Person Making ‘Voluntary Disclosure’ After Subjected To Audit Is Ineligible To Avail Benefit Of SVLDRS, 2019: Rajasthan High Court

In the case of Malik Builders vs Union of India (D.B. Civil Writ Petition No. 7527/2021), The division bench of Acting Chief Justice Manindra Mohan Shrivastava and Justice Madan Gopal Vyas held that a person making “Voluntary Disclosure” after being subjected to any enquiry, investigation, or audit is clearly ineligible to avail the benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS, 2019).


The petitioner/assessee was involved in construction activities bearing Service Tax Registration and filed an online application to avail the benefit of SVLDRS before the authorities on December 31, 2019. The respondents/department also issued the discharge certificate or full and final settlement tax dues under Section 127 of the Finance (No. 2) Act of 2019 read with Rule 9 of the Scheme of 2019. The respondent issued 3 ARN numbers to the petitioner. The audit proceedings eventually resulted in the issuance of an Internal Audit Report against the petitioner for the same period for which the petitioner had filed an application under the SVLDRS, followed by a show cause notice. The petitioner, anticipating adverse action against it in view of pending audit proceedings, had requested the department to afford it an opportunity of hearing. However, opportunity was also not granted and a decision was taken to reject the declarations, holding the petitioner ineligible to seek the benefit of SVLDRS. Therefore, respondents’ actions were vitiated due to a violation of the principles of natural justice.


The court noted that as per Section 129 (2)(C) of the Finance (No.2) Act, in a case of “Voluntary Disclosure”, where any material particular furnished in the declaration is subsequently found to be false, within a period of one year of the issue of the discharge certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable Indirect Tax enactment shall be instituted. The court ruled that the authorities rightly concluded that the declaration filed by the petitioner under the category of “Voluntary Disclosure” appears to have been filed wrongly as the audit had already been initiated. Resultantly, SVLDRS applications were cancelled.

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