2021 (2) TMI 808 - HC - Service Tax

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility of the petitioner or maintainability of his declaration to avail the benefits of the scheme under the category of investigation, enquiry or audit on the ground that the service tax dues of the petitioner for the related period was not quantified on or before 30th June, 2019 - HELD THAT -All that would be required for being eligible 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 more res-integra as 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. When there is a provision for granting personal hearing in a case where the declarant disputes the estimated amount, it would be in complete defiance of logic and contrary to the very object of the scheme to reject a declaration on the ground of being ineligible without giving a chance to the declarant to explain as to why its declaration should be accepted and relief under the scheme be extended to him. Matter remitted back to the respondents (designated authority) to consider the declaration of the petitioner dated 08.12.2019 afresh as a valid declaration in terms of the scheme under the category of investigation, inquiry and audit and thereafter grant the consequential relief(s) to the petitioner. While doing so, respondent No.1 shall provide an opportunity of hearing to the petitioner and thereafter pass a speaking order with due communication to the petitioner - petition allowed by way of remand.

Summary

Issues Involved:
1. Eligibility of the petitioner to avail benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. Whether the service tax liability of the petitioner was quantified on or before the cutoff date of 30th June 2019.
3. Compliance with principles of natural justice in rejecting the petitioner's declaration.

Issue-wise Detailed Analysis:

1. Eligibility of the petitioner to avail benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The petitioner, a private limited company engaged in construction services, sought to quash the order dated 02.01.2020, which rejected their declaration under the Sabka Vishwas Scheme, 2019. The rejection was based on the ground that the service tax liability was not quantified before the cutoff date of 30.06.2019. The petitioner argued that the service tax liability was admitted by their director on 09.04.2019, thus meeting the criteria for quantification before the cutoff date.

2. Whether the service tax liability of the petitioner was quantified on or before the cutoff date of 30th June 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, which clarified that "quantified" means a written communication of the amount of duty payable, including letters intimating duty demand or duty liability admitted during enquiry, investigation, or audit. The petitioner's director had admitted a service tax liability of approximately ?40 to ?45 lakhs on 09.04.2019, which was before the cutoff date. This admission broadly corresponded to the declared amount of ?43,37,865.00. The court concluded that the petitioner's service tax liability was indeed quantified before the cutoff date.

3. Compliance with principles of natural justice in rejecting the petitioner's declaration:
The court emphasized that summary rejection of a declaration without providing an opportunity for the petitioner to explain their position violates principles of natural justice. Referencing the Thought Blurb case, the court noted that when adverse civil consequences are involved, principles of natural justice, such as notice and hearing, must be complied with. The court held that the rejection of the declaration without a hearing was unjustified.

Conclusion:
The court set aside the order dated 02.01.2020 and remanded the matter back to the designated authority to reconsider the petitioner's declaration dated 08.12.2019 as a valid declaration under the Sabka Vishwas Scheme. The respondents were directed to provide an opportunity for a hearing and pass a speaking order within eight weeks. The court also addressed the respondents' technical difficulties in accessing the scheme's portal, suggesting that these issues should be resolved by consulting higher authorities. The writ petition was allowed to the extent mentioned, with no order as to costs.