2024 (11) TMI 1139 - HC - Service Tax

Rejection of Application filed under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 ( SVLDR Scheme ) - quantification of demand is made after 30 June 2019, Petitioner is not eligible to avail the benefit of the said Scheme. HELD THAT - Section 121 (r) of the Scheme defines quantified to mean a written communication of the amount of duty payable under the indirect tax enactment. The said definition does not state that who is required to quantify. Therefore, even if an assessee admits in the course of investigation prior to 30 June 2019 and arrived at the quantification same would fall within the meaning of the term quantified as defined. Section 125 of the said Scheme provides for the eligibility except the exclusion mentioned therein. One of the exclusion under Section 125(1)(e), which is relevant for our purpose, is where a person has been subjected to an enquiry or investigation or audit and the amount of duty involved has not been quantified on or before 30 June 2019. The Ministry of Finance by its clarification dated 27 August 2019 in paragraph 10(g) clarified that the duty liability admitted by the person during enquiry, investigation or audit quantified before 30 June 2019 would be eligible under the Scheme. In the instant case, admittedly in the course of the enquiry / investigation, the Petitioner has admitted its liability of Rs.1,39, 58,752/- and, therefore, the Petitioner is eligible for availing the benefit of the Scheme. Merely because a higher figure is mentioned in the application by way of abundant caution, the Petitioner cannot be deprived of the benefit of the Scheme moreso, when the object of the Scheme is to reduce the litigation. It is also important to note that the Petitioner is not seeking refund of any amount paid or payable on the basis of his declaration of Rs.1,50,37,871/-. Petitioner is justified in relying upon the decisions of the Co-ordinate Bench in the case of Sabareesh Pallikere, Proprietor of M/s. Finbros Marketing Vs. Jurisdictional Designated Committee, Thane Commissionerate, Division IV, Range-II ORs. 2021 (2) TMI 515 - BOMBAY HIGH COURT wherein on an identical fact situation the rejection of the declaration was found to be not justified. Thus rejection of the Petitioner's application is unjustified - Respondents are directed to accept the application of the Petitioner made in Form SVLDRS-1 and inform the Petitioner of any amount due and payable, if any, under the SVLDR Scheme within a period of four weeks from the date of uploading the present order.

Summary

Issues:
Challenge to rejection under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 based on quantification date eligibility.

Analysis:
The petitioner challenged the rejection of its application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, as the quantification of demand was post 30 June 2019, making the petitioner supposedly ineligible. The petitioner, registered under the Finance Act, 1994, admitted service tax liability for 2013-2018 during investigation. The SVLDR Scheme was introduced on 21 August 2019 with a cut-off date of 30 June 2019 for quantification. A show cause notice later demanded Rs.1,50,37,871 for 2014-2017. The petitioner applied under SVLDRS-1, mentioning Rs.1,50,37,871, but the application was rejected based on post-June 2019 quantification, leading to the petition challenging the rejection.

The petitioner contended that the quantification was done during the investigation before 30 June 2019, making them eligible for the Scheme. Even though the application stated a higher amount, it was out of caution and did not prejudice the respondents. The Ministry of Finance's clarification supported admission of duty liability before 30 June 2019. Section 125(1)(e) of the Scheme excludes cases where duty amount is unquantified post-June 2019, but the petitioner's admission pre-June 2019 made them eligible.

The court analyzed the Scheme's definition of "quantified" and the exclusion under Section 125(1)(e), emphasizing the importance of admission before the cut-off date. The court referred to a similar case where discrepancies in admitted tax dues were deemed immaterial for eligibility. Citing other judgments, the court found the rejection unjustified and quashed it. The respondents were directed to accept the petitioner's application and determine any payable amount within four weeks, with subsequent issuance of the final certificate upon payment. The petition was allowed without costs.