2022 (8) TMI 1052 - HC - Service Tax

Rejection of Form SVLDRS-1 filed by Petitioner under the provisions of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - valid quantification and admission of duty/tax by Petitioner before 30th June, 2019 - allegation is that the tax dues (as stated by Petitioner in the said Form) were not quantified as on 30th June, 2019, which is the cut off date prescribed in SVLDRS scheme - HELD THAT - On going through the pleadings, the SVLDRS scheme, the SVLDRS Rules and the relevant Circular dated 27th August, 2019 and have come to the conclusion that the rejection of Petitioner s Form SVLDRS-1 by Respondent No.4 was contrary to the provisions of the said scheme and thus bad in law. Section 125 of the Finance Act, 2019 provides that all persons are eligible to make a declaration under the SVLDRS scheme with the exception of those falling within the exceptions set out in clauses (a) to (h) of sub-section (1) of Section 125. 'Tax dues' referred in section 124 is defined in section 123. It specifies various situations - The Circular dated 27th August, 2019 issued by Central Board of Indirect Taxes and Customs (CBITC) clarified for all cases pending in adjudication or appeal (at any forum), the relief is to the extent of 70 percent of duty involved if it is Rs.50 lakhs or less and 50 percent if it is more than 50 lakhs. The Respondent No.4 was completely unjustified in rejecting the Form SVLDRS-1 filed by Petitioner for the reason so stated in the impugned communication - petition disposed off.

Summary

Issues Involved:
1. Whether the tax dues of the Petitioner were quantified on or before 30th June, 2019, as per the provisions of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS scheme).

Detailed Analysis:

1. Background and Facts Leading to the Filing of Form SVLDRS-1:
The Petitioner, a company providing outdoor catering services, was registered under the Finance Act (Service Tax), 1994, and later under the Central Goods and Service Tax Act, 2017 (CGST Act). Intelligence gathered by Respondent No. 2 indicated that the Petitioner was collecting service tax but not depositing it with the Government Exchequer, leading to an inquiry and summons issued on 13th March, 2018. The Petitioner's Director admitted to outstanding service tax amounts and provided necessary documents.

2. Statements and Admissions by the Petitioner's Director:
On 13th March, 2018, the Petitioner's Director admitted an outstanding service tax amount of approximately Rs. 60 Lakhs. Further, on 28th March, 2018, the Director admitted discrepancies in declared values and stated that the differential service tax amounting to Rs. 90 Lakhs had been paid. These admissions were documented in detailed statements and supported by financial documents submitted by the Petitioner.

3. Introduction and Objective of the SVLDRS Scheme:
The SVLDRS scheme, introduced under the Finance (No. 2) Act, 2019, aimed to resolve pending indirect tax disputes by providing amnesty to taxpayers. Benefits included substantial relief from interest, penalties, and prosecution. Declarants were required to file Form SVLDRS-1 electronically to avail of the scheme's benefits.

4. Circular and FAQs Clarifying the SVLDRS Scheme:
A circular issued on 27th August, 2019, clarified that relief under the SVLDRS scheme was available for cases under investigation where the duty involved was quantified and communicated or admitted by the taxpayer on or before 30th June, 2019. FAQs further clarified that written communication included admissions made during inquiries or investigations.

5. Filing and Rejection of Form SVLDRS-1:
The Petitioner filed Form SVLDRS-1 on 15th January, 2020, declaring an amount of Rs. 1,30,37,261/- as service tax. However, Respondent No. 4 rejected the form on 10th October, 2020, stating that the tax dues were not quantified as of 30th June, 2019.

6. Legal Arguments and Contentions:
The Petitioner's counsel argued that the rejection was contrary to the SVLDRS scheme and the circular dated 27th August, 2019. They highlighted that the Petitioner's Director had admitted to service tax liability on 28th March, 2019, thus meeting the scheme's requirement for quantification before 30th June, 2019. The Respondent's counsel contended that there was no final quantification, pointing to discrepancies between the amounts mentioned in the Director's statement and Form SVLDRS-1.

7. Court's Analysis and Conclusion:
The Court examined the relevant provisions of the SVLDRS scheme, the circular, and the FAQs. It concluded that the Petitioner's Director's statement on 28th March, 2019, constituted a valid quantification and admission of duty/tax before the cut-off date. The Court found that the rejection of Form SVLDRS-1 by Respondent No. 4 was contrary to the scheme's provisions and unjustified.

8. Court's Order:
The Court set aside the impugned communication and directed Respondent No. 4 to take further steps under the SVLDRS scheme within four weeks, either issuing Form SVLDRS-3 or Form SVLDRS-2 to the Petitioner. The Writ Petition was disposed of with no order as to costs.