2023 (6) TMI 704 - HC - Service Tax

SVLDRS - Rejection of application under Sabkha Vishwas (Legacy Dispute Resolution) Scheme, 2019 - requirement that the quantification of duty should have been done prior to 30.06.2019 - interpretation of Section 125 of the Scheme as per which certain persons have been declared to be ineligible for availing the Scheme - HELD THAT - In the present case, the petitioner was in receipt of letter dated 10.10.2019 calling upon the petitioner to submit various particulars on the basis of an allegation that there was a mis-match between the income tax and service tax returns for the year 2016. It is this letter that is cited by the respondent to stand in the way of acceptance of petitioner's eligibility under the Scheme in terms of Section 125(f) which states that any assessee which has been subjected to enquiry or investigation or audit would not be eligible to make a declaration under the Scheme. A perusal of the entire Scheme, indicates the following. (i) the Scheme was introduced by the Finance Act,2019 (ii) It has come into force on 01.09.2019, being the effective date. (iii) Section 121 (c)(iii) refers to filing a return of by the declarant under indirect tax enactment on or before '30.06.2019' (iv) Section 123, defining 'tax dues' mentions in sub-clauses (i) (ii) (b) (c), the date '30.06.2019' as being the cut-off date for computation of tax dues, (v) Section 124, being, 'relief available' under the Scheme clauses (a) (d) refers to the cut-off date being '30.06.2019' and (vi) Section 125 refers to '30.06.2019' in clauses (a) (c) and (e) thereof. The argument of the respondent is that had it been the intention of legislature that 30.06.2019 be adopted for the purposes of Section 125(f), it would have so stipulated in that clause itself. This is certainly a possible argument. In cases involving the interpretation of a beneficial scheme/exemption notification, the accepted Rule is that the scheme be interpreted strictly in line with the avowed and stated intention thereof. Seen in the light, clause 125(f) of the scheme must be read as is, without the addition of the date, 30.06.2019. However, this is not to be, as the interpretation of the Income Tax Department is itself contrary to that position. This writ petition is allowed.

Summary

Issues:
The rejection of the petitioner's application under Sabkha Vishwas (Legacy Dispute Resolution) Scheme, 2019 and the interpretation of Section 125 of the Scheme regarding eligibility criteria.

Issue 1: Rejection of Application under the Scheme
The petitioner, a sole proprietary registered under the category of 'management consultant service', challenged the rejection of their application under the Sabkha Vishwas Scheme. The rejection was based on an allegation of a mis-match between income tax and service tax returns for the year 2016, which the respondent cited as grounds for the petitioner's ineligibility under Section 125(f) of the Scheme. The petitioner argued that the enquiry conducted on 10.10.2019, which led to the rejection, took place after the cut-off date of 30.06.2019 specified in the Scheme. The petitioner relied on previous decisions of the Bombay High Court to support their claim that any enquiry, investigation, or audit conducted after 30.06.2019 should not render an assessee ineligible under the Scheme.

Issue 2: Interpretation of Section 125 of the Scheme
The interpretation of Section 125 of the Scheme, specifically clause (f), was a key point of contention. The petitioner argued that the clause should be read in conjunction with the cut-off date of 30.06.2019 mentioned in other sections of the Scheme. The respondent, on the other hand, contended that the absence of this date in Section 125(f) indicated that it should be interpreted as stated without any additional conditions. The respondent highlighted the need for uniformity in approach regarding the interpretation of the Scheme across different cases.

Key Judgments and Findings:
The High Court examined previous decisions related to similar issues and emphasized the importance of consistency in the revenue department's interpretation of tax laws. The Court noted that the Scheme itself referenced the date 30.06.2019 for various purposes, indicating its significance as a cut-off date. The Court also considered written instructions from the office of the Commissioner, which confirmed the acceptance of a similar order by the Bombay Commissionerate. Ultimately, the Court allowed the writ petition, directing the issuance of a discharge certificate to the petitioner within two weeks.

This summary provides a detailed overview of the issues, arguments, and key findings in the legal judgment without disclosing any specific party names.