Bombay High Court facilitates settlement of pre-TPS disputes

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Taxpayers can claim the benefit of the amnesty scheme for pre-GST dues even if ultimate liability is not quantified or determined via notice from the revenue department, the Bombay High Court has said. This as long as there is written communication of the amount of duty payable by the taxpayer, the court said.

For the purposes of eligibility for the scheme, completion of the survey is not required as a precondition.

The High Court order comes in the case of Nabeel Constructions Pvt., which sought to settle its utility tax debt under the rules of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

The scheme offers taxpayers a 40-70% reduction in the payment of disputed tax amounts, as well as full relief from interest and penalties. To benefit from the regime, the tax debts must have been quantified no later than June 30, 2019.

In the case of Nabeel Constructions, the dispute centered on whether liability was quantified before the deadline.

The company relied on the statement made by its director during the investigation. On February 28, 2019, the director had declared and admitted the total tax liability of Rs 1.28 crore, the company argued.

The tax authority denied the company’s request to settle liability under the scheme on the grounds that the investigation was still ongoing. And that the ministry had not yet quantified the tax to be paid, which means that the amount admitted in the declaration cannot be considered definitive.

The high court disagreed with the ministry’s view.

First, he noted that the company never had a chance to be heard personally before its claim was denied. Denial carries adverse civil consequences as the company would have to face the outcome of a subsequent investigation, investigation or audit.

Second, the court did not agree that liability should have been precisely quantified before the deadline. The tax admission figures do not need to have mathematical precision or be exactly the same amount as later quantified by tax authorities after June 30, 2019, the court noted.

This requirement, the court noted, was met by Nabeel Constructions, making it eligible for the program, the court said.

Underlining the aim of the scheme, the court said, the attempt was to make it a huge success as the government noted a high number of indirect tax disputes even two years after the tax law was introduced. on goods and services.

He noted the Finance Minister’s statement during the introduction of the scheme that more than Rs 3.75 crore was tied up in service tax and excise disputes. We had to unload this baggage and allow the business to continue. Thus, a system for the resolution of inherited disputes has been proposed to allow a rapid closure of these disputes.

The aim of the scheme is to encourage people to settle who had declared tax arrears in good faith before the deadline of June 30, 2019, the high court concluded.

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