2022 (9) TMI 745 - HC - Service Tax

Rejection of petitioner s application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that petitioner was ineligible - excluded person under Section 125 (1)(f) of the Finance Act, 2019 - HELD THAT - This letter cannot be considered commencement of investigation or enquiry. The letter has to be read to mean only because petitioner has obtained service tax registration for providing taxable services, the department in that regard want to verify the documents. In any event, even for a moment, it is held that this letter amounts to commencement of investigation or enquiry as submitted by Mr. Adik, still this letter having been issued only on 26th August 2019 though dated 20th August 2019, petitioner would be said to be subjected to enquiry or investigation only after 30th June 2019 and as held by this court in New India Civil Erectors Private Limited vs. Union of India and Others 2021 (3) TMI 545 - BOMBAY HIGH COURT , it would not be a ground for declaring application filed by petitioner under the SVLDRS as ineligible. The impugned order dated 21st June 2022 is set aside - it is declared that petitioner will be eligible to file declaration under the scheme - petition disposed off.

Summary

Issues:
Challenge to rejection of application under Sabka Vishwas Scheme based on eligibility criteria.

Analysis:
The petition challenged the rejection of the petitioner's application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, on the grounds of ineligibility. The respondent argued that the petitioner was ineligible due to an ongoing enquiry/investigation, which led to the issuance of a show cause cum demand notice. The crux of the matter revolved around Section 125 of the Finance Act, 2019, which outlines the eligibility criteria for making a declaration under the scheme, excluding certain categories of individuals. The petitioner claimed to fall under clause (f) of Section 125, as a person making a voluntary disclosure after being subjected to an enquiry or investigation.

The petitioner contended that they were not subjected to any enquiry or investigation before filing the declaration. Additionally, they argued that even if the enquiry commenced after a specific date, as per relevant judgments, the cut-off date for eligibility should be considered. The court referred to precedents such as New India Civil Erectors Private Limited and UCC Infrastructure Pvt. Ltd., emphasizing that the scheme's objective should guide the interpretation of the eligibility criteria. The court highlighted that the initiation of an enquiry or investigation post the specified date should not render an applicant ineligible under the voluntary disclosure category.

The court examined a letter dated 20th August 2019, which the respondent claimed marked the commencement of an investigation. However, the court determined that the letter was merely a request for verification of service tax payments and did not signify the start of an investigation. Even if the letter was considered as the beginning of an enquiry, the court reiterated that the petitioner was subjected to the investigation after the cut-off date, aligning with the principles established in previous judgments. Consequently, the court quashed the impugned order and declared the petitioner eligible to file a declaration under the scheme, directing the respondents to proceed accordingly.

In conclusion, the judgment delved into the nuances of the eligibility criteria under the Sabka Vishwas Scheme, emphasizing the importance of interpreting the provisions in alignment with the scheme's objectives. The court's decision centered on ensuring that technicalities regarding the commencement of investigations did not unjustly exclude eligible applicants, thereby upholding the petitioner's right to participate in the scheme.