2022 (6) TMI 714 - HC - Service Tax

SVLDRS - Rejection of declaration filed under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that the tax dues have not been quantified on or before 30.06.2019 - HELD THAT - Though the petitioner had filed a declaration in Form SVLDRS-1 on 22.10.2019 in time, last date being 31.12.2019 and later for the second time on 21.12.2019 in Form SVLDRS-1 under category Voluntary Disclosure , it appears that the case of the petitioner was under investigation and a show cause notice was to be issued. Thus, the petitioner was not eligible for the benefit. A reading of the provision of Chapter V of the Finance Act, 2019 containing the provision relating to SVLDR Scheme indicates that though a person who has not been issued with a show cause notice can opt to settle the case under the scheme by offering to pay the tax due as defined in Section 123 of the Act, it is not available to person who have been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before the 30th day of June, 2019. Though, it is not mandatory that a show cause notice or an adjudication order should have been issued and/or passed before filing a declaration in Form SVLDRS-1, to be eligible to settle the case under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, the case should not be under any of the exceptions provided in Section 125 of the Act. The case of the petitioner squarely falls under the exception given in Section 125(1)(e) of the Act as the petitioner was subjected to an enquiry/ investigation and the amount of duty involved in the said enquiry or investigation/ audit had not been quantified on or before the 30th day of June, 2019 - the petitioner is therefore not entitled to settle the dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme. It has been rightly rejected vide impugned communication dated 31.12.2019. Petition dismissed.

Summary

Issues:
Challenge to rejection of application under Sabka Vishwas Scheme

Analysis:
The petitioner challenged the communication rejecting their declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The rejection was based on the grounds that tax dues were not quantified by the specified date of 30.06.2019. The petitioner argued that the rejection was improper and deprived them of their right to settle the dispute under the scheme. They had filed two declarations under different categories, but both were rejected without a personal hearing. The respondents contended that the petitioner was not eligible for the scheme as investigations were ongoing, and a show cause notice had been issued regarding service tax evasion.

The court considered the arguments presented by both parties and examined the provisions of the Sabka Vishwas Scheme, 2019. The scheme aimed to resolve legacy disputes and free taxpayers from litigation burdens. It applied to declarants who had not paid tax under specified enactments, including the Finance Act, 1994. The definition of "tax dues" under the scheme encompassed various scenarios, such as pending appeals, show cause notices, investigations, voluntary disclosures, and arrears. Exclusions from filing declarations were outlined in Section 125 of the Act, including situations where appeals had been finalized, convictions made, show cause notices issued, or investigations pending without quantification before the cutoff date.

The court noted that despite the petitioner's timely filing of declarations, their case was under investigation, and a show cause notice was imminent. As per Section 125(1)(e) of the Act, individuals under investigation without quantified duty amounts by the specified date were ineligible for the scheme. Therefore, the rejection of the petitioner's application was deemed appropriate, and the writ petition was dismissed for lacking merit. The court found no grounds for interference with the impugned communication and ordered the closure of connected miscellaneous petitions without costs.