2021 (8) TMI 345 - HC - Service Tax

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner s application/declaration under the Scheme was rejected by a remark show cause notice issued after 30th June/1st July - validity of such rejection considering the clarificatory Circular No. 1074/07/2019-CX dated December 12, 2019 considering the clarificatory Circular No. 1074/07/2019-CX dated December 12, 2019 - non-application of mind on such rejection - HELD THAT - The Circular dated December 12, 2019 has been issued by the Central Board of Indirect Taxes Customs, New Delhi clarifying such statutory scheme. Clause 2 of the Circular records that references were received by the Board on the scheme which were examined and the issues raised therein are being clarified in the context of the various provisions of Finance (No. 2) Act, 2019 and Rules made therein. Sub-clause (viii) of Clause 2 as relied on behalf of the petitioner is a significant clarification of the principal scheme and is the main pillar of the petitioner s contention on his application becoming eligible. The question which required determination in the petitioner s case was whether the petitioner who was issued a show cause notice subsequent to 1st July, 2019, i.e., on 10th October, 2019 and which came to be adjudicated by an order passed in original dated 26th December, 2019, would be eligible to take the benefit of the scheme and make a declaration being a case falling under the arrears category. This more particularly, when the petitioner had stated that he has complied with the other conditions, in as much as he made a declaration that he shall not file an appeal challenging the order dated 26th December, 2019. These issues were required to be considered by the Competent authority before the petitioner s declaration could be rejected. On a reading of the impugned communication, it appears that the rejection is by a computer generated and/or a mechanical process by a remark that show cause notice issued after 30th June, 2019 . Certainly there is no application of mind on the petitioner s application on the provisions as made by clarificatory circular, as no reasons are furnished as to why the petitioner s declaration cannot be entertained applying clause 2(viii) of the said Circular. Appeal disposed off.

Summary

Issues:
Petitioner's eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 based on the issuance of a show cause notice after June 30, 2019.

Analysis:
The petitioner, a proprietary concern, sought to benefit from the Sabka Vishwas Scheme, which came into force on September 1, 2019. The Scheme's rules were notified under the Sabka Vishwas Scheme Rules, 2019. The petitioner believed they were eligible to file a declaration under the Scheme as they did not fall under the exclusions provided in the Scheme.

The key issue revolved around Clause 125 of the Scheme, which outlines the eligibility criteria for making a declaration. The clause excludes persons who have been issued a show cause notice under an indirect tax enactment and had the final hearing before June 30, 2019. The petitioner received a show cause notice on October 10, 2019, and the final hearing took place on December 26, 2019. The petitioner submitted a declaration under the Scheme on December 27, 2019, based on the tax liability determined by the Adjudicating Authority.

The rejection of the petitioner's application under the Scheme was based on the show cause notice being issued after June 30, 2019. The petitioner argued that a circular issued by the Central Board of Indirect Taxes & Customs clarified that cases where show cause notices were issued after July 1, 2019, could be eligible under the "arrears" category. The respondents contended that the Scheme clearly required tax dues to be quantified before June 30, 2019, to be eligible.

The Court considered the Circular issued by the Central Board of Indirect Taxes & Customs, which clarified that cases where show cause notices were issued after July 1, 2019, could be eligible under the "arrears" category if certain conditions were met. The Court noted that the rejection of the petitioner's declaration lacked reasoning and did not consider the provisions of the Circular.

The Court directed the Central Board of Indirect Tax and Customs, New Delhi, to decide whether the petitioner was entitled to make a declaration and benefit under the Scheme. The petition was treated as a representation to be decided within three weeks. The Court emphasized the need for a decision based on the specific circumstances of the case.

In conclusion, the Court disposed of the matter without costs, highlighting the importance of a detailed review by the competent authority to determine the petitioner's eligibility under the Scheme based on the Circular's provisions.