2020 (10) TMI 1267 - HC - Service Tax

Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - rejection of the scheme on the ground that the petitioner was not eligible to apply under the scheme - Section 125(1)(e) of the Finance(No.2) Act 2019 - HELD THAT - There are two provisions namely Section 128 of the Finance (No.2) Act 2019 and Rule 6(6) of the Scheme Rules that enable the designated committee to modify its order after issuance of statement under Section 127 of the Act. The designated authority can revisit the issue after issuance of Form SVLDRS-3 only in the circumstances set out in Section 128 r/w.Rule 6(6). If during the verification process contemplated by Rule 6 if the designated committee finds that the applicant is not eligible to make a declaration under Section 125 of the Act the declaration ought to be returned or rejected at that stage itself. Having moved to the next stage the designated committee cannot retrace its steps. The designated committee is a creature of statute. It came into existence by virtue of the provisions of Chapter V of the Finance (No.2) Act 2019. If the impugned order is sustained it would mean that the designated committee has been conferred with absolute power of review when what has been conferred is only limited power of review namely the power to correct the arithmetical or clerical error. It cannot revisit the issue on merits having once made the determination under Section 127(4) of the Finance (No.2) Act 2019 r/w. Rule 6 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules 2019. Thus the designated committee did not have the jurisdiction to issue the impugned order - first respondent is directed to issue Discharge Certificate as sought for within a period of thirty days from the date of receipt of a copy of this order - petition allowed.

Summary

Issues Involved:
1. Eligibility of the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. Jurisdiction of the designated committee to reject the declaration after issuing Form SVLDRS-3.
3. Violation of principles of natural justice.

Issue-wise Detailed Analysis:

1. Eligibility of the Petitioner:
The petitioner, a Private Limited Company, was under investigation by the Directorate General of GST Intelligence. According to Section 125(1)(e) of the Finance (No.2) Act, 2019, those under investigation or audit are ineligible to make a declaration under the scheme if the amount of duty involved was not quantified on or before 30.06.2019. The respondents argued that since this requirement was not met, the petitioner was ineligible. However, the court did not delve into the eligibility issue in this writ petition but noted that the department could challenge the eligibility in a separate writ petition.

2. Jurisdiction of the Designated Committee:
The petitioner submitted an application under the Sabka Vishwas Scheme, which was accepted, and Form SVLDRS-3 was issued, determining the liability. The petitioner paid the determined amount, but the first respondent later rejected the declaration, stating the petitioner was ineligible. The court held that the designated committee could only correct arithmetical or clerical errors under Section 128 and Rule 6(6) of the Scheme Rules. The committee lacked jurisdiction to revisit the issue on merits after issuing Form SVLDRS-3. Therefore, the impugned order was quashed on this ground.

3. Violation of Principles of Natural Justice:
The court also found that the impugned order was issued without putting the petitioner on notice, violating the principles of natural justice. Typically, such a violation would result in remitting the matter back to the authority for rehearing. However, since the court had already determined that the designated committee lacked jurisdiction to revisit the issue on merits, it did not remit the matter back.

Conclusion:
The court directed the first respondent to issue the Discharge Certificate within thirty days. The department was given liberty to file an appropriate writ petition to challenge the eligibility of the petitioner if deemed necessary. The writ petition was allowed with no costs.