2021 (5) TMI 401 - HC - Service Tax

Rejection of application under SVLDRS - Rectification of mistake - Sabka Vishwas (Legacy Dispute Resolution) Scheme SVLDRS, 2019 - As returns filed for the period December, 2015 to June, 2017 contained a short fall in remittance of tax, as a result that the petitioner decided to take advantage of (Scheme), which extended benefits to an errant tax payer, in the settlement of tax, interest and penalty dues under various indirect tax enactments - issue raised on merits is that no opportunity of hearing has been granted to the petitioner prior to the impugned rectification - as per defence reading of Section 127(2) with Section 128 reveals that a notice is called for only in those cases where the estimate arrived at by the Designated Committee exceeds the estimate arrived at by the declarant and in the present case, the impugned notices only constitute rectification of apparent errors for which no notices is required. HELD THAT - According to the petitioner, the application would have to quantify the tax payable month wise, since the half yearly returns filed take into account the tax payable, per month. This argument has however to be rejected in the light of Section124(1)(c)(iii) as per which computation of tax due is based upon the return filed under the respective indirect tax enactment. The Finance Act, 1994, in terms of which service tax is levied, provides for a half yearly return. The tax dues would thus be as per Section 124(1)(c)(A) and not 124(1)(c)(B) as computed by the petitioner. Section 128 grants power to the Designated Committee to correct an arithmetical or clerical error apparent on the face of record, either suo moto or upon such error being pointed out by the declarant. The impugned rectifications do not fall within the ambit of an arithmetic or clerical error and enhance the quantification of tax dues under Section 127. Hence, a notice ought to have been issued to the petitioner in this matter, prior to revising the SVLDRS. The legal argument of the petitioner is accepted. A conscious of the position that a rectification can be effected only by the Designated Committee and would normally not have undertaken this exercise. Detailed submissions have been heard by me on the nature of the dispute and the difference in computation and I believe that it would not be appropriate that I remand these matters on the technical issue of lack of opportunity. The stand of the petitioner has, as noticed by me at paragraph 9 above, no legal sanction and the interpretation put forth does not merit acceptance.No justification to relegate the petitioner to the authority, particularly seeing as this litigation pertains to an amnesty scheme where proceedings should, as far as possible, be fast tracked and not delayed. These writ petitions are dismissed. Liberty is granted to the petitioner to approach the authorities seeking some more time to remit the dues contemplated under the revised SVLDRS. Such representation, if made, within a period of two (2) weeks from date of receipt of order, shall be disposed after hearing the petitioner, within a period of four (4) weeks from date of receipt of the application.

Summary

Issues:
1. Maintainability of Writ Petitions filed post the end of the Sabka Vishwas Scheme.
2. Lack of opportunity of hearing prior to rectification of tax dues under the Scheme.

Issue 1: Maintainability of Writ Petitions:
The petitioner, a steamer agency, sought benefits under the Sabka Vishwas Scheme for tax discrepancies from December 2015 to June 2017. The Writ Petitions were filed after the Scheme's end but during the COVID-19 pandemic, which extended the payment deadline. The court found justification to consider the petitions maintainable due to the exceptional circumstances caused by the pandemic and subsequent lockdowns.

Issue 2: Lack of Opportunity of Hearing:
The petitioner argued that no prior hearing was granted before the rectification of tax dues under the Scheme. The respondent contended that no notice was necessary for rectifying apparent errors. However, the court held that as per Section 128, rectifications should only be made after issuing a notice to the assessee. The rectifications made in this case did not fall under clerical errors and required prior notice. The court accepted the petitioner's legal argument, emphasizing the importance of due process even in amnesty schemes. Despite the lack of legal sanction in the petitioner's interpretation, the court dismissed the writ petitions but granted liberty to seek more time for remittance of dues under the revised Scheme.

In conclusion, the High Court of Madras addressed the maintainability of Writ Petitions filed after the conclusion of the Sabka Vishwas Scheme due to the COVID-19 pandemic and ruled in favor of their consideration. Additionally, the court upheld the importance of providing an opportunity for a hearing before rectifying tax dues under the Scheme, emphasizing the need for due process even in amnesty schemes.