2022 (10) TMI 1199 - HC - Service Tax

Benefit under the said SVLDR Scheme denied - petitioner-assessee had admitted and quantified the tax payable by him prior to June 30, 2019 - HELD THAT - In the case of Bioneeds India (P) Limited v. Commissioner of Central Tax 2022 (8) TMI 1315 - KARNATAKA HIGH COURT and Nikitha Build Tech (P) Limited v. Union of India 2022 (11) TMI 1148 - KARNATAKA HIGH COURT , this court has come to the conclusion that so long as the petitioner-assessee had admitted and quantified the tax payable by him prior to June 30, 2019, notwithstanding pendency of an enquiry or an investigation or audit on or before June 30, 2019, the petitioner-assessee would be entitled to the benefit of the SVLDR Scheme. The material on record in the instant case discloses that on October 1, 2018, the respondent had quantified the amount payable by the petitioner as Rs. 1,81,99,659 to which the petitioner had submitted a reply on June 6, 2019 admitting, accepting, agreeing and quantifying the service tax payable by him as Rs.1,37,05,125 much prior to June 30, 2019, which was the cut- off date under the SVLDR Scheme and clarified by the circulars dated August 27, 2019 and December 12, 2019 issued by the respondent. The respondents committed an error in not only passing the impugned order at annexure A rejecting the claim of the petitioner for benefit under the SVLDR Scheme, but also erred in passing the impugned order at annexure H dated April 26, 2021 and consequently, the impugned orders deserve to be set aside and the matter be remitted back to the respondent for reconsideration afresh in accordance with law. Petition allowed by way of remand.

Summary

Issues Involved:
1. Validity and legality of the impugned order rejecting the petitioner's claim under the SVLDRS Scheme.
2. Entitlement of the petitioner to the benefit under the SVLDRS Scheme based on the quantification of service tax liability before the cutoff date.
3. Reconsideration of the petitioner's SVLDRS application.

Detailed Analysis:

1. Validity and legality of the impugned order rejecting the petitioner's claim under the SVLDRS Scheme:

The petitioner sought a writ of certiorari to quash the impugned orders passed by the respondents, which rejected the petitioner's claim under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS Scheme). The petitioner argued that the respondents had quantified the service tax liability as Rs. 1,81,99,659 on October 1, 2018, which was later reduced to Rs. 1,37,05,125 on July 5, 2019, based on the petitioner's objections. Despite this, the respondents issued a show-cause notice on November 13, 2019, demanding the payment of Rs. 1,37,05,125. The petitioner submitted a declaration on December 20, 2019, seeking the benefit of the SVLDRS Scheme, which was rejected by the respondents.

2. Entitlement of the petitioner to the benefit under the SVLDRS Scheme based on the quantification of service tax liability before the cutoff date:

The petitioner contended that since the service tax liability was admitted and quantified before the cutoff date of June 30, 2019, as per the SVLDRS Scheme, the petitioner was entitled to the benefit under the scheme. The petitioner relied on the circulars dated August 27, 2019, and December 12, 2019, and the judgments of the Karnataka High Court in Bioneeds India (P) Limited v. Commissioner of Central Tax and Nikitha Build Tech (P) Limited v. Union of India. The court in these cases held that the benefit under the SVLDRS Scheme would be applicable even if an enquiry, investigation, or audit was pending, provided the tax liability was admitted and quantified before the cutoff date.

3. Reconsideration of the petitioner's SVLDRS application:

The court observed that the respondents had erred in rejecting the petitioner's claim under the SVLDRS Scheme despite the quantification of the service tax liability before the cutoff date. The court noted that the petitioner had paid the entire sum of Rs. 50,50,277 before submitting the SVLDRS-1 form. The court also rejected the respondents' contention that the discrepancy between the admitted amount and the amount shown in the SVLDRS-1 form disqualified the petitioner from claiming the benefit under the scheme. The court held that the petitioner was entitled to a waiver of 50% of the sum of Rs. 53,88,248, which was far less than the amount already paid by the petitioner.

Conclusion:

The court allowed the petition, quashed the impugned orders, and remitted the matter back to the respondents for reconsideration of the petitioner's SVLDRS application. The court directed the respondents to reconsider the claim in light of the circulars dated August 27, 2019, and December 12, 2019, the judgments of the court, and the observations made in the order, after providing a reasonable opportunity to the petitioner.