2021 (6) TMI 630 - HC - Service Tax

Benefit of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - refusal to accept the manual returns filed - HELD THAT - Sub clause (3) of Rule 7 was incorporated with effect from 1.10.2011. A reading of the aforesaid provision would make it clear that the returns contemplated under Section 70 is required to be filed in the forms specified in Rule 7(1) and from 1.10.2011 onwards it is to be submitted in electronic form. Rule 7(3) is explicit that the half-yearly return shall be submitted electronically. No other method of submitting the half-yearly return is contemplated after 1.10.2011, as the wording used in the rule gives the requirement a mandatory colour. The word 'shall' used in the provision is reflective of the said intention of the rule making authority. The requirement of electronic filing is further evidenced by the provisions of the SVLDR Scheme, wherein also, it is specified that the declaration under Section 125 of the Act must be filed electronically. Thus, with the advent of information technology and its advancement, the shift from manual filing to electronic filing serves a salutary purpose and this Court cannot in exercise of its jurisdiction under Article 226 of the Constitution of India interfere with such seamless administration under the taxing statutes - also, the appellant does not have a case that he was prevented on account of any technical glitches, in filing the half-yearly return in the electronic form. Petition dismissed.

Summary

Issues:
- Appellant's plea to accept half-yearly return in physical form under Service Tax Act for April 2017 to September 2017.
- Eligibility for Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 based on return filing.
- Interpretation of Rule 7 of Service Tax Rules, 1994 regarding electronic filing of returns.
- Challenge to the dismissal of the writ petition by the learned single Judge.

Analysis:
1. The appellant, engaged in the construction industry, sought acceptance of their manual half-yearly return under the Service Tax Act for April 2017 to September 2017. This plea was rejected by the respondents, leading to a writ petition for mandamus to accept the manual return. The appeal challenges the rejection of this plea by the learned single Judge.

2. The appellant aimed to avail the benefits of the SVLDR Scheme, 2019, which required filing returns and a declaration electronically. The department refused manual returns, making the appellant ineligible for the scheme. The crux of the issue lies in the electronic filing requirement for scheme eligibility.

3. The interpretation of Rule 7 of the Service Tax Rules, 1994 was crucial. The learned single Judge noted that returns should be filed electronically since October 2011. The appellant contested this interpretation, arguing that while electronic filing may be preferred, manual filing was not prohibited by the rules.

4. The appellant's challenge to the dismissal of the writ petition was based on the contention that the learned single Judge's interpretation was incorrect. The appellant argued that the rules did not expressly prohibit manual filing of returns, making the rejection unjustified.

5. Section 70 of the Finance Act, 1994 mandates the filing of returns by the person liable to pay service tax. Rule 7 specifies the manner of filing returns, with subclause (3) requiring electronic submission since October 2011. The mandatory language of Rule 7(3) emphasizes electronic filing post-2011.

6. The Court emphasized the shift from manual to electronic filing due to technological advancements, promoting seamless administration under taxing statutes. The appellant's exception to electronic filing for the 2017-18 return was noted, but the Court upheld the requirement for electronic submission, citing the salutary purpose served by this transition.

7. Given the clear provisions of Rule 7(3) and the appellant's acknowledgment of the electronic filing requirement, the Court found no grounds to interfere with the learned single Judge's judgment. The writ petition was dismissed, affirming the importance of electronic filing in contemporary tax administration.