2022 (6) TMI 865 - HC - Service Tax

Rejection of petitioner s declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner was an eligible person entitled to file a declaration or not - HELD THAT - When provisions of section 121 (r) read with clause (c) of section 123 read with section 124 of Finance Act, the Circular dated 12th December, 2019 and answer to FAQ 45 are considered, we can safely conclude that requirement under the scheme is admission of tax liability by the declarant during inquiry, investigation or audit. In the show cause notice dated 16th October, 2019, there is an admission from respondents that petitioner s Director in his statement dated 25th June, 2019 has admitted service tax liability amounting to Rs.144,60,835/- as payable on 5th April, 2018. A show cause notice has been issued after 30th June, 2019, i.e, on 16th October, 2019 but that should make no difference to eligibility of petitioner. Eligibility shall be as it was on the relevant date, i.e, on 30th June, 2019 because as on 30th June, 2019, there was an inquiry/investigation pending against petitioner. The amount of duty payable has been quantified on 25th June, 2019 when in the statement of Madhukar Poojari, Director of petitioner it was recorded. In the show cause notice also the total tax liability of the petitioner as on 5th April, 2018 has been quantified as Rs.144,80,183/-. The fact that in the show cause notice which was issued subsequently tax duties quantified by the Departmental Authorities was about Rs.19,348/- in excess would not be material at all to determine eligibility criteria in terms of the scheme. In a similar case which was relied upon by Mr. Shrivastava in the matter of SABAREESH PALLIKERE, PROPRIETOR OF M/S. FINBROS MARKETING VERSUS JURISDICTIONAL DESIGNATED COMMITTEE, THANE COMMISSIONERATE, DIVISION IV, RANGE-II ORS. 2021 (2) TMI 515 - BOMBAY HIGH COURT where it was held that 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 30.06.2019. The fact that there could be discrepancy in the figure of tax dues admitted by the person concerned prior to 30.06.2019 and subsequently quantified by the departmental authorities would not be material to determine eligibility in terms of the scheme under the category of inquiry, investigation or audit. What is relevant is admission of tax dues or duty liability by the declarant before the cut off date. Of course the figure or quantum admitted must have some resemblance to the actual dues. In our view, petitioner had fulfilled the said requirement and therefore he was eligible to make the declaration in terms of the scheme under the aforesaid category. Rejection of his declaration therefore on the ground of ineligibility is not justified Facts in that case were also similar to the facts at hand. In that case also petitioner had accepted total service tax liability for the period under consideration and after initiation of inquiry also paid certain amounts but when the show cause cause-cum-demand notice was issued, amount had varied and petitioner's declaration was rejected on the ground of ineligibility since the final amount came to be quantified after 30th October, 2019, i.e, on 11th November, 2019 when the show cause-cum-demand notice was issued - thus it is held that in petitioner's case there was tax dues of petitioner because an inquiry/investigation was pending against petitioner and the amount of duty payable under GST Act was quantified before 30th June, 2019. Since respondent No.4 had issued Form-2 indicating certain amount as payable by petitioner and petitioner had accepted the same by submitting Form-2A on 25th December, 2019, respondent No.4 shall issue Form-3 namely statement in electronic form indicating the amount payable by petitioner in accordance with subsection 4 of Section 127 of the Finance Act, 2019. Petition disposed off.

Summary

Issues Involved:
1. Eligibility of the petitioner to file a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme).
2. Interpretation of the term "quantified" under the SVLDR Scheme.
3. Validity of the rejection of the petitioner's declaration by the respondent.

Issue-wise Detailed Analysis:

1. Eligibility of the Petitioner to File a Declaration under the SVLDR Scheme:
The petitioner, a company engaged in providing "Outdoor Catering Services and Cleaning Services," was registered under the Service Tax Rules and later under the Goods and Services Tax Act (GST Act). The petitioner received multiple summons from the Directorate General of GST Intelligence (DGGI) regarding an inquiry about evasion of service tax. The petitioner's Director admitted a liability of Rs.1,44,60,835/- in a statement recorded on 25th June 2019. Subsequently, a show cause-cum-demand notice was issued on 16th October 2019. The SVLDR Scheme, introduced under the Finance Act, 2019, required declarations to be filed by 31st December 2019, later extended to 15th January 2020. The petitioner filed a declaration under the category of investigation by DGGI, declaring a total tax liability of Rs.1,44,60,835/- and an amount payable of Rs.28,85,417.50. The designated committee initially estimated the same amount payable but later rejected the declaration on the grounds that the tax quantification was not finalized before 30th June 2019.

2. Interpretation of the Term "Quantified" under the SVLDR Scheme:
The court referred to Section 125 of the Finance Act, 2019, which outlines eligibility for making a declaration under the scheme. Section 123(c) specifies that "tax dues" mean the amount of duty payable under any indirect tax enactment which has been quantified on or before 30th June 2019. The term "quantified" is defined in Section 121(r) as a written communication of the amount of duty payable under the indirect tax enactment. The court also considered the Circular dated 12th December 2019 issued by the Central Board of Indirect Taxes and Customs (CBITC), which clarified that eligibility should be determined as it was on the relevant date, i.e., 30th June 2019. The CBITC's FAQ No. 53 further clarified that only cases where the tax demand was finally worked out on or before 30th June 2019 are eligible under the scheme.

3. Validity of the Rejection of the Petitioner's Declaration by the Respondent:
The court found that the petitioner's Director had admitted the tax liability amounting to Rs.1,44,60,835/- in a statement recorded on 25th June 2019, which constituted a written communication and hence, a quantification of the tax dues before the cut-off date of 30th June 2019. The issuance of the show cause notice after 30th June 2019 did not affect the petitioner's eligibility. The court referred to a similar case, Sabreesh Pallikere vs. Jurisdictional Designated Committee, where it was held that the requirement under the scheme is the admission of tax liability by the declarant during inquiry, investigation, or audit, and minor discrepancies in the figures do not affect eligibility. Based on these considerations, the court concluded that the petitioner was eligible to file a declaration under the SVLDR Scheme and that the rejection by the respondent was erroneous.

Conclusion:
The court held that the petitioner was an eligible person entitled to file a declaration under the SVLDR Scheme as the tax dues were quantified before the cut-off date. The respondent's rejection of the petitioner's declaration was set aside. The court directed the respondent to issue Form-3 indicating the amount payable by the petitioner within 15 days from the date of the order. The petition was disposed of with no order as to costs.