2024 (7) TMI 1516 - HC - Service Tax

Rejection of the application made by firm and its partners in Form-1 under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme) for settlement of dispute arising under indirect tax - seeking waiver of penalty and redemption fine under SVLDR Scheme since the basic duty was already covered and benefit availed under the SVLDR Scheme - HELD THAT - Section 125 (1) of SVLDR Scheme provides that all persons shall be eligible to make a declaration under the Scheme except the persons who are mentioned in clauses (a) to (f). Clause (e) disqualifies person who have 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 30th June 2019. Section 121 (m) of SVLDR Scheme defines enquiry or investigation to include the actions specified therein and sub-clause (iv) refers to recording of statement . In the instant case, as noted above the statement of the representative of Petitioner No.1-Firm was recorded on 6th July 2007 and, therefore, same would fall within the phrase enquiry or investigation as defined in Section 121 of the SVLDR Scheme - the disqulaification specified in Section 125 (1) (e) of SVLDR Scheme is not applicable to the facts of the Petitioner s case inasmuch as, the twin conditions, viz., subjected to an enquiry or investigation and non-quantification of duty before 30th June 2019 is not satisfied since the formula for quantification was prescribed in the High Court order. Therefore, the basis of rejection by Respondents of the aforesaid 14 SVLDR Scheme application is not justified and same is quashed and set aside. The rejection by Respondents of the applications made by firm was not justified. Since basis of rejection of the applications made by the firm has been quashed and set aside, the consequential benefit would flow to the 8 partners who have made 16 applications. The rejections by Respondents of 16 applications made by partners is quashed and set aside - petition allowed.

Summary

Issues Involved:
1. Rejection of application of declaration No. LD2612190005231.
2. Rejection of application in Form SVLDRS-1 No. LD2612190005177.
3. Rejection of multiple declarations in Form SVLDRS-1.
4. Rejection of declarations by partners for settlement of penalty.

Issue-wise Detailed Analysis:

1. Rejection of application of declaration No. LD2612190005231:
- Facts: The Petitioner-Firm filed an application under the SVLDR Scheme to waive penalty and redemption fine, as the basic duty was already settled.
- Respondents' Argument: The application was rejected because the Petitioner did not pay the redemption fine, which is not covered under the SVLDR Scheme.
- Petitioner's Argument: The waiver of redemption fine is covered under the SVLDR Scheme, supported by decisions from the Gujarat High Court, Allahabad High Court, and this Court.
- Court's Analysis: The court held that the SVLDR Scheme requires payment of "tax dues," defined as the amount of excise duty, not redemption fine. The court referenced clarifications from the Central Board of Indirect Taxes and Customs and previous court decisions, concluding that waiver of redemption fine is included.
- Conclusion: The rejection of the application was quashed, and Respondents were directed to issue Form SVLDRS-4 to the Petitioner-Firm within four weeks.

2. Rejection of application in Form SVLDRS-1 No. LD2612190005177:
- Facts: The Petitioner-Firm's application for settling disputes under the SVLDR Scheme was rejected on the ground that the Petitioner had requested to withdraw the application.
- Respondents' Admission: The Respondents admitted that the rejection was erroneous as the Petitioner had not requested withdrawal.
- Court's Decision: The court directed Respondents to accept the application and issue Form SVLDRS-2 within four weeks, followed by the Petitioner making the payment and Respondents issuing Form SVLDRS-4.

3. Rejection of multiple declarations in Form SVLDRS-1:
- Facts: Several declarations were rejected on the ground that no enquiry was pending on 30th June 2019, as the investigation had culminated in an adjudication order.
- Petitioner's Argument: The Petitioner argued that the declarations were filed under "enquiry, investigation or audit," and the duty was quantified in a previous High Court order.
- Court's Analysis: The court noted that the recording of the statement and the quantification of duty in the High Court order met the requirements of an "enquiry or investigation" under the SVLDR Scheme. The disqualification specified in Section 125 (1) (e) was not applicable.
- Conclusion: The rejection of the 14 applications was quashed, and Respondents were directed to issue Form SVLDRS-2 and subsequently Form SVLDRS-4 after payment by the Petitioner.

4. Rejection of declarations by partners for settlement of penalty:
- Facts: The partners' applications were rejected because the firm's applications were rejected.
- Court's Decision: Since the rejection of the firm's applications was quashed, the consequential benefit flowed to the partners. The court directed Respondents to accept the 16 applications by the partners and follow the same procedure as for the firm.

Final Judgment:
- The petition was allowed, and all rejections by Respondents were quashed. Respondents were directed to process the applications as per the court's directions within specified timelines. The petition was disposed of accordingly.