HC relief for Rampal in tax case technical goof-up

Actor Arjun Rampal availed of the Sabka Vishwas (Legacy Dispute Resolution) Scheme for tax dues on his income between April 2016 and June 2017. File Pic/Satej Shinde

Actor Arjun Rampal has got relief from the Bombay High Court in a matter involving his pending income tax dues. In 2020, he had availed a short-term scheme of the central government for a concession in clearing tax dues, but the payment didn't go through. Thereafter, he filed a writ petition in the HC to avoid paying the full pending amount of over Rs 9 lakh. The court ruled in his favour, stating that the actor was not at fault, instead a technical error prevented him from abiding by the scheme's rules. A bench of Justices Nitin Jamdar and Abhay Ahuja ruled in the matter on March 30, but the detailed order was published on the official website on April 28.

The scheme

The Centre had introduced Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) to put an end to legacy disputes in indirect tax matters. Rampal is a professional film artiste, brand ambassador and also works in advertisements and on stage shows and is registered as a service provider under the provision of the finance Act, 1994. Under this Act, all professional film artistes have to pay taxes as per their incomes.

Rampal took advantage of SVLDRS when anti-evasion officers of the Central Goods and Services Tax (CGST) on February 5, 2019, found that his tax liability balance was R9,16,203 for his income between April 2016 and June 2017. According to SVLDRS, a taxpayer is entitled to 70 per cent concession on tax dues of R50 lakh and less pending as of June 30, 2019. Hence, he had to pay only Rs 2,74,860.

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Rampal generated a challan through Central Board of Indirect Taxes and Customs (CBIC) portal to pay the dues and made the payment on June 22, 2020, via RTGS that was initially accepted. However, it was reversed later and refunded to his account. The actor attempted to make the payment again, but was unsuccessful and even communicated the same to the CGST commissioner and the joint commissioner. Siddharth Chandrashekar who is an advocate and panel counsel appointed by the Central Board of Indirect Taxes & Customs (CBIC), told the court that Rampal failed to make the payment on or before June 30, 2020, and therefore cannot get the benefit of SVLDRS.

The court ruling

The court observed that Rampal was unable to make the payment due to legal impediment. "Rampal also fell seriously ill on June 29, 2020, and there was nobody to look after his affairs and he could not deposit the amount. Such inability was beyond his control and when he got out of sickness he tried to deposit the amount and contacted the officers, but when he didn't get help, he approached the court and filed a writ petition," the court stated.

The court ordered that Rampal cannot be deprived of the benefit of SVLDRS merely on the basis of a technical issue of reversal of the amount paid by him prior to June 30, 2020, on the ground of expiry of challan for which clearly he was not at fault. The court directed the authorities to allow the actor to pay the amount of R2,74,860 under SVLDRS and issue the necessary discharge certificate under the scheme.

Advocate Bharat Raichandani said, "My client Arjun Rampal paid the pending tax dues under the scheme, but due to technical issues the payment was reversed and the government informed him that he will not get the benefit of the scheme. The court held that substantive benefit cannot be denied for technical reasons. Now my client will get this benefit as court directed." Calls and messages to Rampal went unanswered.