2021 (7) TMI 260 - HC - Service Tax

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - while granting second personal hearing, typographical / clerical error crept in SVLDRS-2B - principles of natural justice - HELD THAT - The petitioners claim of having deposited a sum of ₹ 50,00,000/- towards service tax liability pursuant to show-cause notice is not denied; and it is required to be ascertained as to whether the payment claimed by the petitioners is towards said liability and as such, hearing was necessary, a room for which is given in the scheme, particularly under section 127. According to the petitioners, they had applied for adjournment in Form SVLDRS-2A and in response even Form SVLDRS-2B had been assigned for such purpose. The revenue as well, as a matter of fact, has referred to that Form SVLDRS-2B had been issued, albeit, there has been typographical / clerical error in the same. It is not denied that on 03/03/2020, the petitioners had requested for hearing on 05/03/2020 and in response thereto, found Form SVLDRS-2B had been issued with error showing hearing to be held on 09/03/2021 but on 07/03/2020 itself impugned order Form SVLDRS-3 has been passed. It is a peculiar case wherein personal hearing under the scheme could not take place for the errors which are not attributable to the petitioners, resulting in an order running adverse to petitioners interest where they have claimed that more than 90% chunk of the amount payable had already been deposited. Thus, this is a case wherein it would not be improper to intervene in the matter and set aside the impugned Form SVLDRS-3. The matter restored before the Designated Committee for, hearing the petitioners and verification of records and issue a revised Form SVLDRS-3, on verification of factual position of payment of ₹ 50,00,000/- towards liability under the show-cause notice - petition allowed by way of remand.

Summary

Issues:
Petition challenging Form No.SVLDRS-3 for not considering payment of ?50,00,000 towards service tax dues. Interpretation of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Allegation of procedural irregularities and breach of natural justice in issuing Form SVLDRS-3 without proper verification.

Analysis:

Issue 1: Payment Consideration in Form SVLDRS-3
The petitioners contested Form SVLDRS-3 for not acknowledging the payment of ?50,00,000 towards service tax dues during the proceedings initiated by a show-cause notice. They argued that under the SVLDR scheme, this pre-deposit should have been taken into account to calculate the final payable amount accurately. The petitioners claimed that the correct amount payable under the scheme should be ?1,99,302, considering the ?50,00,000 already deposited.

Issue 2: Interpretation of SVLDR Scheme
The counsel for the petitioners referred to the SVLDR scheme under the Finance Act, 2019, emphasizing section 124 which allows for deductions of amounts paid as pre-deposit during proceedings when calculating the final payable amount. The petitioners asserted that their case falls within the provisions of the scheme and circular dated 12/12/2019, which clarifies the treatment of deposits made during adjudication proceedings.

Issue 3: Procedural Irregularities and Natural Justice
The Revenue department defended the issuance of Form SVLDRS-3 without considering the ?50,00,000 payment, citing the need for further verification of the pre-deposit claim. They argued that a verification report was sought, and the Designated Committee had to ensure the accuracy of the payment before finalizing the amount payable. The petitioners contended that procedural errors, including typographical mistakes in hearing schedules, led to the unjust issuance of Form SVLDRS-3, breaching principles of natural justice.

Final Judgment:
The court found merit in the petitioners' claim of having deposited ?50,00,000 towards service tax liability and ordered a reevaluation by the Designated Committee. The court allowed the writ petition, directing a fresh hearing, verification of records, and the issuance of a revised Form SVLDRS-3 based on the verified payment of ?50,00,000. The judgment emphasized the importance of procedural fairness and adherence to the SVLDR scheme's principles, ensuring accurate determination of tax liabilities under the scheme.