2024 (4) TMI 494 - HC - Service Tax

SVLDRS - Quantification of liability - Prayer for issuance of Discharge Certificate after allowing the petitioner opportunity to pay up the requisite amount under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - short payment of service tax - HELD THAT - It is no longer res integra that a Circular issued by CBIC, here under Section 133 (1) of the Scheme would bind the Revenue Authorities insofar as it is beneficial to the assessee/declarant. In UCO BANK, TAMIL NADU INDUSTRIAL INVESTMENT CORPORATION LTD. VERSUS COMMISSIONER OF INCOME-TAX 1999 (5) TMI 3 - SUPREME COURT , an issue arose as to the binding effect of circulars issued by CBIT under the Income Tax Act, 1961. It was held in the case that The officers, therefore, were asked to intimate to all the companies that if the loans were repaid before 30th of June, 1955 in a genuine manner, they would not be taken into account in determining the tax liability of the shareholders to whom they may have been advanced despite the new section. This circular was held by this Court as binding on the Revenue, though limiting the operation of Section 12(1B) or excluding certain transactions from the ambit of Section 12(1B). It was so held because the circular was considered as issued for the purpose of proper administration of the provisions of Section 12(1B) and the court did not look upon this circular as being in conflict with Section 12(1B). Once, the audit party had recorded the admission of the petitioner with respect to the quantum of duty admitted to be payable by it, that admission recorded in writing may have amounted to a written communication. However, no independent adjudication is required to be made on the point, in view of clarification made by the CBIC. Plainly, the CBIC itself has remedied the situation to include admissions recorded during the course of audit within the meaning of quantified , as defined under Section 121 (r) of the Scheme. Seen in that light, the declaration made by the petitioner was with respect to amount quantified prior to 30.06.2019. Therefore, the petitioner's declaration was maintainable. It ought to have been dealt with on its own merits. It may not have been rejected for reason of show cause notice issued after the cut-off date, i.e. 15.7.2019. The order dated 31.12.2019 passed by the Designated Committee is set aside. The matter is remitted to the Designated Committee to pass an appropriate order treating the petitioner's declaration to be in accordance with law with respect to amount quantified before the cut-off date i.e. 30.06.2019 - petition allowed by way of remand.

Summary

Issues Involved:
1. Whether the amount of duty was "quantified" before the cut-off date of 30.06.2019 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. The binding nature of CBIC Circulars on the Revenue Authorities.

Summary:

1. Quantification of Duty Before Cut-off Date:
The petitioner, a Works Contractor, challenged the order dated 31.12.2019 by the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The petitioner argued that the duty amount was quantified before the cut-off date of 30.06.2019, as evidenced by their admission and payments made during the audit proceedings. The audit party had recorded the petitioner's admission of duty liability before the cut-off date, although the Final Audit Report was dated 15.07.2019. The Designated Committee rejected the petitioner's declaration on the grounds that the amount was not quantified in a written communication before 30.06.2019, as per Section 121(r) of the Finance Act, 2019.

2. Binding Nature of CBIC Circulars:
The court referred to Section 133 of the Scheme, which empowers the CBIC to issue orders, instructions, and directions for the proper administration of the Scheme. CBIC Circular No. 1071/4/2019-CX.8, dated 27.8.2019, clarified that "quantified" includes duty liability admitted by the person during an audit. The court emphasized that CBIC's circulars are binding on Revenue Authorities, as established in UCO Bank Ltd. vs. CIT and Paper Products Ltd. Vs. Commissioner of Central Excise. The court concluded that the petitioner's admission recorded during the audit amounted to a written communication of the duty amount, thus falling within the definition of "quantified" under Section 121(r) of the Scheme.

Judgment:
The court allowed the writ petition, setting aside the order dated 31.12.2019 by the Designated Committee. The matter was remitted to the Designated Committee to pass an appropriate order treating the petitioner's declaration as in accordance with law, considering the amount was quantified before the cut-off date of 30.06.2019. The Designated Committee was directed to complete this action within three months. No order as to costs.