2020 (12) TMI 318 - HC - Service Tax

Rejection of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS - rejected on the ground of ineligibility - quantification of service tax liability on or before 30.06.2019 - case of respondent is that petitioner was not eligible to make a declaration as the outstanding amount due to be paid by the petitioner was not determined upon adjudication on or before 30.06.2019 - section 125(1)(e) of the Finance (No.2) Act, 2019 - HELD THAT - There is clear admission / acknowledgment by the petitioner about the service tax liability. The acknowledgment is dated 27.06.2019 i.e., before 30.06.2019 both in the form of letter by the petitioner as well as statement of its Director, Shri. Sanjay R. Shirke. In fact, on a pointed query by the Senior Intelligence Officer as to whether petitioner accepted and admitted the revised service tax liability of ₹ 2,47,32,456.00, the Director in his statement had clearly admitted and accepted the said amount as the service tax liability for the period from 2015-16 upto June, 2017 with further clarification that an amount of ₹ 1,20,60,000.00 was already paid. It is evident that the word quantified under the scheme would mean a written communication of the amount of duty payable which will include a letter intimating duty demand or duty liability admitted by the person concerned during enquiry, investigation or audit or audit report and not necessarily the amount crystalized following adjudication. Thus, petitioner was eligible to file the declaration in terms of the scheme under the category of enquiry or investigation or audit as its service tax dues stood quantified before 30.06.2019. Matter remanded back to the Designated Committee to consider afresh the declaration of the petitioner dated 24.11.2019 as a valid declaration and grant the consequential relief after giving due opportunity of hearing to the petitioner who shall be informed about the date, time and place of the hearing - petition allowed by way of remand.

Issues Involved:
1. Eligibility of the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. Quantification of tax dues before the cut-off date of 30.06.2019.
3. Non-joinder of necessary party (DGGI, Mumbai Zonal Unit).
4. Validity of the rejection of the declaration by the Designated Committee.

Issue-wise Detailed Analysis:

1. Eligibility of the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The petitioner, a company with GST registration, sought to quash the order dated 01.03.2020 rejecting its declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, and requested reconsideration of the declaration as valid. The petitioner had admitted a service tax liability of ?2,47,32,456.00 for the period from 2015-16 up to June 2017, out of which ?1,20,60,000.00 was paid. The scheme, introduced as part of the Finance (No.2) Act, 2019, aimed to resolve legacy disputes related to indirect taxes.

2. Quantification of tax dues before the cut-off date of 30.06.2019:
The core issue was whether the tax dues were quantified on or before the cut-off date of 30.06.2019. The petitioner's declaration under the scheme was rejected on the ground that the final quantification was not done before the cut-off date. The petitioner argued that the service tax liability was acknowledged and admitted in a letter dated 27.06.2019 and in a statement by the Director on the same date. The court referred to the circular dated 27.08.2019, which clarified that written communication of duty liability, including admission by the declarant, would be considered quantification. The court found that the petitioner's acknowledgment dated 27.06.2019 met the requirement of quantification before 30.06.2019.

3. Non-joinder of necessary party (DGGI, Mumbai Zonal Unit):
The respondents contended that the petitioner had not added the DGGI, Mumbai Zonal Unit, as a respondent, making the writ petition defective due to non-joinder of a necessary party. The court dismissed this objection, stating that the rejection of the declaration was by the Designated Committee, and internal communications between officials did not necessitate the inclusion of DGGI, Mumbai Zonal Unit, as a party. Therefore, the objection was deemed without substance.

4. Validity of the rejection of the declaration by the Designated Committee:
The court examined the rejection of the petitioner's declaration by the Designated Committee, which was based on the assertion that the tax dues were not quantified before 30.06.2019. The court referred to previous judgments, including Thought Blurb Vs. Union of India and M/s. G. R. Palle Electricals Vs. Union of India, where it was held that acknowledgment of duty liability before the cut-off date constituted quantification. The court emphasized that the scheme was intended to reduce litigation and facilitate business operations by resolving pre-GST disputes. The court concluded that the petitioner's declaration was valid and eligible under the scheme, and the rejection by the Designated Committee was not justified.

Conclusion:
The court set aside the order dated 01.03.2020 and remanded the matter back to the Designated Committee to reconsider the petitioner's declaration as valid. The Designated Committee was directed to grant consequential relief after providing an opportunity for a hearing to the petitioner, with the entire process to be completed within six weeks. The writ petition was allowed, and no order as to costs was made.

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