2020 (8) TMI 43 - HC - Service Tax

Duplication of demand by issuing two show cause notices (SCN) for the same period - Sabka Vishwas Legacy Disputes Resolution Scheme, 2019 ( SVLDRS ) - remission of differential service tax - short payment of tax - periods December 2008 to January 2010 - whether there was a duplication of demand in the two SCNs dated 12.10.2011 and 09.02.2012? - HELD THAT - There is an overlap between the period covered under SCN1 and SCN2, the former covering the period December 2008 to January 2010 and the latter the period April 2008 to March 2010. The periods December 2008 to January 2010 are thus common under both SCNs - revenue agrees in counter that the demand of ₹ 19,15,941/- is duplicated. Hence, according to them, the demand under OinO2 stands reduced to ₹ 10,00,775/-of which 30%, as per the Scheme, is a sum of ₹ 3,00,232.50. There is an excess of a sum of ₹ 15,18,561/- in regard to OinO1 that, by applicationof Section 130(2) shall neither be refunded nor utilised towards any other demand. This argument is also misconceived. The petitioner, as confirmed by the order of R2, is right about the double demands raised for Periods 1 and 2. Thus, as far as the demand of ₹ 19,18,375/- is concerned, it ought not to have been raised at all - The remaining demand of ₹ 9,98,350/- corresponding to Period 2 also stands covered/telescoped by the amount of ₹ 80,74,333/- already paid for the same period earlier. In stating this, I have taken note of the position that the total taxable value of the two projects under both SCN 1 and 2 is identical. The point of dispute revolves around the remittance or otherwise of the amount of ₹ 19,15,491/-. In the light of the detailed discussions, there being no dispute on the position that the petitioner has, admittedly, remitted the aforesaid amount and the demand under SCN2/OinO2 is a duel demand, the computation of the petitioner is accepted and the impugned order set aside. The Dispute Resolution Scheme is an attempt to close legacy tax disputes and a certain amount of fairness should be seen in the interpretation of the provisions of the Scheme. Learned counsel for the respondent would harp on the argument that a dispute raised under one SCN cannot be settled by utilising a deposit made under a different SCN. This argument does not arise in a case such as the present, since the two SCNs relate to identical transactions, time periods and demands and constitute a duplication of proceedings. Petition allowed.

Summary

Issues Involved:
1. Duplication of Service Tax Demand.
2. Compliance with Sabka Vishwas Legacy Disputes Resolution Scheme, 2019.
3. Maintainability of the Appeal.
4. Principles of Natural Justice.
5. Computation of Tax Dues and Relief.

Detailed Analysis:

1. Duplication of Service Tax Demand:
The petitioner, engaged in the construction and sale of residential apartments, faced two Show Cause Notices (SCNs) for differential service tax for overlapping periods and projects. The first SCN dated 12.10.2011 (SCN 1) demanded ?19,15,491/- for the period December 2008 to March 2009. The second SCN dated 09.02.2012 (SCN 2) demanded ?29,16,716/- for the same period and additional months, with a breakdown of ?19,18,375/- for the period December 2008 to March 2009 and ?9,98,350/- for April 2009 to March 2010. The petitioner argued that SCN 2 duplicated the demand of SCN 1.

Upon verification, the Commissioner of Service Tax (Appeals-II) found that the demands for the period December 2008 to March 2009 were indeed duplicated, with minor variations in figures. The demand for April 2009 to January 2010 was also substantially the same under both SCNs, confirming the petitioner's claim of duplication.

2. Compliance with Sabka Vishwas Legacy Disputes Resolution Scheme, 2019:
The petitioner availed of the Sabka Vishwas Scheme, which required remittance of 30% of the disputed demand, adjusted by pre-deposits. The Designated Committee rejected the petitioner's declaration, directing payment of ?8,75,014/-. The petitioner challenged this, arguing that the duplicated demand should be considered as pre-deposit, negating further payment.

The Court found that the duplicated demand of ?19,18,375/- was already appropriated in an earlier order, making the petitioner's appeal maintainable and rendering the Designated Committee's rejection premature and incorrect.

3. Maintainability of the Appeal:
The appeal against the Order-in-Original (OinO 2) was initially returned due to non-payment of statutory pre-deposit. However, the Court directed the Commissioner to consider the petitioner's representation regarding duplication of demands. The Commissioner's findings confirmed the duplication, validating the appeal's maintainability.

4. Principles of Natural Justice:
The revenue argued that the Commissioner's order violated natural justice by not hearing them. The Court rejected this, stating there is no provision requiring the Appellate Commissioner to hear the revenue in a first appeal under the Finance Act, 1994. The direction to dispose of the appeal was issued in the presence of the revenue's counsel, who did not seek inclusion for a hearing.

5. Computation of Tax Dues and Relief:
The revenue's computation reduced the demand under OinO 2 to ?10,00,775/- after acknowledging the duplicated demand. However, they argued that the duplicated amount could not be used as pre-deposit for the current demand. The Court found this argument misconceived, as the duplicated demand should not have been raised at all. The petitioner's computation, considering the pre-deposit of ?19,15,491/-, was accepted.

Conclusion:
The Court allowed the writ petition, setting aside the impugned order and accepting the petitioner's computation. The Sabka Vishwas Scheme aims to close legacy tax disputes fairly, and the duplicated demands in this case justified the petitioner's claim without further payment. The appeal was deemed maintainable, and the principles of natural justice were upheld.