2021 (2) TMI 499 - HC - Service Tax

Rejection of declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - seeking a direction to the said respondent to reconsider the declaration of the petitioner - eligibility of a declarant for making a declaration in terms of the scheme under the category of investigation, enquiry or audit or maintainability of such a declaration - amount of tax dues was not quantified on or before 30.06.2019 - HELD THAT - All that would be required for being eligible in terms of the scheme under the above category is a written communication which will mean a written communication of the amount of duty payable including a letter intimating duty demand or duty liability admitted by the person concerned during inquiry, investigation or audit. For eligibility under the scheme, the quantification need not be on completion of investigation by issuing show-cause notice or the amount that may be determined upon adjudication. The issue is no longer res integra and decided in the case of THOUGHT BLURB VERSUS UNION OF INDIA AND ORS. 2020 (10) TMI 1135 - BOMBAY HIGH COURT where it was held that there are no hesitation to hold that petitioner was eligible to file the application (declaration) as per the scheme under the category of enquiry or investigation or audit whose tax dues stood quantified on or before 30th June, 2019. Reverting back to the facts of the present case, it is found that in the course of the investigation, statement of Shri. Nipun Radhu, authorized representative of the petitioner was recorded on 26.11.2018 by the Senior Intelligence Officer in the office of DGGI. The statement was recorded under section 83 of Chapter V of the Finance Act, 1994 read with section 14 of the Central Excise Act, 1944 as well as under the provisions of the CGST Act, 2017. In the course of his statement, the authorized representative acknowledged that service tax liability of the petitioner for the year 2016-17 was to the tune of ₹ 1,61,01,194.00 and for the year 2017-18 (upto June, 2018), the service tax liability was to the extent of ₹ 14,60,823.00. This admission was reiterated by Shri. Nipun Radhu in his subsequent statement recorded on 13.03.2019. Both the statements were made prior to the cut-off date of 30.06.2019. Therefore, petitioner was clearly eligible to file a declaration in terms of the scheme under the category of investigation, enquiry or audit - Also, it is a well settled principle of natural justice that if an authority relies upon a document which is adverse to the person concerned and results in an adverse decision, copy of such a document is required to be furnished to the person concerned so that he can put up an effective defence. Devoid of the same, any personal hearing granted would be an empty formality. The matter remanded back to respondent No.5 to consider the declaration of the petitioner afresh in terms of the scheme as a valid declaration under the category of investigation, enquiry or audit and grant the consequential relief to the petitioner - petition allowed by way of remand.

Summary

Issues Involved:
1. Eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019
2. Quantification of Tax Dues
3. Principles of Natural Justice

Detailed Analysis:

1. Eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019

The petitioner sought quashing of the order dated 27.02.2020, which rejected their declaration under the Sabka Vishwas Scheme, 2019. The Court examined whether the petitioner was eligible to file a declaration under the category of "investigation, enquiry, or audit." The respondents argued that the petitioner was ineligible because the quantification of tax dues was not finalized before the cut-off date of 30.06.2019. The Court referred to previous judgments, including *Thought Blurb Vs. Union of India, 2020 (10) TMI 1135*, where it was held that eligibility under the scheme required a written communication of the amount of duty payable, which could include a letter intimating duty demand or duty liability admitted by the person during enquiry, investigation, or audit.

2. Quantification of Tax Dues

The Court analyzed whether the tax dues were quantified before the cut-off date. The petitioner’s authorized representative had acknowledged the service tax liability in statements recorded on 26.11.2018 and 13.03.2019. The Court noted that these admissions were made before the cut-off date of 30.06.2019, making the petitioner eligible to file a declaration under the scheme. The Court reiterated that quantification did not necessarily require completion of investigation or adjudication but could be based on written communication of the amount of duty payable, as clarified in the circular dated 27.08.2019 and FAQs issued by the department.

3. Principles of Natural Justice

The Court found that the designated committee had sought views from DGGI, which responded that the quantification of tax dues was not finalized before 30.06.2019. This information was not furnished to the petitioner, violating the principles of natural justice. The Court emphasized that any document relied upon by an authority, which results in an adverse decision, must be provided to the affected party to allow for an effective defense. The absence of this information rendered the personal hearing granted to the petitioner an empty formality.

Conclusion:

The Court set aside the order dated 27.02.2020, rejecting the petitioner’s declaration and remanded the matter back to the designated committee. The committee was directed to reconsider the declaration as a valid one under the category of "investigation, enquiry, or audit" and provide consequential reliefs. The respondents were instructed to grant an opportunity of hearing to the petitioner and pass a speaking order within eight weeks.

Judgment Summary:

The writ petition was allowed, and the matter was remanded for fresh consideration. The Court underscored the importance of adhering to the principles of natural justice and clarified the eligibility criteria under the Sabka Vishwas Scheme, emphasizing that quantification of tax dues could be based on written communication, not necessarily adjudication.