2024 (3) TMI 1180 - HC - Service Tax

Rejection of the Petitioner s Application filed under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that the amount of tax is not quantified before 30th June 2019 and investigation is going on - HELD THAT - It is thus seen that the Department has taken a clear position that the duty liability admitted by any person during enquiry, investigation or audit would amount to making him eligible for the benefits of the scheme. Such interpretation, as made by the Department, has also become relevant in terms of Section 121(r), which defines the term quantified. Section 125 (1) (e), as referred, clearly sets out that an assessee, who has been subjected to an enquiry or investigation or audit, and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before the 30th day of June, 2019, would not make him eligible to take the benefit of the scheme. However, in the present case, the duty was quantified much prior to the cut off date of 30th June 2019. The rejection, as generated by the electronic system, appears to be not correct, and would be required to be held to be illegal considering the clear position as brought out by the terms and conditions of the Scheme, and the clarification of the Scheme as issued by the Circular of the Revenue dated 27th August 2019. The Petitioner was clearly eligible to avail benefits of the Scheme and the rejection, as impugned, is illegal - Petition allowed.

Summary

Issues involved: Challenge to rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 due to tax amount not quantified before 30th June 2019 and ongoing investigation.

Summary:
The Writ Petition challenges the rejection of the Petitioner's Application under the SVLDRS on the grounds of tax amount not being quantified before the specified date and an ongoing investigation. The Petitioner, a company engaged in hospitality business, had admitted the service tax liability for multiple financial years. Despite attempts to avail the SVLDRS scheme, the applications were rejected. The Petitioner contended that the duty payable was quantified on specific dates, making them eligible for the scheme. The Department's interpretation of the scheme's terms and conditions was crucial, as it defined eligibility criteria based on quantification of duty liability.

The Court noted that the duty liability was quantified before the cut-off date of 30th June 2019, as per the Petitioner's declarations. The rejection based on the investigation status was deemed incorrect, considering the scheme's guidelines and the Department's circular clarifying the quantification requirement. A previous judgment was cited where a similar declaration of tax amount entitled the petitioner to scheme benefits. Consequently, the Court held that the Petitioner was eligible for the scheme benefits and deemed the rejection illegal.

The Court allowed the Writ Petition, quashing the rejection order and directing the Department to consider the Petitioner's application within a specified timeframe. The Show Cause Notices issued post the filing of the Petition were also set aside. The judgment emphasized adherence to the scheme's provisions and timely consideration of applications, ensuring fair treatment in resolving tax disputes.