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2022 (8) TMI 805 - HC - Income TaxDirect Tax Vivad Se Vishwas Scheme - definition of ‘dispute’ under the VSV Act / Rules - exclusion of a disputant of tax liability, like the petitioner, from the possibility of settlement under the VSV Act - case of the petitioner that on filing of the declarations in prescribed forms in terms of Section 4 (1) of the VSV Act, the designated authority was required to issue certificate under Section 5 (1) intimating the particulars of tax arrears and the amount payable after such determination - petitioner contended that since this Court had given liberty to approach authorities seeking waiver of interest and penalties and while the penalty was waived under Section 273 (A) (4) of the VSV Act, Section 220 (2A) being almost similar, interest ought to have been waived as well - HELD THAT:- Declaration under Form I & II requesting for settlement of their tax arrears relating to disputed interest ought to have been resolved under the VSV Act since they fell within the scope of Section 3 read with Section 2(1) (h) and 2 (1) (o). CIT however was also relying on definitional sections to contend that while tax arrears included disputed interest but the disputed interest was only in a case where “an appeal” has been filed and rejection of the waiver application prior in time by the department could not be considered an appeal and petitioner would not be an ‘appellant’. In the opinion of this court this contention of respondent is inherently flawed on various grounds. Firstly, there is no definition of ‘appeal’ in the VSV Act for CIT to take support of any straitjacketed definition. Secondly, what is instead defined was ‘dispute’, not in the VSV Act but in the Rules at Clause 2 (b) and includes an appeal, writ, special leave petition, arbitration, conciliation and mediation the intent of the VSV Act was to provide resolution of all nature of disputes relating to tax, penalty, interest, fee as determined under provisions of the VSV Act. The restrictive scope that the CIT is providing for definition of ‘dispute’ or even of an ‘appeal’ is not in synchronicity with the letter and spirit of the VSV Act that propounds an ameliorative scheme for resolution. Thirdly, Section 2 (1) (o) which defines tax arrears includes distinct categories which are in the alternative and not cumulative viz., disputed tax, disputed interest, disputed fee, disputed penalty. Therefore, for the CIT to contend that Section 2 (1) (h) relates to a disputed interest on a disputed tax only and therefore the petitioner was non-suited since there was no disputed tax but only disputed interest, is not tenable. Provisions have to read purposively and in harmony with the scheme of the VSV Act and its intent. It is a well settled principle of law that a statute should be given a purposive construction in order to give effect to its legislative purpose. This, not being a taxing statute but one which propounds a dispute resolution scheme for tax disputes would be amenable to a purposive construction. Fourthly, even as per the Statement of Objects and Reasons to the VSV Act, which is extracted below for convenience, the intent was to include all sorts of disputes even if pending before the Commissioner of Income Tax or the courts. The intent of the legislature was clearly to have an expansive inclusion rather than a restrictive exclusion. In fact section 9 of the VSV Act, which provides what is specifically excluded from the VSV Act [as also the Explanation to Section 2 (1) (o)], does not include anything which relates to the case of the petitioner. Fifthly, even this Court in Shyam Sunder Sethi v. Pr. Commissioner of Income Tax-10 and Others [2021 (3) TMI 603 - DELHI HIGH COURT] has set aside a similar order of rejection based upon an FAQ under the VSV Act, as bad in law. Accordingly, attempt by the CIT to exclude a genuine disputant of tax liability, like the petitioner, from the possibility of settlement under the VSV Act is extremely hyper-technical. The interest as demanded under Section 220 (2A) which is 1% for every month of the period of delay as opposed to an application of Rule 154 of the Companies Court Rules which provides for an interest ceiling at the rate of 4% interest for companies in liquidation, is a huge statutory benefit given to companies in liquidation. It cannot be contended that the respondent CIT is not qualified to account for the beneficial provisions for a company in liquidation. That is not the ground of rejection of petitioner’s declaration under the Act. The ground of rejection as stated that the company application filed by the petitioner in this Court was not an ‘appeal’ and therefore not within the scope of the VSV Act, which in light of above analysis cannot be accepted. This writ petition is disposed setting aside the rejection dated 5th January, 2021 of From I and II filed by petitioner on 20th March, 2020 by the Principal Commissioner of Income TaxIV, Delhi (CIT) with directions to the CIT to re-examine/reassess the declaration filed by the petitioner under the VSV Act and decide on its merits in terms of procedure envisaged under the Act read with its Rules.
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