2022 (7) TMI 1119 - HC - Service Tax

Rejection of declaration filed by petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 - rejection has been made by passing a very cryptic order without spelling out the reason - opportunity of hearing also not provided - violation of principles of natural justice - HELD THAT - Reliance placed in the MAGNUM MANAGEMENT AND SERVICES P. LTD. VERSUS UNION OF INDIA ORS. 2021 (3) TMI 136 - BOMBAY HIGH COURT , where it was held that the petitioner ought to have been given a personal hearing before his declaration was rejected. The order is set aside with a direction to respondents to reconsider petitioner s declaration and pass order as it deemed fit but after offering an opportunity of a personal hearing to petitioner. The notice for personal hearing shall be given atleast 7 days in advance. The order shall be a reasoned order, if respondents are not willing to accept petitioner s explanation. Petition disposed off.

Summary

Issues:
1. Rejection of declaration under the 'Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019' without providing reasons.
2. Requirement of a personal hearing before rejection of declaration.
3. Compliance with principles of natural justice in rejection of declarations.
4. Quashing of the order dated 10.01.2020 and reconsideration of petitioner's declaration with an opportunity for a personal hearing.

Issue 1: Rejection of declaration without providing reasons
The petitioner raised a grievance against the rejection of their declaration under the 'Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019' due to the cryptic nature of the rejection order. The court noted that the rejection was based on the remark "investigation already initiated by department," lacking material particulars, which did not sufficiently explain the basis for rejection.

Issue 2: Requirement of a personal hearing before rejection of declaration
Referring to a previous judgment, the court emphasized the importance of granting a personal hearing to declarants before rejecting their declarations. The court highlighted that the discretion vested in the designated committee to determine eligibility under the scheme must be exercised fairly, justly, and in compliance with the principles of natural justice, including providing an opportunity for the declarant to be heard.

Issue 3: Compliance with principles of natural justice in rejection of declarations
The court reiterated that the rejection of a declaration without affording the declarant an opportunity of hearing would violate the principles of natural justice, rendering the decision-making process invalid in law. The court emphasized that summary rejection without a hearing would lead to adverse civil consequences for the declarant and emphasized the need for compliance with natural justice principles in decision-making processes.

Issue 4: Quashing of the order and reconsideration of petitioner's declaration
Given the violation of natural justice principles in the rejection of the petitioner's declaration, the court quashed the order dated 10.01.2020 and directed the designated committee to reconsider the petitioner's declaration under the category of 'voluntary disclosure.' The court mandated that the reconsideration process should include a personal hearing for the petitioner, ensuring compliance with natural justice principles. The court set a timeline of eight weeks for the entire process to be completed from the date of the court's order.

In conclusion, the court disposed of the petition, emphasizing that they had not expressed any opinion on the merits of the matter but focused on ensuring procedural fairness and compliance with natural justice principles in the rejection and reconsideration of the petitioner's declaration.