The High Court held that in the case of Sew Infrastructure Ltd. vs. Dir. General of GST Intelligence DGGI , Telangana High Court had directed GST Department to set off refund that was due to petitioner therein from the Income Tax Department.

In that case, petitioner was unable to discharge its liability under SVLDRS because of the Covid Pandemic situation and financial difficulties and the only way the petitioner could discharge its liability as per Form No.SVLDRS – 3 was by utilizing the Income Tax refund of Rs.34,65,92,330/- which it was held entitled to. The GST Department in this case relied upon Sub Section (5) of Section 127 of the Finance Act, 2019 to show that the payment should only be made electronically through internet banking. The High Court held that petitioner shall be deemed to have made the payment determined under Form SVLDRS – 3 and the GST Department was directed to adjust with one that was due to petitioner from the Income Tax Department.

SVLDRS is a statutory scheme, that provides some reliefs to the assessee in varying degrees. There is force in the submission of Mr. Nankani that the scheme in question, being for the benefit of assessees needs to be construed liberally to effectuate the purpose. There is no dispute that the SVLDRS Scheme was introduced by Finance (no.2) Act, 2019 and notified in the Gazette of India Extra-ordinary on 01.08.2019. SVLDRS was introduced by the Union of India to provide relief to tax payers in the form of both dispute resolution as well as amnesty. It was a one-time measure to free a large segment of tax payers from their pending disputes with the Tax Administration, unload the baggage and allow businesses to move on. It provides both dispute resolution and amnesty in regard to past disputes of Central Excise, Service Tax and several other Indirect Tax Enactments.

It was a beneficial scheme, which is being narrowly interpreted by respondents instead of being liberally interpreted. Respondents should adopt a reasonable and pragmatic approach so that a declarant can avail the benefits of the scheme and a declarant like petitioner cannot be put in a worse off condition than he was before making declaration under the Scheme.

In our view the SVLDRS has to be given a liberal interpretation and not a narrow interpretation, its intent being to unload the baggage relating to legacy disputes.

Here, petitioner has scrupulously abided by all the terms and conditions of the scheme. In the absence of any definition as to what amounts to “pay electronically through internet banking”, in our view even payment made by electronic cash ledger maintained by petitioner under the CGST Act also amounts to payment through internet banking. In the words of the Hon’ble M.C. Chagla, J, in The State of Bombay vs. Morarji Cooverji,a petitioner in order to get relief from the court in a Writ Petition must satisfy the court that making of the order will do justice and that justice lies on his side. In this case, we are satisfied that justice is on the side of petitioner and making of an order in favour of petitioner by accepting its submissions will do justice.

Respondent No.4 is directed to issue within four weeks discharge certificate in Form SVLDRS – 4 through electronic form and if it cannot then it be issued in physical form.