2022 (8) TMI 1147 - HC - Service Tax

Sabka Vikas Legacy Dispute Resolution Scheme, 2019 - application rejected only an erroneous ground that audit had been initiated and hence, the petitioner was not entitled to the benefit of the SVLDR Scheme - HELD THAT - Shri Saraswat is not in a position to dispute the fact that the last date stipulated for initiating the investigation or audit making the applicant ineligible to apply under the Disclosure Scheme was 30.06.2019. It is not disputed that the notice for providing documents to conduct audit was issued to the petitioner well after 30.06.2019 to be specific on 26.12.2019. Hon ble Bombay High Court in the case of UCC Infrastructure Pvt. Ltd. vs. Union of India Ors. 2022 (2) TMI 94 - BOMBAY HIGH COURT where it was held that In the facts of this case also the respondents had issued a summons only on 30th August, 2019 i.e. after 30th June, 2019 and thus summons issued after the cut-off date of 30th June, 2019 could not be the ground for declaring the application filed by the petitioner under SVLRDS-1 ineligible. The Declaration Forms filed by the petitioners are restored to file and are remanded to the respondent no.3 for taking a fresh decision on these two declaration forms filed by the petitioner by treating the same as valid declarations under the voluntary disclosure category and thereafter grant the admissible relief to the petitioner - It is made clear that the respondents are empowered to take action under Section 129(2)(c) of the said Scheme, if within a period of one year of issuance of the discharge certificate against the petitioner, the respondent no.3 finds that the material particulars furnished in the declaration filed by the petitioner are found to be false. The writ petition is allowed.

Summary

Issues:
1. Rejection of application under the SVLDR Scheme based on the initiation of an audit.
2. Dispute regarding the timeline of audit initiation and application filing under the SVLDR Scheme.
3. Interpretation of relevant provisions of the SVLDR Scheme in light of previous court judgments.
4. Legality and justification of denying the petitioner the benefit of the SVLDR Scheme.

Analysis:
1. The petitioner, a GST-registered proprietorship firm, applied under the SVLDR Scheme for voluntary disclosure and deposited the due service tax. However, the application was rejected citing the initiation of an audit after the cut-off date of 30.06.2019, which allegedly made the petitioner ineligible for the scheme.

2. The petitioner's counsel argued that the audit notice was issued after the cut-off date and should not preclude the petitioner from benefiting from the SVLDR Scheme. The respondent's representative acknowledged the timeline discrepancy but contended that the audit initiation notice was served before the application date, hence disqualifying the petitioner.

3. Referring to a judgment by the Bombay High Court, the Rajasthan High Court emphasized that an audit, investigation, or enquiry initiated post 30.06.2019 should not bar a party from voluntary disclosure under the SVLDR Scheme. The court highlighted the importance of the scheme's objective and the need for a reasonable interpretation of its provisions.

4. The High Court concluded that the respondents' action in initiating an enquiry and rejecting the petitioner's application under the SVLDR Scheme was illegal and unjustified. Consequently, the court quashed the impugned order and directed the restoration of the petitioner's declaration forms for a fresh decision, emphasizing the need for a fair hearing and adherence to the law within a specified timeline.

5. The court also empowered the respondents to take action if false particulars were found in the petitioner's declaration after the issuance of a discharge certificate. The writ petition was allowed, and the stay application was disposed of, ensuring the petitioner's right to avail benefits under the SVLDR Scheme and receive a fair decision within the legal framework.