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2021 (8) TMI 397 - HC - Service TaxSabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - seeking adjustment of pre-deposit amount - Renting of Immoveable Property of Service - Circular bearing No. 1071/4/2019-CX.8 by the Department dated 27-8-2019 - HELD THAT - It is to be noted that the petitioner at an earlier point of time in its communication dated 7-8-2013 to the Assistant Commissioner of Service Tax, Division-II, Bangalore had stated that the entire amount payable towards the service tax on rent as regards the show cause notice for the period 1-4-2008 to 31-3-2011 had been paid and details of the challans are produced alongwith the letter dated 7-8-2013, a copy of which has been produced by way of a memo dated 19-2-2021 - It is also to be noted that the show cause notice issued at Annexure-A also refers to the period of 1-4-2008 to 31-3-2011 and accordingly, the contention that there is co-relation with the deposits made by the petitioner cannot be brushed aside without further enquiry as sought for in the present petition. It is specifically clarified that manual processing of declaration would be allowed subject to conditions mentioned in the communication dated 8-1-2021, the objection has been addressed. The Estimation in SVLDRS-2 at Annexure-C dated 9-12-2019 is set aside and consequently the Statement in Section 127 in Form SVLDRS-3 at Annexure-G dated 27-2-2020 is also set aside. The Declaration in Form No. 1 is to be reconsidered and a Discharge Certificate if eligible to be made out in SVLDRS-4 - Application disposed off.
Issues:
1. Adjustment of pre-deposit under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. 2. Consideration of pre-deposit amounts by the Department. 3. Interpretation of Section 124(2) of the Finance Act and relevant Board Circulars. 4. Claiming credit under ST-3 returns. 5. Extending the benefit of SVLDRS, 2019. Analysis: 1. Adjustment of Pre-deposit: The petitioner, engaged in renting properties, registered under the category of "Renting of Immoveable Property of Service," faced a show cause notice for service tax. Opting for the SVLDRS, the petitioner sought adjustment of a pre-deposit amount of ?8,19,643 against a penalty of ?7,48,290. The Department, in response, credited only ?63,558, leading to a dispute over the adjustment amount. 2. Consideration of Pre-deposit: The petitioner provided details of pre-deposits through Challan Nos. 00484, 01294, and 00011 totaling ?8,19,643. However, the Department, in its statement, credited only ?63,558, arguing lack of evidence linking the pre-deposit to the specific liability under dispute. The petitioner contended that the entire pre-deposit amount should be considered for adjustment under the SVLDRS. 3. Interpretation of Section 124(2) and Board Circulars: Section 124(2) of the Finance Act mandates the deduction of pre-deposits during appellate proceedings when determining the amount payable under the SVLDRS. Board Circulars further clarify that deposits made post-show cause notice issuance but before adjudication should be considered for adjustment. The petitioner's communication to the Department also indicated full payment of the service tax liability for the relevant period. 4. Claiming Credit under ST-3 Returns: The Department argued that the petitioner should have claimed credit under ST-3 returns instead of seeking adjustment under the SVLDRS. However, the petitioner relied on the self-contained nature of the SVLDRS, which provides a specific procedure for adjustment, not requiring general credit claiming procedures. 5. Benefit of SVLDRS, 2019: The Department contended that the SVLDRS is time-specific and cannot be extended, making any relief granted futile. However, a communication from the Central Board of Indirect Taxes and Customs clarified that manual processing of declarations could be allowed based on court directions, addressing concerns about the scheme's extension. In conclusion, the High Court set aside the estimation and statement by the Department, directing a reconsideration of the petitioner's declaration under the SVLDRS. The judgment emphasized the importance of considering all pre-deposits made by the petitioner and following the provisions of Section 124(2) and relevant Board Circulars for fair adjustment and resolution under the SVLDRS.
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