2020 (12) TMI 1095 - HC - Service Tax

Principles of Natural Justice - rejection of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - grievance of the petitioner is that the Authority without providing an opportunity of hearing as contemplated under Section 127 of the Sabka Vishwas Scheme have rejected the petitioner s application and have accepted the second application - HELD THAT - The petitioner filed two applications, on 28.12.2019 and 14.01.2020 to avail the benefit of SVLDRS Scheme which was processed on the basis of correctness of Tax Dues declared in the application with reference to the amount of duty quantified in the reference document mentioned in the said declaration. As there were application wherein the amount of Tax Dues declared by the declarant in their SVLDRS application were not matching with the amount of duty quantified in the reference document issued on or before 30.06.2019, there was delay in proceessing. It is urged that the second application dated 14.01.2020 was processed early because the amount of Tax due declared therein matched with the amount of duty quantified in the departmental audit spot memo No.228 dated 17.05.2019. And being to be correctly filed, the amount of ₹ 74423447.50 payable by the petitioner after allowing the benefit of SVLDRS was intimated vide SVLDRS 3 form issued on 10.02.2020. It is urged that with the acceptance of declared SVLDRS application dated 17.01.2020, the earlier application which required and was under process to match out the amount of Tax Due declared with the amount of duty quantified with reference document issued on or before 30.06.2019, therefore, rendered redundant. We perceive logic in the action of the respondent in not taking decision on the application dated 28.12.2019, which the Department was not under statutory obligation to have considered first - there are no illegality or a jurisdictional error in considering the application dated 14.01.2020, rendering earlier application as redundant, no interference is caused. Petition dismissed.

Issues:
1. Quashing of order rejecting the application under Sabka Vishwas Scheme
2. Correct demand consideration and defreezing of accounts
3. Processing of SVLDRS applications in chronological order
4. Rejection of the first application as duplicate filing
5. Opportunity of hearing under Section 127 of the Sabka Vishwas Scheme
6. Provision of the SVLDRS Scheme, 2019
7. Verification of correctness of declaration by designated committee
8. Processing of applications based on correctness of "Tax Dues"
9. Action on the application dated 28.12.2019
10. Legality of considering the application dated 14.01.2020

Analysis:
1. The petitioner sought to quash the order rejecting their application under the Sabka Vishwas Scheme and requested consideration of the correct demand. The petitioner, a private limited company, had a dispute with the Service Tax Department regarding differential tax payable, penalty, and interest. The authorities issued a spot memo quantifying the tax payable, leading to the petitioner's application under the Scheme. However, the authorities processed a later application as duplicate, rejecting the original application. The petitioner argued for the correct consideration of their application and defreezing of accounts for payment.

2. The petitioner's grievance included the lack of opportunity for a hearing as required by the Sabka Vishwas Scheme. The rejection of the first application without a hearing was deemed illegal. The petitioner had also submitted a request for correction of apparent mistakes in the tax demand calculation. The respondents contended that there was no requirement to follow a chronological order in processing SVLDRS applications, leading to the acceptance of a later application over the original one.

3. The respondents highlighted the evasion of service tax discovered during scrutiny, leading to the quantification of tax dues. The SVLDRS Scheme aimed at resolving pending disputes and ensuring disclosure of unpaid taxes. The scheme provided relief for cases with pending investigations or audits before a specified date. Circulars issued by the Central Board of Indirect Taxes and Customs outlined the process for declaring tax dues under the Scheme.

4. The processing of the petitioner's applications was based on the correctness of "Tax Dues" declared compared to the duty quantified in reference documents. The delay in processing was due to discrepancies in the declared tax dues. The second application was processed early as the declared tax dues matched the audit findings, resulting in the issuance of SVLDRS-3 with the payable amount. The court found no illegality in considering the later application and dismissed the petition, stating no interference was warranted.

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