2024 (12) TMI 679 - HC - Service Tax

Challenge to rejection of application made under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - duty demand was not quantified before 30 June 2019 - HELD THAT - Under Section 126 of SVLDR Scheme the Designated Authority has the power to verify the figures mentioned in the declaration and give a counter-offer to the declarant of the correct amount. However in this case the Petitioner s application was thrown out at the threshold itself and therefore this stage did not arise. Today the Scheme has come to an end and the Petitioner has stated that he is willing to substitute the figure of Rs. 28, 72, 603/- in place of Rs. 23, 82, 188/- and is willing to pay interest on the balance. In view thereof we are of the view that Petitioner s declaration was rejected wrongly by invoking the provisions of Section 125 (1) (e) of the SVLDR Scheme. However since the Petitioner is eligible and has now offered to pay the difference along with interest and in the light of subsequent fact that the Scheme has come to an end it is proposed to accept the request made by the Petitioner. Rejection of SVLDRS-1 dated 8 November 2019 and 30 December 2019 are hereby quashed and set aside and the Respondents are directed to accept the same - the Respondents to re-calculate the amount payable under the Scheme by taking the figure of Rs. 28, 72, 603/- as duty quantified on or before 30 June 2019 (as reduced any pre-deposit or payment made) and intimate the same to the Petitioner to make the payment along with interest at the rate of 6% per annum from 1 January 2020 till date of such intimation. Petition disposed off.

Summary

Issues:
Challenge to rejection under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 based on duty quantification date.

Analysis:
The petitioner challenged the rejection of their application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, stating that they were ineligible due to duty quantification after 30 June 2019. The petitioner, engaged in dry cleaning services, had admitted a service tax liability during a summons in June 2018. The petitioner later applied under the SVLDR Scheme, mentioning duty and pre-deposit amounts. The application was rejected twice, citing non-quantification before the deadline. The petitioner argued that quantification was admitted in the summons statement and was willing to pay the difference. The respondent contended that the petitioner's application figures did not match later quantifications. However, the court found that quantification was done before the deadline, and a mere difference in figures did not disqualify the petitioner under Section 125 (1) (e) of the SVLDR Scheme.

The court noted that the SVLDR Scheme did not specify who should quantify the duty amount and that disqualification under Section 125 (1) (e) applies only if there is no quantification before the deadline. The court emphasized that the petitioner had quantified the duty amount before 30 June 2019, despite a later show cause notice with a different figure. The Designated Authority could verify figures and provide a counter-offer, but in this case, the rejection was premature. The court accepted the petitioner's willingness to pay the difference and interest, considering the scheme's conclusion and previous decisions supporting the petitioner's case.

Based on the above analysis, the court quashed the rejection of the petitioner's SVLDR Scheme applications and directed the respondents to accept them. The respondents were instructed to recalculate the payable amount using the correct duty figure and inform the petitioner to make the payment with interest. The petitioner was given four weeks to make the payment, after which the respondents were to issue a final certificate under the SVLDR Scheme. The court concluded by making the rule absolute in favor of the petitioner, with no cost order.