2023 (2) TMI 184 - HC - Service Tax

Rejection of petitioner s applications under Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS) 2019 - appeal dismissed due to non-compliance of making pre-deposit - no hearing notice was given to the petitioner - gross violation of the principles of natural justice - HELD THAT - On the date of filing of the applications under the aforesaid Scheme on 15th January, 2020 when the aforesaid scheme was valid by virtue of notification issued by the Central Government it can be easily said that the applications under the aforesaid Scheme were filed within time and before the expiry of the aforesaid scheme - the show cause cum demand notices in question issued by the adjudicating authority were received by the petitioner before the 30th June, 2019, as per Section 123(b) of the aforesaid scheme and the duty was due and payable by the petitioner and the tax dues were relatable to show cause cum demand notices which were pending adjudication on 30th June, 2019 as per Section 124(1)(a) of the Scheme. Petitioner could not be called not eligible or excluded to make declaration under the said scheme in view of Section 125(1)(c) of the aforesaid scheme since no final hearing had been taken place on or before the 30th June, 2019, after setting aside of the order-in-original and remanding the matter back by the CESTAT to adjudicating authority concerned for de novo adjudication on the show cause cum demand notices in question which is an admitted factual position and even till date no final order has been passed on the said show cause cum demand notices in question. Petition is disposed of by setting aside the impugned orders dated 12th February, 2020 rejecting the applications of the petitioner filed under SVLDRS- 2019 and the respondents authority concerned are directed to grant appropriate relief to the petitioner under the aforesaid Scheme by reconsidering the aforesaid applications in the light of the observations made in this judgment, after giving opportunity of hearing to the petitioner or its authorised representative.

Issues Involved:
1. Legality of the rejection of the petitioner's applications under the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS) 2019.
2. Eligibility of the petitioner to file applications under SVLDRS considering the status of the show cause notices and adjudication orders.
3. Impact of the dismissal of the earlier writ petition on the eligibility under SVLDRS.
4. Interpretation of "tax dues" and their status as pending on the relevant dates.
5. Validity of the respondents' reliance on specific sections of SVLDRS for rejecting the applications.
6. Relevance of the scheme's expiration in determining relief eligibility.

Detailed Analysis:

Issue 1: Legality of the Rejection of Applications under SVLDRS 2019
The petitioner challenged the rejection of their applications under SVLDRS 2019, arguing that the rejections were arbitrary, illegal, and disregarded the scheme's objectives. The court found that the rejections were indeed arbitrary and not tenable in law, as the applications were filed within the scheme's validity period and the show cause notices were pending adjudication.

Issue 2: Eligibility to File Applications under SVLDRS
The court examined whether the petitioner was eligible to file applications under SVLDRS given the status of the show cause notices and adjudication orders. The court noted that the show cause notices were pending adjudication on the relevant date (30th June 2019) and that no final hearing had occurred. Therefore, the petitioner was eligible to file applications under the scheme.

Issue 3: Impact of the Dismissal of the Earlier Writ Petition
The court considered whether the dismissal of an earlier writ petition, which was limited to the issue of a pre-deposit condition, affected the eligibility under SVLDRS. The court concluded that the dismissal of the writ petition had no impact on the pending status of the show cause notices, as the appeal had been restored and the matter remanded for fresh adjudication.

Issue 4: Interpretation of "Tax Dues" and Their Status
The court interpreted "tax dues" under Section 123(b) and Section 124(1)(a) of SVLDRS, concluding that the tax dues were indeed pending as the show cause notices were not finally adjudicated by 30th June 2019. The court emphasized that the pending status of the show cause notices made the petitioner eligible for relief under the scheme.

Issue 5: Validity of Respondents' Reliance on Specific Sections of SVLDRS
The respondents argued that the petitioner was ineligible under Section 125(1)(a) and (c) of SVLDRS, asserting that the appeal had been finally heard and that no proof of deposit was provided. The court rejected these arguments, clarifying that no final hearing had taken place and that the dismissal of the writ petition did not affect the pending status of the show cause notices.

Issue 6: Relevance of the Scheme's Expiration
The respondents contended that no relief could be granted as the scheme had expired. The court, however, held that since the applications were filed before the scheme's expiration, the petitioner was entitled to relief. The court relied on precedents from the Bombay and Delhi High Courts, which supported the view that pending adjudication made the petitioner eligible for the scheme.

Conclusion:
The court set aside the impugned orders dated 12th February 2020, rejecting the petitioner's applications under SVLDRS 2019. The respondents were directed to reconsider the applications and grant appropriate relief within 12 weeks, ensuring an opportunity for the petitioner to be heard. The court emphasized that the rejection of the applications was arbitrary and not in line with the scheme's provisions and objectives.

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