2023 (9) TMI 659 - HC - Service Tax

Rejection of SVLDRS-1 - audit department had not qualified the amount due from the petitioner before 30.06.2019 - impugned communication gives no reason as to why the aforesaid application/declaration filed by the petitioner under the provisions of the aforesaid scheme on the aforesaid date has been rejected - principles of natural justice - HELD THAT - A perusal of the declaration/application petitioner in Form SVLDRS-1 dated 07.11.2019 under the provisions of Sabka Visvas (Legacy Dispute Resolution) Scheme, 2019 indicates that the petitioner has made a reference was made to the audit communication dated 31.05.2019 - It is evident that there was a quantification by the audit Department on 31.05.2019 based on which the petitioner has filed Rs. 62,03,346/- Form SVLDRS-1 dated 07.11.2019 under the category Investigation, Enquiry or Audit Subcategory Audit. It cannot therefore be construed that there was no determination of tax liability of the petitioner on or before 30.06.2019. The benefit of the Scheme ought to have been extended to the petitioner. The delay in communicating the amount due for the petitioner cannot be a reason for denying the benefit cannot be a reason for denying the benefit of the above Scheme especially when the petitioner was declared higher amount than the amount quantified on 29.06.2020 by the Audit Department. This Writ Petition stands allowed.

Summary

Issues:
The judgment concerns the rejection of an application under the Sabka Visvas (Legacy Dispute Resolution) Scheme, 2019 by the 1st respondent without providing reasons for the rejection. The main issue revolves around the quantification of the tax liability of the petitioner before the specified date of 30.06.2019.

Issue 1 - Lack of Reasoning in Rejection:
The petitioner challenged the communication dated 07.01.2020 where the 1st respondent rejected the application filed under the Sabka Visvas Scheme without specifying any reasons for the rejection. The impugned communication failed to provide any justification for the denial of the petitioner's application, raising concerns about procedural fairness.

Issue 2 - Quantification of Tax Liability:
The crux of the matter lies in the quantification of the tax liability of the petitioner before the deadline of 30.06.2019. The respondent cited the audit department's failure to qualify the amount due from the petitioner by the specified date as the basis for rejection. However, subsequent communications revealed that the tax liability was quantified at Rs. 56,46,036/- on 31.05.2019, slightly higher than the amount declared by the petitioner in the application.

Issue 3 - Eligibility for Scheme Benefits:
The petitioner contended that despite the delay in communicating the exact amount due, the benefit of the Sabka Visvas Scheme should still be extended. The petitioner's declaration of a higher amount than the quantified sum by the Audit Department on a later date, along with the clarification in Circular No.1071/4/2019-CX, supported the argument that the petitioner should be eligible for the scheme.

In the detailed analysis, the court noted that the rejection lacked substantive reasoning, which violated the principles of natural justice. The communication from the audit department quantifying the tax liability before the cutoff date of 30.06.2019 indicated that the petitioner had met the requirement for availing benefits under the Sabka Visvas Scheme. Despite the delay in formal communication of the exact amount due, the petitioner's proactive declaration of a higher sum demonstrated willingness to resolve the tax dispute. Therefore, the court allowed the writ petition, emphasizing the importance of procedural fairness and adherence to the scheme's eligibility criteria.