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2022 (6) TMI 479 - HC - Service TaxSabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - brokerage / commission services - declaration accepted but according to petitioner, respondents have not given credit to certain amounts which, according to petitioner, has been paid - HELD THAT - One thing is very clear that it is the intention of Union of India also to put an end to a litigation where the declarant wants to put an end to. Any person can be a declarant except those excluded under Section 125 of the Finance Act. In our view, having considered the various provisions of the scheme alongwith circulars issued by respondent no.2, one thing that is certain is any amount paid either in cash or by virtue of input credit should be reduced at the time of determination of the final amount payable under the scheme. As held by this court in M/S. CODE ENGINEERS PRIVATE LIMITED THROUGH ITS DIRECTOR MR. ABIRAAJ RAJAN VERSUS UNION OF INDIA AND OTHERS 2021 (2) TMI 10 - BOMBAY HIGH COURT the crucial word is verify used in Section 126(1) of the Finance Act and Sub Rule (1) of Rule 6 of the Rules. The obligation of respondent no.3 is to verify the truth or truthfulness of the declaration made by petitioner. In our view, that would also include verification of petitioner s statement in the declaration that it has paid Rs.8,73,19,575/- including Rs.5,37,25,305/- by reversal of credit in service tax returns filed for the period April 2015 to September 2015. Mr. Mundra, as stated earlier, submitted that petitioner had given proof and details to respondent no.3 during the personal hearing. If that was the case, respondent no.3 ought to have verified the truthfulness of petitioner s statement whether the amount of Rs.5,37,25,305/- by reversal of credit in service tax returns was correct. By verifying this truthfulness would not, amount to disposing or hearing the appeal filed by petitioner on merits. Respondent no.3 should not take such pedantic approach and should keep in mind the purpose behind introducing the scheme, i.e., liquidation of past disputes so that the business can move ahead and the tax administration can also focus on the smooth implementation of the goods and services tax. Respondent no.3 is directed to consider all documents and records submitted by petitioner including proof of payment of Rs.5,37,25,305/- alongwith records available with the department and issue a fresh statement under Section 127 of the Finance Act - Petition disposed off.
Issues Involved:
1. Eligibility and compliance under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019. 2. Verification of tax payments made by the petitioner. 3. Adjustment of CENVAT credit against tax dues. 4. Procedural obligations of the designated committee under the scheme. 5. Legal interpretation of the term "verify" in the context of the scheme. Issue-wise Detailed Analysis: 1. Eligibility and Compliance under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019: The petitioner, a stockbroker, filed a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 to settle tax disputes. The scheme, introduced by the Government of India under Chapter V of the Finance Act 2019, allows eligible persons to make declarations to settle disputes. The petitioner's eligibility was not in question as their appeal was pending before the Customs Excise Service Tax Appellate Tribunal (CESTAT) on 30th June 2019, making them entitled to make a declaration under the scheme. 2. Verification of Tax Payments Made by the Petitioner: The petitioner claimed they had paid Rs. 6,86,85,255/- towards service tax, including Rs. 5,37,25,305/- by reversal of credit in service tax returns. However, the respondents did not give credit for the amount paid by reversal of credit, only acknowledging the cash payment of Rs. 1,49,59,950/-. The petitioner argued that if the credit was given, they would owe no further amount and there would be a surplus with the Government. 3. Adjustment of CENVAT Credit Against Tax Dues: The petitioner contended that the amount paid by reversal of credit should be considered while determining the final payable amount under the scheme. The respondents, however, did not allow the adjustment of Rs. 5,37,25,305/- paid by reversal of credit. The designated committee issued a statement under Section 127 of the Finance Act, giving credit for only Rs. 2,39,66,528/- and declaring a balance payable of Rs. 3,25,20,936/-. 4. Procedural Obligations of the Designated Committee under the Scheme: The designated committee is required to verify the correctness of the declaration based on the particulars furnished by the declarant and the records available with the department. The petitioner argued that the committee failed to verify the truthfulness of their declaration regarding the payment made by reversal of credit. The court emphasized that the committee should have examined the records and not dismissed the petitioner's submissions by stating that the entitlement to credit could only be examined in an appeal or de novo adjudication. 5. Legal Interpretation of the Term "Verify" in the Context of the Scheme: The court referred to previous judgments, highlighting that the term "verify" means to confirm or establish the truthfulness of the declaration. The verification process should not be an adjudicatory exercise but should ensure the correctness of the declaration based on the records available. The court criticized the committee's pedantic approach and stressed the scheme's objective of liquidating past disputes to facilitate business operations and smooth tax administration. Conclusion: The court quashed the statement dated 23rd January 2020 and directed the designated committee to reconsider the petitioner's documents and records, including proof of payment of Rs. 5,37,25,305/-, and issue a fresh statement under Section 127 of the Finance Act. The committee must grant a personal hearing to the petitioner before issuing the statement. The court clarified that it did not make any observations on the merits of the petitioner's claim for credit and directed the committee to consider it independently. The petition was disposed of with no order as to costs.
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