2021 (2) TMI 406 - HC - Service Tax

Rejection of declaration of the petitioner filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS - Stand taken is that investigation into the allegation of short payment of service tax by the petitioner was going on and the amount of duty involved had not been quantified on or before 30.06.2019 - period from April 2014 to March 2017 - HELD THAT - In Thought Blurb Vs. Union of India 2020 (10) TMI 1135 - BOMBAY HIGH COURT it was held that the petitioner was eligible to file the application (declaration) as per the scheme under the category of enquiry or investigation or audit whose tax dues stood quantified on or before 30th June, 2019. It is evident that all that would be required for being eligible under the above category is a written communication which will mean a written communication of the amount of duty payable including a letter intimating duty demand or duty liability admitted by the person concerned during enquiry, investigation or audit - That apart, in Thought Blurb, It is held that when there is a provision for granting personal hearing in a case where the declarant disputes the estimated amount, it would be in complete defiance of logic and contrary to the very object of the scheme to reject a declaration on the ground of being ineligible without giving a chance to the declarant to explain as to why its declaration should be accepted and relief under the scheme be extended to him. The matter remanded back to respondent Nos.3, 4 and 5 to consider the declaration of the petitioner dated 30.12.2019 in terms of the scheme as a valid declaration under the category of investigation, enquiry and audit and thereafter grant the consequential relief(s) to the petitioner - appeal allowed by way of remand.

Summary

Issues Involved:
1. Eligibility of the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. Quantification of service tax dues on or before 30.06.2019.
3. Compliance with principles of natural justice in rejecting the petitioner’s declaration.

Issue-wise Detailed Analysis:

1. Eligibility of the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The petitioner sought quashing of the respondents' decision dated 15.02.2020, which rejected the petitioner’s declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The petitioner, a partnership firm engaged in construction services, had filed a declaration on 30.12.2019 under the category of "investigation, enquiry or audit," claiming that the tax dues payable after availing relief under the scheme would be nil. The respondents rejected this declaration on the ground of ineligibility, stating "amount not quantified."

2. Quantification of service tax dues on or before 30.06.2019:
The respondents contended that the amount of duty involved had not been quantified on or before 30.06.2019, making the petitioner ineligible under section 125(1)(e) of the Finance (No.2) Act, 2019. However, the petitioner argued that the letter dated 24.06.2019, where it admitted total liability of ?20,88,947.00, should be considered as quantification. The court referred to previous judgments, including Thought Blurb Vs. Union of India and M/s G.R.Palle Electricals Vs. Union of India, which clarified that "quantified" means a written communication of the amount of duty payable, including a letter intimating duty demand or duty liability admitted by the person during enquiry, investigation, or audit.

3. Compliance with principles of natural justice in rejecting the petitioner’s declaration:
The court emphasized that rejecting a declaration without giving the petitioner a chance to explain would violate the principles of natural justice. Citing the Thought Blurb case, the court noted that when a person faces adverse civil consequences, principles of natural justice like notice and hearing must be complied with. The court held that summary rejection of the declaration without affording an opportunity of hearing would be in violation of these principles.

Conclusion:
The court set aside the order dated 15.02.2020 and remanded the matter back to the respondents to consider the petitioner’s declaration dated 30.12.2019 as valid under the category of investigation, enquiry, and audit. The respondents were directed to provide an opportunity of hearing to the petitioner and pass a speaking order within six weeks. The writ petition was accordingly allowed, with no order as to cost.

This detailed analysis preserves the legal terminology and significant phrases from the original text while providing a comprehensive understanding of the judgment.