2024 (10) TMI 1262 - HC - Service Tax

Interpretation of Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019 regarding adjustment of CENVAT credit and cash payments for service tax - short payment of service tax - zero pre-deposit - HELD THAT - Considering pursuant to the SCN petitioner had applied under the scheme and in view of aforesaid facts, we direct that the personal hearing will be for purpose of the Department/Designated Committee to conclude on petitioner s assertion that 50% or more of the demand was paid and it is entitled to relief against the balance, under the scheme. The Department/Designated Committee will do well to pass a reasoned order such that points urged by petitioner in the writ petition and as may be urged before it regarding the scheme applying to it, are dealt with without leaving any ambiguity. In event the Department/Designated Committee concludes that petitioner is not entitled to relief under the scheme, it will then issue fresh notice for personal hearing on the demand. This direction is made in view of clause (c) in aforesaid circular dated 27th August, 2019 and absence of anything on record or submission made that exercise of reconciliation was undertaken in respect of the particulars of the cash payments. The writ petition is disposed of.

Summary

Issues:
1. Interpretation of Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019 regarding adjustment of CENVAT credit and cash payments for service tax.
2. Validity of show cause notice (SCN) and subsequent notice for personal hearing challenging eligibility for relief under the scheme.

Detailed Analysis:
1. The petitioner, represented by Mr. Sahoo, was issued a show cause notice (SCN) for alleged short payment of service tax for the period 2013-14. The petitioner applied under the Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019, claiming adjustment of CENVAT credit and cash payments made. The petitioner argued that the adjustments and payments were for the financial year 2013-14, which were not considered in the subsequent SVLDRS-2 and SVLDRS-3 issued by the revenue department. The circular dated 27th August, 2019, allowed for the adjustment of disputed CENVAT credit under the scheme. The petitioner sought the court's intervention to show the aggregate of cash and credit as pre-deposit, challenging the subsequent notice for a personal hearing issued by the department, contending the petitioner was not entitled to relief under the scheme.

2. On the other hand, Mr. Satapathy, representing the revenue department, opposed the writ petition, arguing that the cash payments included payments for other periods and that the CENVAT credit was disallowed and cannot be adjusted. The court, after considering the petitioner's application under the scheme and the arguments presented, directed that a personal hearing be conducted by the Department/Designated Committee to determine if the petitioner had paid 50% or more of the demand and was entitled to relief against the balance under the scheme. The court emphasized the need for a reasoned order to address the petitioner's assertions and ensure clarity. If the Department/Designated Committee concludes that the petitioner is not eligible for relief, a fresh notice for a personal hearing on the demand should be issued. The court highlighted the circular's provision regarding reconciliation of cash payments and the absence of such reconciliation in the case at hand.

3. It is important to note that the court did not find any issue regarding the petitioner's application under the scheme itself. The writ petition was disposed of with the direction for the Department/Designated Committee to conduct a thorough review and provide a reasoned decision based on the petitioner's claims and the provisions of the Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019, ensuring transparency and addressing all relevant points raised during the proceedings.