2022 (12) TMI 1195 - HC - Service Tax

Voluntary payment pursuant to declaration in SVLDRS-1 in 12 equal monthly installments - Circular 1071/4/2019 dated 27.08.2019 - contravention of Section 73 of the Finance Act - HELD THAT - The notice issued by the respondent No.2 under Section 87, according to the petitioner, is in contravention of Section 73 of the Finance Act since there is a mandate to adjudicate and the amount declared as voluntary disclosure of the petitioner cannot be taken as a final amount without any adjudicatory process. Mr.Hemani assisted by the learned advocate, Ms.Vaibhai Parikh, who has drawn our attention to the Circular 1071/4/2019 dated 27.08.2019 to say that in case of the voluntary disclosure of duty not paid, the full amount of disclosed duty would have to be paid. However, there is nothing to say that the interest and penalty would be automatic and any recovery can be made without adjudication. Issue Notice and Notice as to interim relief as well, returnable on 22.12.2022.

Summary

Issues:
Challenge to notice under Section 87 of the Finance Act, 1994 for contravention of provisions. Prayer for voluntary payment in installments, quashing of notice, remand for consideration, stay on recovery proceedings. Interpretation of voluntary disclosure under Sabka Vishwas Scheme. Adjudicatory process requirement for finalizing disclosed amount.

Analysis:
The petitioner filed a petition under Article 226 challenging a notice issued under Section 87 of the Finance Act, 1994, dated 31.03.2022, alleging it contravened the Act's provisions. The petitioner sought various reliefs, including permission to pay the remaining amount voluntarily, quashing the notice demanding Rs.1,35,23,617, remanding the matter for consideration, and staying recovery proceedings. The petitioner had made a voluntary disclosure under the Sabka Vishwas Scheme in 2019 but could not pay the full amount due to COVID-19 and a partner's death. The petitioner argued that the notice was issued in violation of Section 73 of the Finance Act, contending that the disclosed amount should be subject to an adjudicatory process before being finalized.

The petitioner's counsel referred to Circular 1071/4/2019, highlighting that while the full disclosed duty amount must be paid, automatic imposition of interest and penalty without adjudication was not specified. The counsel argued that the petitioner might lose the benefit of penalty and interest waiver but could not be subjected to recovery without adjudication. The court issued notice, including interim relief, returnable on 22.12.2022, with the AGP waiving service for the respondent-State. Additionally, direct service through e-mode on the official email address was permitted, ensuring proper communication and adherence to procedural requirements.