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2022 (12) TMI 603 - HC - Service TaxRejection of SVLDRS declaration - remedy available to petitioner - delay of eight to nine months in filing these writ petitions - whether the case of the petitioner falls within the purview of the exception in Section 125(1)(e) of the SVLDRS, 2019 or not? - quantification qualifies as quantification before 30.6.2019 under SVLDRS, 2019 or not - HELD THAT - the rejection of applications filed by the respective petitioners and communication of the same after the scheme has expired did not bar the respective petitioners from challenging the impugned orders rejecting their application under the SVLDRS,2019 Had the petitioner immediately challenged the impugned orders rejecting their declaration as soon as it was communicated to them before the so called expiry period under SVLDRS,2019, could it be said that the petitioners were barred from proceeding further and the Court was barred from passing a final order? In our view, the writ petitions could not have been dismissed. If the Declarations were filed for settling the tax case under SVLDRS, 2019 in time but were rejected at the threshold, an applicant whose application was rejected cannot be left without any remedy as the right to have the case settled under the SVLDRS, 2019 is a substantive right. - In our view, the respective Writ petitions cannot be rejected in limine. Validity of show cause notice - Proper officer - HELD THAT - the second respondent, the Principal Additional Director General, Directorate General of Goods and Service Tax Intelligence, is a Central Excise Officer. The second respondent was therefore competent to issue the impugned Show Cause Notice No.47 of 2020 dated 25.09.2020 under Section 73 of the Finance Act, 1994 to the petitioner. Whether the Show Cause Notice makes out a case for evasion of tax, warranting invocation of the provisions of the Finance Act, 1994 is altogether a different issue. We will refrain from making any observation on the merits of the case. Validity of orders of the Designated Committee - quantification qualifies as quantification before 30.6.2019 under SVLDRS, 2019 or not - Claim of quantification based on letter issued by the Audit Team or Investigation team - HELD THAT - There should have been a quantification of the tax dues/duty liability on or before 30.06.2019 as per Section 123(c) where the tax dues are linked to an enquiry, investigation or audit against the declarant so as not to attract the exception under Section 125(1)(e). Non-quantification of tax dues acts as a dis-qualifier and therefore inhibits a person from availing the benefit of the SVLDRS, 2019. Such a person cannot file a declaration under the scheme. Quantification of tax dues is sine qua-non for availing the benefit for relief under Sec.124(1)(d) of SVLDRS,2019. During the course of enquiry investigation or audit, a person can file a Declaration under SVLDR, 2019 provided there is a proper quantification of tax liability on or before 30.06.2019. However, mere filing of a Declaration ipso facto will not mean that the enquiry, investigation or audit has to be stopped. If the amount quantified is correct, such quantification can be accepted. However, if enquiry, investigation or audit is complete, where there is no quantification, there is no scope for filing Declaration. However, it is not the self declared quantification of a Declarant of tax dues which will entitle the benefit of the aforesaid scheme. The scheme brings a closure to the tax dispute with issuance of certificate under Section129 of SVLDRS, 2019. It has to be a quantification which ought to have been accepted by the Investigating Wing or Audit Wing of the Department. Failure to furnish the details and information sought during Audit / Investigation - HELD THAT - The details furnished by the petitioner in its communication dated 24.10.2018 and the information in the Show Cause Notice dated 26.02.2022indicate that the petitioner did not make a complete disclosure. There was no proper quantification of the tax due by the petitioner for the entire period between March 2016 to June 2017. However, only an adhoc quantification was made for the tax dues period between April 2017 to June 2017. Therefore, there was quantification for the aforesaid period alone. No quantification was provided by the petitioner for the period between March 2016 to March 2017 for the purpose of definition under Section 121(r) r/w Section 123(c) Section 124(1)(d). The disability under Section 125(1)(e) of SVLDRS, 2019 is attracted for the period between March 2016 to March 2017 and therefore as an errant taxpayer whose tax liability has not been determined, the petitioner is not entitled to avail the benefit of SVLDRS, 2019 for the period between March 2016 to March 2017.
Issues Involved:
1. Eligibility under SVLDRS, 2019. 2. Quantification of tax dues before 30.06.2019. 3. Validity of Show Cause Notices and Notifications. 4. Maintainability of writ petitions post-SVLDRS scheme period. 5. Scope of relief under SVLDRS, 2019. Detailed Analysis: 1. Eligibility under SVLDRS, 2019: The primary issue was whether the petitioners fell within the exceptions under Section 125(1)(e) of the SVLDRS, 2019, which disqualifies those whose tax dues were not quantified on or before 30.06.2019. The court analyzed whether the tax dues were quantified before the cutoff date, determining eligibility for relief under the scheme. 2. Quantification of Tax Dues Before 30.06.2019: - W.P.No.11785 of 2020: The petitioner claimed quantification of Rs.1,98,86,089/- in a letter dated 24.10.2018. However, the court found that quantification was only partial and not for the entire period (March 2016 to June 2017). The court held that the petitioner was only entitled to relief for the period April 2017 to June 2017. - W.P.No.12957 of 2020: The petitioner quantified Rs.37,08,90,828/- in a letter dated 07.05.2019. The court found partial quantification valid for the period 2014-15 to 2016-17, but not for the entire amount. The petitioner was entitled to relief for the quantified amount before 30.06.2019. 3. Validity of Show Cause Notices and Notifications: - W.P.No.3320 of 2022: The court upheld the validity of the Show Cause Notice No.47 of 2020 dated 25.09.2020, issued by the Principal Additional Director General, Directorate General of Goods and Service Tax Intelligence. - W.P.No.3322 of 2022: The court dismissed the challenge to Notification No.22/2014-Service Tax dated 16.09.2014, confirming the jurisdiction of the officers to issue the show cause notice. 4. Maintainability of Writ Petitions Post-SVLDRS Scheme Period: The court held that the rejection of applications after the scheme's expiry did not bar the petitioners from challenging the rejections. The right to settle under SVLDRS, 2019 was a substantive right, and the court could not deny relief solely based on the expiry of the scheme period. 5. Scope of Relief Under SVLDRS, 2019: The court clarified that relief under SVLDRS, 2019 was available only for the quantified amount before the cutoff date. The petitioners were directed to be issued discharge certificates for the quantified amounts, and for the remaining amounts, the respondents were allowed to proceed with the show cause notices. Judgment: - W.P.No.11785 of 2020: Allowed for the period April 2017 to June 2017. The respondents were directed to issue a discharge certificate for Rs.1,98,86,089/- and proceed with the show cause notice for the remaining period. - W.P.No.12957 of 2020: Allowed for the period 2014-15 to 2017-18 (up to June 2017). The respondents were directed to issue a discharge certificate for the quantified amount and proceed with the show cause notice for the remaining amount. - W.P.Nos.3320 & 3322 of 2022: Dismissed. The court upheld the validity of the show cause notice and the notification. The court emphasized the importance of quantification before the cutoff date and provided relief accordingly, ensuring adherence to the SVLDRS, 2019 provisions.
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