Bombay High Court Orders Reassessment of Evershine Enterprises' Tax Liabilities under SVLDRS

Court mandates re-evaluation of predeposit and recovery claims in Evershine Enterprises' SVLDRS-3 form by designated committee

In a significant judgment, the Bombay High Court has directed a reconsideration of the tax liabilities determined for Evershine Enterprises under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The court found procedural lapses in the verification of predeposit and recovery claims made by the petitioner, Evershine Enterprises, by the designated committee responsible for issuing the SVLDRS-3 form.

The case stemmed from a writ petition filed by Evershine Enterprises challenging the SVLDRS-3 form issued on December 26, 2019, which demanded a payment of Rs. 1,12,65,902. The petitioner argued that the designated committee failed to account for amounts already recovered or predeposited, leading to an inflated demand.

In its judgment, the court emphasized the necessity for the designated committee to verify claims of predeposit and recoveries during investigations by examining submitted documents and departmental records, as mandated by Section 124(2) of the Finance Act, 2019. The court noted that failure to verify such claims constitutes a procedural lapse that requires reconsideration of the determination under the Scheme.

The bench, comprising Justices M.S. Sonak and Advait M. Sethna, highlighted that the verification exercise is not an adjudicatory or appellate function but aims to ensure the settlement of disputes in accordance with the Scheme's objectives. The court cited a similar precedent from the case of Code Engineers Pvt. Ltd. v. Union of India, reinforcing the importance of proper verification in line with the Scheme's intent to resolve legacy disputes.

The court quashed the existing SVLDRS-3 form to the extent of the disputed amount and directed the designated committee to re-evaluate the claims related to predeposit and recoveries. The committee is required to verify the challans submitted by the petitioner on December 9 and 16, 2019, and consider statements from a prior show-cause notice acknowledging recoveries amounting to approximately Rs. 80 Lakhs.

The court mandated the completion of this verification process within three months, ensuring that Evershine Enterprises is given a fair opportunity to present its case. The judgment clarifies that while the petitioner's contentions about predeposit or recovery have not been accepted, the designated committee must now assess these claims afresh.

This decision underscores the judiciary's role in ensuring administrative fairness and adherence to procedural requirements in statutory schemes like the SVLDRS, aimed at resolving tax disputes efficiently.

Bottom Line:

The designated committee under The Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 must verify claims of predeposit or recovery during investigations based on documents submitted and departmental records before determining the payable amount under SVLDRS-3.

Statutory provision(s): Finance Act, 2019 Section 124(2), The Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019

Evershine Enterprises v. Union of India, (Bombay)(DB) : Law Finder Doc Id # 2813079