• Notification Date: 24-01-2022
• Notification No: N/A

Bombay High Court Settles Pre-GST Disputes

Bombay HC allows the taxpayers to seek the amnesty scheme benefits for their pre-GST dues. They can avail of the benefits even if the final notice is not determined by the revenue department through notice. The Court has stated that the taxpayers can seek benefits of the scheme as long as they file a written communication about the amount of duty to the revenue department. They do not need to wait for the investigation to be completed.

Nabeel Constructions Pvt. had sought to settle its service tax liability under the Sabka Vishwas Scheme Rules, 2019. The case was regarding the determination of the company’s liability within the cut-off date of the scheme. The ruling as ordered by the Bombay High Court has come as a settlement to this case. This scheme allows a 40-70% reduction in the disputed tax liability to the taxpayers, along with interests and penalties. The tax liabilities must be determined within 30 June 2019 to avail of the scheme benefits.

The director of the company had declared on 28 Feb 2019 that the total tax liability of the company is Rs.1.28 crore.

The tax department has rejected the company’s request of settling the matter as the investigation is still not complete and the liability is not determined. The amount mentioned in the statement cannot be considered as final since the investigation is pending. But the high court denied the viewpoint of the tax department.

The company was not allowed to present a personal hearing before the judgment of rejecting its application was passed. This has forced the company to face subsequent inquiries, investigations, and audits.

The court noted that the tax liability figure does not have to be the exact amount as the subsequent quantification that is determined by the tax authorities within 30 June 2019.  

The High Court commented that this new scheme was introduced with the purpose of clearing the huge amount of indirect tax disputes that were not being cleared after two years of introducing the goods and service tax. The scheme would encourage the people to settle their tax disputes within the cut-off date of June 30, 2019.