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2021 (8) TMI 397 - HC - Service Tax


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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