2025 (3) TMI 1034 - HC - Service Tax

Rejection of the SVLDRS declaration filed by the petitioner - initiation of an investigation after the statutory cut-off date - violation of of principle of natural justice - HELD THAT - In the present case admittedly the investigation was initiated by a issuance of a summon only on 18.09.2019 and thus the rejection/withdrawal of the SVLDRS declaration dated 29.10.2020 is unsustainable. Conclusion - The impugned order dated 29.10.2020 rejecting the declaration/application under the Scheme is set aside. Petition disposed off.

ISSUES PRESENTED and CONSIDERED

The primary legal issues considered in the judgment were:

Whether the rejection of the petitioner's declaration under the Sabka Vishwas-Legacy Dispute Resolution Scheme, 2019 (SVLDRS) was justified based on the initiation of an investigation after the statutory cut-off date.
Whether the principles of natural justice were violated in the issuance of the impugned order rejecting the SVLDRS declaration.
Whether the adjudication order dated 21.05.2021 should be quashed as a consequence of the findings on the SVLDRS declaration.

ISSUE-WISE DETAILED ANALYSIS

1. Rejection of SVLDRS Declaration

Relevant Legal Framework and Precedents: The SVLDRS was introduced to resolve legacy disputes under indirect tax laws. Section 125(1)(e) of the Finance (No.2) Act, 2019 specifies that individuals subject to an inquiry or investigation initiated on or before 30.06.2019 are ineligible to file a declaration under the scheme. The Bombay High Court in New India Civil Erectors Private Limited vs. Union of India interpreted this provision to mean that investigations initiated after 30.06.2019 do not affect eligibility.
Court's Interpretation and Reasoning: The Court agreed with the Bombay High Court's interpretation, emphasizing that the investigation against the petitioner was initiated on 18.09.2019, after the cut-off date. Therefore, the rejection based on the initiation of an investigation was unsustainable.
Key Evidence and Findings: The investigation was initiated on 18.09.2019, and the petitioner filed the SVLDRS declaration on 13.01.2020. The Designated Committee issued a rejection communication on 29.10.2020, citing the investigation as a reason for ineligibility.
Application of Law to Facts: The Court applied the interpretation of Section 125(1)(e) from the Bombay High Court's decision, concluding that the investigation's initiation date was critical. Since the investigation began after the cut-off date, the petitioner was eligible to file the declaration.
Treatment of Competing Arguments: The respondent argued that the petitioner's failure to disclose the investigation was fatal to the declaration's validity. However, the Court found this argument unpersuasive, given the investigation's initiation date.
Conclusions: The Court set aside the impugned order rejecting the SVLDRS declaration, as the investigation's initiation after the cut-off date did not bar the petitioner from filing under the scheme.

2. Principles of Natural Justice

Relevant Legal Framework: The principles of natural justice require fair hearing and unbiased decision-making in administrative actions.
Key Evidence and Findings: The petitioner alleged that the impugned order violated these principles, but the Court did not delve deeply into this issue, as the primary reason for setting aside the order was the misapplication of the SVLDRS eligibility criteria.
Conclusions: The Court did not find it necessary to address the natural justice argument in detail, given the resolution of the primary issue concerning the investigation date.

3. Quashing the Adjudication Order

Application of Law to Facts: The adjudication order dated 21.05.2021 was contingent on the rejection of the SVLDRS declaration. With the declaration's rejection set aside, the adjudication order lost its foundation.
Conclusions: The Court quashed the adjudication order as it no longer had a basis following the decision on the SVLDRS declaration.

SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning: "The impugned order is liable to be set aside inasmuch as the impugned order proceeds on the erroneous premise that since an investigation was initiated prior to filing of the declaration by the petitioner under the Scheme, the same would be hit by embargo contained in Section 125 (i)(e) of the Act."
Core Principles Established: The eligibility under SVLDRS is not affected by investigations initiated after the statutory cut-off date of 30.06.2019.
Final Determinations on Each Issue: The rejection of the SVLDRS declaration was set aside, the adjudication order was quashed, and the Court did not find it necessary to further examine the alleged violation of natural justice principles.

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