2022 (5) TMI 573 - HC - Service Tax

Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 - quantification of tax payable - opportunity of hearing - it is alleged that the declaration of the Petitioner was rejected without hearing the Petitioner and the reason given for the rejection is Amount not quantified before 30.06.2019 - Circular dated 27.08.2019 - HELD THAT - The term quantification was subject matter of interpretation in various judgments of this court. The quantification of the duty, demand or duty liability has to be on or before 30.06.2019 to avail the benefit of SLVDRS. In the present matter, the Petitioners have given a statement about the service tax liability. Even in the affidavit in reply, the Respondents have averred that the assessee was summoned and that one Mr. Kothari in his statement dated 16.05.2019 voluntarily stated that for the outstanding dues of the service tax for the period November, 2015 to June 2017 is Rs.46,36,960/- and in his statement dated 17.05.2019, he had stated that the outstanding dues for service tax was Rs.46,59,031/- and the amount of Rs.42,77,721/- was paid and, therefore, the outstanding was Rs.3,81,310/-. The Petitioners had made out a case wherein the Petitioners ought to have been given an opportunity of hearing. In the present case, the declaration of the Petitioners under SVLDRS-1 scheme has been rejected without giving an opportunity of hearing. The Petitioners could have pointed out all these facts. Under the circular dated 27.08.2019, it has also been clarified that the written communication will include a letter intimating duty demand, or duty liability admitted by a person during enquiry, investigation or audit or audit report. Statement of the Petitioners is recorded much before the cut-off date viz. 30.06.2019. The same ought to have been considered by the Respondents. The impugned order dated 15.01.2020 rejecting Petitioner no.1 s declaration in terms of Form SVLDRS-1 is set aside - Respondents shall after hearing the Petitioners decide afresh declaration made by the Petitioners in terms of Form SVLDRS-1 after giving an opportunity of hearing to the Petitioners - Petition disposed off.

Issues:
1. Rejection of declaration under the Sabka Viswas Scheme, 2019.
2. Eligibility criteria under section 125 of the Finance Act.
3. Quantification of service tax liability and payment made by the Petitioners.
4. Mechanism of hearing under the scheme and rejection without hearing.
5. Investigation and issuance of show cause cum demand notice.
6. Interpretation of the term 'quantification' for the scheme.
7. Counter-arguments regarding quantification and eligibility for the scheme.
8. Consideration of statements and liabilities for service tax.
9. Opportunity of hearing and consideration of facts by the authority.
10. Final decision and orders passed by the court.

1. Rejection of Declaration under the Sabka Viswas Scheme, 2019:
The Petitioners filed a declaration under the Sabka Viswas Scheme, 2019, which was rejected on 15.01.2020. Subsequently, a show cause cum demand notice assessing the service tax liability was issued on 05.07.2021. The rejection was based on the reason that the amount was not quantified before 30.06.2019, contrary to the record of the department.

2. Eligibility Criteria under Section 125 of the Finance Act:
The Petitioners claimed eligibility under section 125 of the Finance Act along with relevant Circulars. They quantified the service tax payable and made payments before the cut-off date of 30.06.2019. The Petitioners argued that they had cleared all outstanding dues as per the quantification and were entitled to the benefits of the scheme.

3. Quantification of Service Tax Liability and Payment Made by the Petitioners:
The Petitioners quantified the service tax payable, paid a specific amount as tax and interest, and submitted statements reflecting the payments made. They contended that the quantification was done before the scheme's cut-off date, making them eligible for the scheme's benefits.

4. Mechanism of Hearing under the Scheme and Rejection without Hearing:
The Petitioners highlighted that the scheme provides for a mechanism of hearing the applicant, which was not followed in their case. The rejection without a hearing was deemed arbitrary, especially when the Petitioners had paid a significant portion of the assessed tax liability.

5. Investigation and Issuance of Show Cause Cum Demand Notice:
The Respondent department argued that the investigation was ongoing, and the final quantification of duty had not been completed before 30.06.2019. They maintained that the show cause notice issued on 05.07.2021 demonstrated that the amount had not been quantified by the cut-off date.

6. Interpretation of the Term 'Quantification' for the Scheme:
The court interpreted the term 'quantification' and referred to previous judgments to determine its application in the present case. Statements made by the Petitioners admitting service tax liability were considered, emphasizing the importance of quantification before the scheme's deadline.

7. Counter-Arguments Regarding Quantification and Eligibility for the Scheme:
The Respondent department contended that the duty quantification should occur after the investigation is complete and a demand notice is issued. They argued that the Petitioners were not eligible for the scheme as the final quantification had not been done before the specified date.

8. Consideration of Statements and Liabilities for Service Tax:
Both parties presented statements and liabilities related to the service tax payments made by the Petitioners. The court analyzed these documents to determine the eligibility of the Petitioners for the benefits under the Sabka Viswas Scheme.

9. Opportunity of Hearing and Consideration of Facts by the Authority:
The court emphasized that the Petitioners should have been given an opportunity for a hearing, especially when they had presented a case for consideration by the authority. The importance of considering facts presented by the Petitioners before rejecting their declaration was highlighted.

10. Final Decision and Orders Passed by the Court:
The court set aside the order rejecting the Petitioner's declaration and directed the Respondents to reconsider the declaration after providing an opportunity for a hearing. The Petitioners were instructed to appear before the authority, and further steps were outlined based on the decision regarding the declaration. The writ petition was disposed of with no costs awarded.

This detailed analysis covers the issues involved in the judgment, including the arguments presented by both parties, the court's interpretation of legal provisions, and the final decision rendered by the court.

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