2022 (2) TMI 192 - HC - Service Tax

Seeking to restore and reconsider SVLDRS declaration filed by the petitioner on merits - issuance of summons to the petitioner under the provisions of Section 83 of Finance Act, 1994 and Sections 70 and 174 of the Central Goods and Services Act, 2017 - HELD THAT - A perusal of the Show Cause cum Demand Notice dated 30 th December 2020 issued by the office of DGGI indicates that the statement made by the Joint Director of the petitioner in paragraph 3.3 is referred. It is clearly admitted that the petitioner had accepted their unpaid/short paid Service Tax liability of ₹ 72.37 lakhs. We are thus not inclined to accept the submission made by Mr.Ochani, learned counsel for the respondents that the petitioner had not admitted the complete tax dues in the said statement of the Director of the petitioner recorded by the Investigating Officer. This Court held that it is not necessary that the figures on such admission should have Mathematical precision or should be exactly the same as the subsequent quantification by the authorities in the form of show cause notice etc. post 30th June, 2019. The object of the scheme is to encourage persons to go for settlement who had bonafidely declared outstanding tax dues prior to the cut off date of 30th June, 2019. It is held that the fact that there could be a discrepancy of figure but only when the tax dues admitted by the person concerned prior to 30th June, 2019 and subsequently quantified by the departmental authorities, would not be material to determine the eligibility to file Declaration in terms of the scheme under the category of enquiry, investigation or audit. The impugned order dated 12th February 2020 rejecting SVLDRS-1 declaration submitted by the petitioner is quashed and set aside - the petitioner is held eligible to file the said SVLDRS-1 declaration and to avail benefits under the said Scheme - petition allowed.

Summary

Issues Involved:
1. Eligibility of the petitioner to file SVLDRS-1 declaration.
2. Quantification of tax dues before the cut-off date.
3. Validity of the rejection of the SVLDRS-1 declaration by the Designated Committee.
4. Adherence to the principles and objectives of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Issue-wise Detailed Analysis:

1. Eligibility of the petitioner to file SVLDRS-1 declaration:
The petitioner sought a writ of mandamus under Article 226 of the Constitution of India for the restoration and reconsideration of their SVLDRS declaration on merits. The petitioner had filed the SVLDRS-1 declaration on 1st November 2019, declaring tax dues of ?72.37 lakhs as admitted by their Director. The petitioner consistently admitted this liability in various forms and communications. The court concluded that the petitioner was eligible to file the SVLDRS-1 declaration and to avail benefits under the said Scheme.

2. Quantification of tax dues before the cut-off date:
The Designated Committee rejected the SVLDRS-1 declaration on the grounds that the tax dues were not quantified finally on or before 30th June 2019. The court noted that the Director of the petitioner had admitted the tax liability of ?72.37 lakhs in a statement recorded on 25th March 2019. The court referred to the definitions of 'tax dues' under Section 123(c) and 'quantified' under Section 121(r) of the Finance (No.2) Act, 2019, and concluded that the petitioner had satisfied these definitions. The court also referenced a recent judgment in Nabeel Construction Pvt. Ltd Vs. Union of India & Ors., which supported the petitioner's case.

3. Validity of the rejection of the SVLDRS-1 declaration by the Designated Committee:
The Designated Committee's order dated 12th February 2020 rejected the SVLDRS-1 declaration based on a verification report from the DGGI, which stated that the tax dues were not quantified by the cut-off date. The court found that this order was contrary to the forms SVLDRS-2 and SVLDRS-2A, which had quantified the tax dues at ?72.37 lakhs. The court held that the reasons provided in the affidavit-in-reply, which were not part of the impugned order, could not be considered. The court concluded that the rejection of the SVLDRS-1 declaration was invalid.

4. Adherence to the principles and objectives of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The court emphasized that the Scheme's objective was to liquidate outstanding litigation and free taxpayers from the burden of legacy taxes. The court referred to the Central Excise Circulars and Trade Notices, which supported the petitioner's case. The court reiterated the principles laid down in Nabeel Construction Pvt. Ltd., stating that the admission of tax dues before the cut-off date need not have mathematical precision. The court concluded that the impugned order was contrary to the objectives and intent of the Scheme.

Conclusion:
The court quashed and set aside the impugned order dated 12th February 2020, held the petitioner eligible to file the SVLDRS-1 declaration, and directed the respondents to pass a fresh order granting relief to the petitioner under the Scheme. The petitioner was directed to deposit the balance amount within eight weeks, and upon payment, the respondents were instructed to issue a discharge certificate within one week. The writ petition was allowed, and no order as to costs was made.