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2024 (4) TMI 74 - HC - Service TaxPrinciples of natural justice - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - dispute regarding the amount payable under the Scheme - department alleged that there was a difference of services shown in the Income Tax Returns vis-a-vis the value shown in the service tax returns for the period under dispute - requirement to grant personal hearing to the declarant - HELD THAT - As per the provisions of the Section 127 of the Sabka Vishwas Scheme and Rule 6 of the Sabka Vishwas Rules, the Designated Committee was required to issue Form SVLDRS 2 indicating the amount which, according to the Designated Committee, was payable by the Petitioner and giving an opportunity of personal hearing to the Petitioner. If such a Form SVLDRS 2 had been issued by the Designated Committee then the Petitioner would have got an opportunity of personal hearing and of making written submissions by filing Form SVLDRS-2A. However, in the present case, without issuing Form SVLDRS 2, the Designated Committee has straight away issued Form SVLDRS 3, thereby depriving the Petitioner of an opportunity of a personal hearing. This action of the Designated Committee of straight away issuing Form SVLDRS 3, without issuing Form SVLDRS 2, is not only in violation of Section 127 of the Sabka Vishwas Scheme and Rule 6 of the Sabka Vishwas Rules but is also in total violation of the principles of natural justice. Form SVLDRS 3 is required to be quashed and the matter is required to be remanded back to the Designated Committee for taking a fresh decision in the matter, after giving an opportunity of hearing to the Petitioner - Form SVLDRS 3, dated 2nd December 2020, is hereby quashed and set aside. Petition allowed by way of remand.
Issues Involved:
1. Validity of the Show Cause Notice dated 12th April 2019. 2. Eligibility and procedural compliance under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. 3. Requirement of issuing Form SVLDRS 2 and granting a personal hearing. Summary: Validity of the Show Cause Notice dated 12th April 2019: The Petitioner, a Partnership Firm engaged in technical testing and certification services, was issued a Show Cause Notice on 12th April 2019 by the service tax department, alleging a discrepancy of Rs. 19,80,37,410/- between the Income Tax Returns and service tax returns. The notice proposed to demand and recover Rs. 2,44,77,423/- along with interest and penalty. The Petitioner contended that the turnover declared in Form ST-3 was not NIL as alleged and had already deposited Rs. 1,70,46,567/- which was not considered in the notice. Eligibility and Procedural Compliance under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019: The Petitioner filed Form SVLDRS 1 under the Sabka Vishwas Scheme, declaring Rs. 2,44,77,423/- as tax dues. According to Section 124(1)(a), the amount payable under the Scheme was 50% of the tax dues, i.e., Rs. 1,22,38,711.50. The Petitioner mistakenly declared Rs. 1,70,46,567/- under "Reason for disagreement" instead of the "Pre-deposit column". Consequently, Respondent Nos. 4 and 5 issued Form SVLDRS 3, disallowing the pre-deposit and demanding Rs. 1,22,38,711.50. The Petitioner argued that as the deposited amount exceeded the tax dues, the payable amount should be NIL. Requirement of Issuing Form SVLDRS 2 and Granting a Personal Hearing: The Petitioner contended that under Section 127(2) of the Sabka Vishwas Scheme and Rule 6 of the Sabka Vishwas Rules, the Designated Committee was required to issue Form SVLDRS 2 and grant a personal hearing if there was a dispute regarding the amount payable. Despite disputing the amount in Form SVLDRS 1, no Form SVLDRS 2 was issued, nor was a personal hearing granted, violating the Scheme's provisions and principles of natural justice. Judgment: The Court held that the Designated Committee's action of issuing Form SVLDRS 3 without issuing Form SVLDRS 2 and without granting a personal hearing was in violation of Section 127 of the Sabka Vishwas Scheme, Rule 6 of the Sabka Vishwas Rules, and principles of natural justice. The Court quashed Form SVLDRS 3 and remanded the matter back to the Designated Committee to issue Form SVLDRS 2, grant a personal hearing, and pass a reasoned order within six weeks. The Writ Petition was disposed of with no order as to costs.
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