2020 (8) TMI 343 - HC - Service Tax

Rejection of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that the audit was conducted and conveyed on 02nd July, 2019 and amount of duty involved in the audit had not been quantified on or before the 30th day of June, 2019 - HELD THAT - This Court is of the view that the duty liability stood admitted in an oral statement by the petitioner before 30th June, 2019 and consequently stood quantified prior to the cut-off date in accordance with the beneficial circulars dated 12th December, 2019 and 27th August, 2019 issued by the Central Board of Indirect Taxes and Customs - This Court is further of the opinion that a liberal interpretation has to be given to the SVLDRS, 2019 and the circulars issued by Central Board of Indirect Taxes and Customs as their intent is to unload the baggage relating to legacy disputes under the Central Excise and Service Tax and to allow the businesses to make a fresh beginning. The Designated Committee is directed to decide the petitioner s application in accordance with the observations and findings of this Court after giving an opportunity of hearing to the petitioner - list the matter before the Designated Committee on 03rd September, 2020 at 11 00 A.M.

Summary

Issues:
Challenge to rejection order under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 based on quantification of duty before the cut-off date.

Analysis:
The petitioner challenged the rejection order dated 17th January, 2020, under the Sabka Vishwas Scheme, stating that the duty demands were quantified before the cut-off date of 30th June, 2019. The petitioner argued that despite the audit memo being issued on 02nd July, 2019, they had accepted the demands on disputed points on 28th June, 2019, prior to the scheme coming into force. The petitioner relied on circulars clarifying eligibility under the scheme for cases where duty had been admitted before 30th June, 2019. The FAQs issued by the Ministry of Finance were also cited, stating that modifications post-quantification do not affect eligibility.

The respondents contended that the duty amount was not quantified before the cut-off date, making the petitioner ineligible under the scheme. They emphasized the definition of "quantified" under the Finance Act, 2019, and highlighted that the audit memo was issued after 30th June, 2019. The respondents argued against the petitioner's claim of admission and quantification before the cut-off date.

The court analyzed the circulars and legal precedents, noting that circulars are binding on departments even if inconsistent with statutes. It found that the duty amount was determined, communicated, and admitted by the petitioner before 30th June, 2019. The court emphasized the liberal interpretation of the scheme and circulars to resolve legacy disputes and allow businesses a fresh start. Consequently, the rejection order was quashed, and the Designated Committee was directed to reconsider the petitioner's application, providing an opportunity for a hearing.

Therefore, the court's decision was in favor of the petitioner, emphasizing the importance of adherence to the circulars and the intent behind the SVLDRS, 2019 to resolve legacy disputes effectively and promote business restarts.