2021 (4) TMI 647 - HC - Service Tax

Maintainability of petition - mandatory requirement with the compliance with the pre-deposit - Sabka Vishwas Legacy Dispute scheme - CENVAT Credit - Renting of Immoveable Property Service - HELD THAT - On reading of Clause-2(ii) and (iii) of the Circular bearing No.1074/07/2019-CX dated 12.12.2019 and an entire reading of Section 124(2) read with Board Circulars would make it clear that the pre-deposit made at any point of time subsequent to the issuance of show cause notice ought to be taken note of and credit extended while indicating the amount payable by the assessee in the estimate in SVLDRS-3. As it is specifically clarified that manual processing of declaration would be allowed subject to conditions mentioned in the communication dated 08.01.2021 the objection at para-9 has been addressed - the respondent No.1 is directed to reconsider the explanation of the petitioner in Form No. SVLDRS-2A and order as regards the application under SVLDRS-1 and issue Discharge Certificate in SVLDRS-4 if eligible as per law.

Summary

Issues:
1. Challenge to Estimation and Statement under SVLDRS Scheme
2. Adjustment of pre-deposit and CENVAT credit
3. Defective Form No.3 issued by the Department
4. Interpretation of Section 124(2) of the Finance Act
5. Clarifications under Circulars regarding adjustment of deposits
6. Claiming credit under ST-3 returns
7. Time-specific nature of SVLDRS Scheme and extension

Analysis:
1. The petitioner, a Company engaged in renting properties, challenged the Estimation and Statement under the SVLDRS Scheme, seeking a writ of certiorari to quash them. The petitioner claimed adjustment of pre-deposit and objected to the Estimate not considering the pre-deposit amount, emphasizing the necessity of taking note of pre-deposits.

2. The petitioner contended that they made a separate representation for the credit of pre-deposit and CENVAT credit adjustment. The Department argued for a factual inquiry into CENVAT credit usage and the necessity of determining if the pre-deposit was adjusted against other demands. The petitioner emphasized the need for reworking Form No.3 to consider their explanation.

3. Section 124(2) of the Finance Act was crucial in this case, providing conditions for relief calculation and deduction of pre-deposit amounts. The Circulars clarified the adjustment of deposits during various proceedings and emphasized the importance of considering deposits made under protest.

4. The interpretation of Section 124(2) and the Circulars highlighted the significance of pre-deposit made post-show cause notice issuance. The petitioner's reliance on the SVLDRS Scheme's self-contained procedure for claiming credit was emphasized to counter the Department's contention.

5. The Department's argument on the time-specific nature of the SVLDRS Scheme and the futility of extending relief was countered by a communication clarifying manual processing of declarations under specific conditions, addressing objections raised by the Department.

6. Ultimately, the Court set aside the Statement under SVLDRS-3 and directed the Department to reconsider the petitioner's explanation, order under SVLDRS-1, and issue a Discharge Certificate if eligible, in compliance with the law, resolving the challenges raised by the petitioner effectively.