2021 (2) TMI 982 - HC - Service Tax

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - short payment of service tax - declaration was rejected by respondent No.4 on the ground of ineligibility with the remarks that the amount of service tax liability was not quantified finally before 30.06.2019 and that investigation was going on - HELD THAT - In response to summons dated 10.04.2019, petitioner had submitted letter dated 04.06.2019 furnishing details of royalty paid to the government and service tax / GST paid on the said royalty payment, the details of which have been mentioned at page 43 of the paper-book which comes to the total figure of ₹ 47,37,377.00. However, at page 43 we find a note that the said service tax liability was not acceptable to the petitioner. From these two documents, no acknowledgment or admission of service tax liability by the petitioner is discernible. Also, the petitioner has stated about the details of royalty paid to the government and service tax / GST paid on the said royalty payment - Though learned counsel for the petitioner would like to submit that it was a clerical and inadvertent mistake as instead of the word 'paid' it should have been 'payable', we do not find any such indication either in the writ petition or in any of the documents annexed to the writ petition. The only time such a statement was made was when the petitioner wrote to the designated committee on 10.01.2020 explaining that ₹ 47,37,377.00 was the service tax liability for the period from 2016-17 and April, 2017 to June, 2017. But there is no pleading to that effect. There are no acknowledgment or admission by the petitioner of its service tax liability for the period under investigation prior to 30.06.2019 which is the cutoff date under the scheme - decision of respondent No.4 dated 04.03.2020 to reject the declaration of the petitioner dated 31.12.2019 on the ground that service tax liability of the petitioner was not quantified prior to 30.06.2019 cannot be faulted - petition dismissed.

Summary

Issues:
Challenge to order rejecting declaration under Sabka Vishwas Scheme, 2019

Analysis:
The petitioner, a company providing services, filed a declaration under the Sabka Vishwas Scheme, 2019, declaring a service tax liability of ?47,37,377.00 for the period from 01.10.2013 to 30.06.2017. However, the designated committee rejected the declaration on the grounds of ineligibility, stating that the tax dues were not quantified before 30.06.2019, and an investigation was ongoing. The petitioner sought reconsideration of the rejection through a writ petition under Article 226 of the Constitution of India.

The key issue revolved around the interpretation of eligibility criteria under the Finance (No.2) Act, 2019. Section 123(c) defined "tax dues" where an enquiry or investigation is pending, requiring quantification of duty payable by 30.06.2019. Section 125 laid down eligibility conditions, excluding persons with unquantified duty involved in an enquiry or investigation by the cut-off date. The term "quantified" was defined in Section 121(r) to include any admission or acknowledgment of tax dues by the declarant before 30.06.2019.

The petitioner argued that the service tax liability was quantified before the deadline, referring to a letter disclosing details of royalty paid and service tax liability. However, the respondents contended that the petitioner's liability was not acknowledged or admitted before 30.06.2019, rendering them ineligible to make a declaration under the scheme's investigation category.

The Court carefully examined the evidence presented, including the petitioner's submissions and correspondence with the authorities. It was observed that there was no clear acknowledgment or admission of the service tax liability by the petitioner before the cut-off date of 30.06.2019. Despite the petitioner's explanations and contentions, the Court upheld the decision of the designated committee to reject the declaration, as the tax liability was not quantified within the stipulated timeframe.

In conclusion, the Court dismissed the writ petition, finding no fault with the decision to reject the petitioner's declaration under the Sabka Vishwas Scheme, 2019. The judgment emphasized the importance of meeting the eligibility criteria and quantifying tax dues within the specified period for availing benefits under the scheme.