2020 (11) TMI 844 - HC - Service Tax

Recovery of arrears of duty - Section 121(c) of Finance Act - Validity of circular dated 25.09.2019 - HELD THAT - The words amount payable has been defined in Section 121 (e) of the Act. It means the amount calculated by the authority as the amount of tax dues less the tax relief. Thus, the amount of tax dues being the amount in arrears in terms of provisions of Section 124(1) (c) read with Section 121(c) of the Finance (No.2) Act, 2019 is the amount of duty which is in arrears as per order in original dated 29.03.2019 i.e. ₹ 1,74,66,374/which has been reflected in the SVLDRS3, by the designated authority who computed the amount of tax relief under Section 124(1)(c) at ₹ 69,86,549.60/. Thus the balance amount as estimated amount payable has been determined at ₹ 1,04,79,824.40. Thus, neither the circular appears to be in breach of the provisions of Section 124(1)(c) or subsection (2) of Section 124 nor the amount estimated as per SVLDRS3 dated 01.02.2020 suffers from any error. As prayed by learned counsel for the petitioner, put up this case in the additional cause list on 25.11.2020 at 02.00 p.m.

Summary

Issues:
1. Challenge to circular dated 25.09.2019 and SVLDRS3 dated 1.2.2020
2. Interpretation of provisions of Section 124 of The Finance (No.2) Act, 2019

The writ petition challenged a circular dated 25.09.2019 and SVLDRS3 dated 1.2.2020, seeking various reliefs including quashing of the circular, acceptance of a declaration, and relief from tax liability. The petitioner argued that the circular's provision on relief calculation was in violation of Section 124(1)(c) of the Act, as it calculated relief on the net outstanding amount without adjusting against the original demand. The Respondent No.2's determination in SVLDRS3 was also contested as breaching Section 124(2) of the Act.

The High Court examined the relevant provisions of Sections 121 and 124 of the Finance (No.2) Act, 2019 to address the controversy. Section 121 defined key terms like "amount in arrears" and "amount payable," crucial for determining relief under the scheme. Section 124 outlined the conditions and calculation of relief available to declarants. The court noted the petitioner's original demand of service tax, deposits made, and the amount in arrears, emphasizing the importance of these figures in the relief calculation process.

The court analyzed the definitions provided in the Act, clarifying that the "amount payable" is calculated as the tax dues less the tax relief. It highlighted the petitioner's specific case, where the amount in arrears was determined as a certain sum recoverable under the indirect tax enactment. The designated authority computed the tax relief amount, resulting in an estimated payable balance. The court found that neither the circular nor the SVLDRS3 amount calculation appeared to breach the Act's provisions based on the facts and legal framework presented.

Ultimately, the court granted the petitioner's request for additional time to further prepare and present arguments. The case was scheduled for a future hearing to allow for continued discussion and examination of the legal aspects involved in the dispute.