2023 (2) TMI 13 - HC - Service Tax

Rejection of declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT - The present case falls in the category where the Designated Committee has accepted the amount declared by the declarant. The fact that form SVLDRS-3 is not issued to the Petitioner is an admitted position. This fact is admitted in the reply affidavit filed on behalf of Respondent Nos. 3 to 6 by the Assistant Commissioner of CGST Central Excise, Division VI, Thane Commissionerate. Further, the Petitioner was eligible for availing the benefit of the Scheme is also accepted, and it is further stated in the reply affidavit that if the Petitioner is allowed to deposit the eligible amount it should be with interest at the rate of Rs. 9% per annum, which stand is reiterated before us by the learned Counsel for the Respondents. Therefore, the issuance of form SVLDRS-3 was necessary, and it was not issued to the Petitioner due to the error on the part of the Respondents is an accepted position. The Petitioner therefore is entitled to a direction to the Respondent to accept the eligible amount. Whether the Petitioner should deposit the amount with interest at the rate of Rs. 9% per annum? - HELD THAT - In the case at hand, admittedly, to date, the Respondents have not issued an electronic form SVLDRS-3 as required. Therefore, the obligation of the Petitioner under section 127 (5) of the Act of 2019 to pay the amount within 30 days had not arisen at all. In the case of M/S LG CHAUDHARY VERSUS UNION OF INDIA 2022 (10) TMI 631 - GUJARAT HIGH COURT before the High Court of Gujarat, form SVLDRS-3 was issued to the Petitioner therein, but the Petitioner did not make payment as there was an error on the part of the Bank and the payment was returned. The facts in this case are entirely different. Admittedly, there is no fault on the part of the Petitioner. The Petitioner is therefore entitled to the relief prayed for as to the benefit of the Scheme. Petition allowed.

Summary

Issues:
Challenge to action of Designated Committee under Sabka Vishwas Scheme - Rejection of declaration - Seeking extension of Scheme benefits.

Analysis:
The Petitioner, a software development services company, challenged the action of the Respondent/Designated Committee under the Sabka Vishwas Scheme for rejecting its declaration and sought a direction to extend the Scheme benefits. The Respondents alleged that the Petitioner was liable to pay tax on transactions with a SEZ unit, leading to a show cause notice for service tax. The Petitioner contended that service tax exemption was correctly availed. The Sabka Vishwas Scheme, introduced by the Finance Act 2019, allowed declarants to resolve tax disputes. The Petitioner filed a declaration under the Scheme, which was initially rejected due to an alleged final hearing before the Scheme's cut-off date. However, a subsequent application was manually processed, and the sanction for tax dues was accorded.

The Scheme required declarants to file an online declaration, which would be verified by the Designated Committee. If the estimated amount matched the declared amount, the Committee would issue a statement indicating the payable amount within 60 days. The Petitioner's case involved the Committee accepting the declared amount, but failing to issue the necessary form SVLDRS-3 within the stipulated time frame. The Respondents admitted the error and agreed that the Petitioner was eligible for the Scheme benefits, subject to paying interest at 9% per annum. The Court acknowledged the Respondents' stance and directed them to accept the eligible amount, emphasizing the necessity of issuing the form SVLDRS-3 to the Petitioner.

The Respondents contended that the Petitioner should pay the amount with interest, citing a Gujarat High Court decision. However, the Court noted that as the required form had not been issued to the Petitioner, the obligation to pay within 30 days had not arisen. The Court distinguished the present case from the Gujarat High Court decision, where the Petitioner failed to pay due to a bank error. In this instance, the Petitioner was faultless, and thus entitled to the relief sought under the Scheme. Consequently, the Court made the rule absolute in favor of the Petitioner, granting the requested relief without costs.