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2022 (1) TMI 867 - HC - Service TaxViolation of the principles of natural justice - SVLDRS-1 Declaration - rejection of the application under the scheme without rendering any opportunity of hearing to the declarant - HELD THAT - It is not in dispute that the impugned orders have been passed without rendering any personal hearing to the petitioner. This Court in case of Thought Blurb 2020 (10) TMI 1135 - BOMBAY HIGH COURT after dealing with the provisions of the said scheme has held that summary rejection of the application under the said scheme without rendering any opportunity of hearing to the declarant would be in violation of the principles of natural justice. The rejection of the application (Declaration) will lead to adverse civil consequences for the declarant as he would have to face consequences of enquiry or investigation or audit - Non-compliance to the principles of natural justice would impeach the decision making process rendering the decision invalid in law. The rejection of the Declaration under the said scheme filed by the petitioner without rendering a personal hearing to the petitioner leads to adverse civil consequences for the petitioner as the petitioner would have to face the consequences of enquiry or investigation or audit. The impugned orders are in gross violation of the principles of law laid down by this Court in the case of Thought Blurb would apply to the facts of this case. Whether the petitioner was eligible to make a Declaration under the said scheme and would fall under one of the categories of the persons who are eligible to make such Declaration under section 125(1) of the said scheme or not? - HELD THAT - Section 125(1)(e) of the said scheme provides that a person who has been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before 30th June 2019 is not eligible to make a Declaration under the said scheme. In this case the tax dues were quantified by the petitioner in the statement of its director Mohd.Azhar Ali recorded by the investigating officer on 28th February 2019 - A perusal of section 123(c) of the said Scheme also clearly indicates that where an enquiry or investigation or audit is pending against the declarant the amount of duty payable under any of the indirect tax enactment which has been quantified on or before 30th June 2019 would fall within the term tax dues under the said section 123(c) of the said scheme. This Court in case of Thought Blurb (supra) has considered the objects and reasons and the purpose of introducing the said Sabka Vikas (Legacy Dispute Resolution Scheme 2019) framed by the Government of India. The Government took cognizance of the fact that GST had completed two years. An area that concerns was that there were huge pending litigations from pre-GST regime. More than 3.75 lakhs crores were blocked in litigations in service tax and excise. There was need to unload this baggage and allow the business to move on and accordingly proposed a Legacy Dispute Resolution scheme that would allow quick closure of those litigations - A perusal of the statement of objects and reasons of the said scheme indicates that the scheme was a one time measure for liquidation of past disputes of Central Excise and service tax as well as ensure the disclosure of unpaid taxes by a person eligible to make a Declaration. The matter is remanded back to the Designated Committee to consider the said Declaration dated 30th December 2019 filed by the petitioner in terms of the scheme as valid Declaration under the category investigation enquiry and audit and grant consequential reliefs to the petitioner after providing due opportunity of hearing to the petitioner before finally deciding the issue - Appeal allowed by way of remand.
Issues Involved:
1. Validity of rejection of SVLDRS-1 Declaration. 2. Eligibility of the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. 3. Violation of principles of natural justice. Detailed Analysis: 1. Validity of Rejection of SVLDRS-1 Declaration: The petitioner filed a writ petition under Article 226 of the Constitution of India, seeking to quash the order communicated via email on 14th February 2020, which rejected their SVLDRS-1 Declaration dated 30th December 2019. The petitioner argued that the rejection was improper as the tax dues had been quantified before the cutoff date of 30th June 2019, based on the statement of their director, Mohd. Azhar Ali, recorded on 28th February 2019. The respondents contended that the investigation was ongoing and the tax liability had not been finalized, thus the amount admitted in the statement could not be considered final. 2. Eligibility of the Petitioner under the Scheme: The petitioner claimed eligibility under Section 125 of the said Scheme, asserting that the tax dues were quantified as per Section 121(r) through the director's statement during the investigation. The respondents argued that since the investigation was not completed and the show-cause notice was issued after 30th June 2019, the petitioner was ineligible. The court examined the definition of "quantified" and concluded that the tax dues admitted in the director's statement before the cutoff date satisfied the Scheme's requirements. 3. Violation of Principles of Natural Justice: The court noted that the rejection of the Declaration was done without providing the petitioner an opportunity for a personal hearing, which is a violation of the principles of natural justice. The court referred to its previous judgments, emphasizing that summary rejection without hearing leads to adverse civil consequences and is invalid in law. The court held that a personal hearing should have been granted to the petitioner to explain their position. Conclusion: The court quashed the impugned order and remanded the matter back to the Designated Committee to reconsider the Declaration filed by the petitioner, providing a personal hearing and passing a speaking order within six weeks. The court emphasized the need for a liberal interpretation of the Scheme to achieve its objective of resolving legacy disputes and allowing businesses to move forward. The show-cause notice issued to the petitioner was also nullified as a result of the remand order. Order: 1. The impugned order rejecting the SVLDRS-1 Declaration is quashed and set aside. 2. The matter is remanded to the Designated Committee for reconsideration, with a directive to provide a personal hearing and issue a speaking order within six weeks. 3. The show-cause notice issued to the petitioner does not survive. 4. The writ petition is allowed, and the rule is made absolute. 5. No order as to costs.
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