eligibility for relief under the SVLDRS. The case reinforces the view that tax benefits cannot be claimed based on unsubstantiated or self-contradictory claims.

The petition was ultimately dismissed, with the Court ruling that the petitioner had failed to provide sufficient evidence to support their claim for relief. The decision serves as a reminder of the rigorous documentation and consistency required under tax resolution schemes. As a result, the Court found that the respondents’ calculations were accurate, and the petitioner’s shifting claims did not warrant interference with the impugned order.

This case illustrates the crucial role of clear and honest disclosures in tax dispute resolutions and sets a precedent for similar future cases under the Sabka Vishwas Scheme.

FINANCE ACT, 1977