2023 (2) TMI 610 - HC - Service Tax

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility of petitioner to apply for the scheme or not - HELD THAT - Section 125 of the Act states that all persons shall be eligible to make a declaration under this Scheme except ones specified in the said section. The Petitioner had applied under the Voluntary Disclosure category. Section 125(1)(f) refers to a person making a voluntary disclosure after being subjected to any enquiry, investigation or audit, as not eligible. Even though Section 125(1)(f) does not make a specific reference to any date, the Division Benches of this Court in M/S. NEW INDIA CIVIL ERECTORS PRIVATE LIMITED VERSUS UNION OF INDIA AND OTHERS 2021 (3) TMI 545 - BOMBAY HIGH COURT and UCC INFRASTRUCTURE PVT. LTD., VERSUS UNION OF INDIA REPRESENTED BY THE SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, NEW DELHI, JOINT COMMISSIONER CGST AND CX NAVI MUMBAI, COMMISSIONER CGST AND CX, NAVI MUMBAI, ASSISTANT COMMISSIONER CGST AND CX, NAVI MUMBAI 2022 (2) TMI 94 - BOMBAY HIGH COURT have interpreted Section 125 to mean that the investigation must be pending as of 30 June 2019 to disentitle the declarant under voluntary disclosure category. From the affidavit in reply filed by the Respondents, it is clear that even the basic process of issuing notice had commenced after 30 June 2019. Absolutely nothing is placed on record as regards the cut-off date of 30 June 2019 qua the Petitioner. In light of the position that emerges on record, the Petitioner is entitled to the benefit of the legal position laid down by this Court in New India Civil Erectors Private Limited and UCC Infrastructure Pvt.Ltd. since the date 30 June 2019 is relevant even for the voluntary disclosure category. On that date the Petitioner was not subjected to any inquiry/ investigation prior to 30 June 2019. Thus, it cannot be held that the Petitioner was not eligible to apply under the Scheme. Petition allowed.

Summary

Issues:
Challenge to show cause notice under Sabka Vishwas Scheme regarding service tax eligibility based on investigation status.

Analysis:

1. Legacy Dispute Resolution Scheme Application: The petitioner, a private limited company engaged in construction and development, applied under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, for relief from tax dues and waiver of interest and penalty. The petitioner declared an amount under Work Contract Service and received a discharge certificate upon payment as per the scheme's provisions.

2. Show Cause Notice: Subsequently, the petitioner received a show cause notice demanding payment of service tax due, citing an ongoing investigation by the Director General of GST Intelligence. The notice challenged the petitioner's eligibility under the voluntary declaration scheme and demanded a significant amount from the petitioner.

3. Legal Interpretation: The court analyzed the relevant sections of the Finance Act, 2019, concerning the issuance of discharge certificates and the consequences of false declarations. The petitioner argued that only the Designated Committee could determine the falsity of declarations post-issuance of the discharge certificate, while the respondents contended that the committee's role ceased after issuance.

4. Court's Decision: The court ruled in favor of the petitioner, emphasizing that the show cause notice was unwarranted as the declarations were not false. Referring to previous judgments, the court highlighted that investigations must be pending as of a specific date for disqualification under the voluntary disclosure category. Since no inquiry or investigation was ongoing against the petitioner before the relevant date, the court held that the petitioner was eligible to apply under the scheme.

5. Conclusion: Consequently, the court allowed the writ petition, making the rule absolute in favor of the petitioner, with no order as to costs. The judgment underscores the importance of adherence to legal provisions and the significance of investigating the eligibility criteria under such schemes before issuing show cause notices.