2023 (1) TMI 546 - HC - Service Tax

Benefit of SVLDRS - Revenue filed the appeal after the expiry of limitation of Scheme - Rejection of declaration filed by the petitioner under Section 125 (2) of SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 , in Form SVLDRS-1 - jurisdiction of Designated Committee in terms of Section 126 of SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 - extension of benefit by issuance of Discharge Certificate to the petitioner after accepting the amount which the petitioner is liable to deposit under the Scheme of 2019. HELD THAT - It appears that from bare perusal of Section 126 as well as Section 127 of the SVLDRS Scheme and its corresponding Rules being Rule 6 of SVLDRS Rule, it would transpires that the Designated Committee constituted under the Scheme was only required to verify the correctness of the declaration filed by the declarant and estimate the amount payable by such declarant for availing the benefit of the said Scheme, Thus, Designated Committee has not been vested with any jurisdiction to deny the benefit of the Scheme to a declarant on the sole ground that department has taken for filing an Appeal against the Order in Original. The impugned order passed by respondent no.2 is wholly without jurisdiction and beyond its power conferred under the Scheme of 2019. The Designated Committee travelled beyond the purview of the Scheme and acted in a wholly illegally and arbitrary manner by denying the benefit of the Scheme to the petitioner. The crux of the case revolves around the category i.e. arrears or litigation under which the case of the Petitioner will fall. From bare perusal of the aforesaid provisions of Scheme, it would transpire that the nature of cases falling under Section 121(c) is categorized under arrears category . Section 123(a), 123(b) and 123(c) deals with cases falling under litigation category for determining tax dues under the Scheme. The said provisions of Section 123 are not applicable to the case of the Petitioner, as admittedly, no Appeal was pending as on 30. 06.2019 and the show cause notice was received by the Petitioner on 10.08.2019 i.e. after the cut off date of 30.06.2019 - Further, no enquiry or investigation or audit was pending against the Petitioner as on 30.06.2019. Thus, calculation of Tax payable under Section 124(1)(a) by the Designated Committee is unwarranted. As on the date of filing of the declaration form by the Petitioner, no Appeal was filed and/or pending before the Appellate Forum. Indeed for the purpose of determination of tax dues, the case of the petitioner does not fall under Section 123 of the scheme of 2019 as Department had not preferred an Appeal against the Order in Original as on the said date - It further appears that the appeal of the Department has been filed after the expiry of period of limitation prescribed under Section 86(3) of the Finance Act as the said provision provides a period of limitation of three months which has expired on 14.04.2020. Thus, it transpires that in the opinion of the respondent filing of the appeal has led to change in the category of petitioner from arrear category to litigation category which view is beyond the letter and spirit of the scheme. The impugned Order wherein the Declaration filed by the petitioner under Section 125 (2) of SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019, in Form SVLDRS 1 has been rejected, is quashed - Application allowed.

Summary

Issues Involved:
1. Quashing the order rejecting the declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. Determination of eligibility under the "arrears" or "litigation" category.
3. Jurisdiction and authority of the Designated Committee under the Scheme.
4. Interpretation of relevant provisions of the Scheme and corresponding rules.

Detailed Analysis:

1. Quashing the Order Rejecting the Declaration:
The petitioner sought to quash the order dated 15.05.2020, which rejected their declaration under Section 125(2) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 ("Scheme of 2019"). The rejection was based on the ground that the respondent had decided to file an appeal against the original order, thus categorizing the case under "litigation" rather than "arrears."

2. Determination of Eligibility under "Arrears" or "Litigation" Category:
The petitioner argued that their case fell under the "arrears" category as defined in Section 121(c) of the Scheme of 2019. They highlighted that no appeal was pending as of 30.06.2019, and the show cause notice was issued after the cut-off date. The respondents contended that the case fell under the "litigation" category because an appeal was contemplated and later filed.

3. Jurisdiction and Authority of the Designated Committee:
The court examined Sections 126 and 127 of the Scheme, along with Rule 6 of the SVLDRS Rules, to determine the Designated Committee's authority. It concluded that the Committee's role was limited to verifying the correctness of the declaration and estimating the payable amount. The Committee had no jurisdiction to deny benefits based on the department's decision to file an appeal.

4. Interpretation of Relevant Provisions:
The court analyzed various sections of the Scheme:
- Section 121(c): Defines "amount in arrears" and does not impose a cut-off date.
- Section 123: Defines "tax dues" and includes a cut-off date of 30.06.2019 for litigation and enquiry/investigation/audit categories.
- Section 124: Relates to tax relief and the calculation of dues.
- Section 125: Lists eligibility conditions, emphasizing that the show cause notice issued after 30.06.2019 places the case under the "arrears" category.

The court found that the petitioner's case fit within the "arrears" category, as the show cause notice was issued after the cut-off date, and no appeal was pending as of 30.06.2019. The court also noted that the appeal filed by the department after the rejection of the declaration did not change the category.

Conclusion:
The court quashed the impugned order dated 15.05.2020 and directed the respondents to reconsider the petitioner's declaration under Section 125(2) of the Scheme of 2019. The respondents were instructed to complete this exercise within four weeks, extending any consequential benefits to the petitioner. The writ application was allowed and disposed of accordingly.