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2020 (9) TMI 9 - HC - Service TaxRejection of declaration filed under the amnesty scheme- Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - settlement of Service tax dues - rejection of the declaration filed by the Petitioner on account of Petitioner s eligibility relates to quantification of tax dues prior to the relevant date - HELD THAT - As per Section 123, in case of an enquiry or investigation or audit which is pending against the declarant, the amount of duty payable under any of the indirect tax enactments has to be quantified before 30th June, 2019. Section 125(1)(e) referred above, renders all such persons ineligible to make a declaration under the Scheme who have been subjected to an enquiry or investigation or audit and the amount involved has not been quantified on or before 30th June 2019. Thus, Section 125 (1)(e) in a way compliments Section 123 (c) of the Act and quantification of tax dues is imperative for a declarant to become eligible for applying under the scheme. The meaning of the word quantified has been extended and broadened, obviously keeping in view the objective of the Scheme by way of Circulars dated 12th December, 2019 and 27th August, 2019. By virtue of the circulars, the Respondents have clarified that the benefit of the Scheme can also be given to those cases where the duty involved is quantified by way of an admission made by the declarant in a statement made on or before 30th June, 2019. This admission can be during an enquiry, investigation or audit report etc. Now, let us examine whether the admission made by the Petitioner in the present case make it eligible under the scheme. Whether by virtue of the aforesaid admission, the tax dues can be said to quantified by the Investigating Authority before 30th June, 2019? - HELD THAT - The demand-cum-show cause notice dated 13th March, 2020, on the face of it relates to tax dues which are much more than the amount admitted by the Petitioner. No doubt, in so far as the Service Tax liability is concerned, which is one of the components of the demand-cum-show cause notice dated 13th March, 2020, there is no dispute between the parties with respect to the quantum. However, the aforesaid admission of liability of Service Tax, to our understanding, cannot be held to be quantification of the entire tax dues . It is admission of Service tax liability only. Petitioner s contention that this should be treated as the quantified tax dues, is therefore, plainly incorrect. SVLDR is a beneficial scheme and purposive interpretation of its terms is desirable. However, we cannot give an interpretation that would run counter to its objective. The scheme is a one-time measure for liquidation of past disputes under the erstwhile regime and affords an opportunity of voluntary disclosure to non-compliant tax payers. The declarants are thus expected to come clean in order take its benefit. During investigation, Petitioner only admitted Service Tax liability and did not make any disclosure with respect to the other tax dues and as a result whereof, after investigation, Respondents have issued the demand-cum show cause notice for an amount of ₹ 13,77,13,890/-. This show cause notice would have to be adjudicated in entirety and cannot be done in a piecemeal manner - We cannot construe admitted tax liability to be matter and the remainder dues as per show-cause notice to be a separate matter , especially since the investigation was still ongoing on the relevant date. Application was rightly dismissed.
Issues Involved:
1. Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS). 2. Quantification of tax dues before the relevant date. 3. Interpretation of the SVLDRS provisions and related circulars. 4. Admissibility of partial settlement under the SVLDRS. Detailed Analysis: 1. Eligibility under the SVLDRS: The Petitioner filed a declaration under the SVLDRS, seeking settlement of Service Tax dues. The Respondents rejected the declaration, stating that the tax dues were not quantified before the relevant date, i.e., 30th June 2019. The Petitioner argued that the liability was admitted and quantified during the investigation, making them eligible under Section 125(1)(e) of the Finance Act, 2019. The Respondents countered that the comprehensive demand notice issued on 13th March 2020 included several heads of tax dues, and the quantification was not completed before the relevant date. 2. Quantification of Tax Dues Before the Relevant Date: The Petitioner contended that the Service Tax liability of ?1,75,63,982 was admitted in a statement dated 26th July 2018 and reiterated in subsequent communications. The Respondents, however, maintained that the tax dues were not quantified by the investigative authority before 30th June 2019. The court examined the provisions of the SVLDRS and related circulars, which clarified that the amount must be quantified and communicated in written form before the relevant date. The court found that the admission of Service Tax liability alone did not constitute the quantification of the entire tax dues. 3. Interpretation of the SVLDRS Provisions and Related Circulars: The court referred to the definitions and provisions under Sections 121(r), 123(c), and 125(1)(e) of the Finance Act, 2019, along with circulars dated 12th December 2019 and 27th August 2019. These provisions and circulars emphasized that the quantification must be a written communication of the duty payable. The court noted that the Petitioner’s admission of Service Tax liability did not cover the entire tax dues, which were quantified in the show cause notice dated 13th March 2020. The court distinguished the present case from the Seventh Plane Networks Pvt. Ltd. case, where there was no dispute about the amount. 4. Admissibility of Partial Settlement under the SVLDRS: The Petitioner argued that under Section 129 of the Finance Act and related circulars, partial settlement of tax dues should be allowed. The court disagreed, stating that the SVLDRS did not contemplate fragmented settlement of tax dues. The discharge certificate issued under Section 126 would be conclusive for the matter and time period stated therein, and the entire demand arising from the same investigation and time period must be adjudicated together. The court emphasized that the scheme aimed for a complete resolution of legacy disputes, and partial settlement would not achieve this objective. Conclusion: The court found no infirmity in the rejection of the Petitioner’s declaration under the SVLDRS, as the tax dues were not fully quantified before the relevant date. The petition was dismissed, reinforcing that the scheme requires comprehensive quantification and resolution of tax disputes, not piecemeal settlements.
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