In an important ruling clarifying the binding nature of settlement schemes and the finality of dispute resolution, the Kerala High Court has directed the GST Department to issue a discharge certificate under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS), after the declarant had fulfilled all statutory conditions under the scheme.
The judgment reinforces the principle that once a taxpayer complies with the scheme and the designated committee determines the payable amount; the tax administration cannot withhold statutory benefits on technical or procedural grounds.
Statutory Context: SVLDRS Framework
The SVLDRS, 2019, enacted as part of the Finance (No. 2) Act, 2019, was a one-time amnesty scheme intended to liquidate legacy disputes under pre-GST indirect tax laws, including Central Excise and Service Tax.
Upon:
- Filing of a valid declaration
- Determination of the payable amount by the designated committee
- Payment of such amount within the prescribed time
the declarant becomes statutorily entitled to a discharge certificate, which conclusively settles the dispute and bars further proceedings on the same cause of action.
Dispute Before the High Court
In the present case, the petitioner had opted for the SVLDRS and paid the amount determined under the scheme. However, despite such compliance, the GST Department failed to issue the discharge certificate, effectively keeping the dispute alive and depriving the petitioner of the statutory finality promised under the scheme.
Aggrieved by the inaction, the petitioner approached the Kerala High Court seeking enforcement of the scheme’s benefits.
Court’s Analysis and Findings
The High Court categorically held that:
- Once the declarant has fulfilled the payment obligation under SVLDRS, issuance of a discharge certificate is not discretionary but mandatory
- The department cannot revisit the merits of the dispute or raise collateral issues after acceptance of the declaration
- Administrative delay or internal objections cannot defeat legislative intent behind a settlement scheme designed to bring closure to legacy disputes
The Court observed that the very purpose of SVLDRS would be frustrated if taxpayers, despite complying with the scheme, are left without final resolution due to departmental inertia or hyper-technical objections.
Principle of Finality and Estoppel
A key legal principle reaffirmed by the Court is that settlement schemes operate on the doctrine of finality. Once the State invites taxpayers to settle disputes on specified terms and accepts compliance, it is estopped from denying consequential reliefs.
The discharge certificate under SVLDRS is not a mere procedural formality, it is the statutory instrument that extinguishes tax liability, interest, penalty, and prosecution in respect of the settled matter.
Direction Issued by the Court
The Kerala High Court accordingly directed the GST Department to:
- Issue the SVLDRS discharge certificate to the petitioner
- Treat the dispute as fully and finally settled
- Refrain from initiating or continuing any proceedings relating to the same demand
Broader Implications for Legacy Tax Disputes
This ruling has wider significance for taxpayers who opted for SVLDRS and face similar issues:
- It affirms that departmental authorities are bound by the scheme’s outcome
- It strengthens taxpayer confidence in amnesty and settlement frameworks
- It limits post-settlement litigation and administrative overreach
For practitioners, the judgment is a useful precedent in cases where discharge certificates are delayed or withheld, despite full compliance by the declarant.
Conclusion
The Kerala High Court’s decision underscores that SVLDRS is a complete code in itself, and once its conditions are satisfied, the tax administration has no residual discretion to deny statutory closure. The ruling aligns with the broader judicial trend of enforcing settlement schemes strictly in accordance with legislative intent, thereby ensuring certainty, finality, and fairness in tax administration.
Source: TaxGuru