2025 (4) TMI 774 - HC - Service Tax

Eligibility to file a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 (SVLDRS) - appeal before the Supreme Court did not arise from a show cause notice or demand of duty - HELD THAT - This Court in QUEST RETAIL PRIVATE LIMITED VERSUS PRINCIPAL COMMISSIONER CGST AND ANOTHER 2023 (2) TMI 1397 - PUNJAB AND HARYANA HIGH COURT relying upon the judgment of the Bombay High Court in the case of Nilkamal Limited and Ors v/s Union of India and Ors 2022 (11) TMI 1008 - BOMBAY HIGH COURT set aside the impugned order and remanded the matter back to the designated Committee to pass a fresh order as per the clarificatory circular and judgment passed by Bombay High Court in Nilkamal Limited and Ors. The impugned order dated 27.12.2019 is set aside. The matter is remanded back to the designated Committee to pass a fresh order as per the clarificatory circular - petition disposed off by way of remand.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal question in this case was whether the petitioner was eligible to file a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) despite the rejection of their declaration by the respondents on the grounds that the appeal before the Supreme Court did not arise from a show cause notice or demand of duty. Additionally, the issue involved whether the rejection was contrary to the binding Circular No. 1073/06/2019-CX, which permits members of the Retailers Association of India (RAI) to avail benefits under the SVLDRS.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The SVLDRS was enacted to resolve legacy disputes related to indirect taxes. The scheme allows eligible parties to file declarations for settling disputes. Circular No. 1073/06/2019-CX, issued by the Central Board of Indirect Taxes and Customs, clarifies eligibility criteria under the scheme, specifically allowing members of the RAI to file declarations.

The Bombay High Court in Nilkamal Limited and Ors v/s Union of India and Ors interpreted this circular, confirming that members of RAI could file declarations under the scheme, provided they comply with its conditions.

Court's Interpretation and Reasoning

The Court noted the binding nature of Circular No. 1073/06/2019-CX, which explicitly allows RAI members to file declarations under the SVLDRS. It recognized that the Bombay High Court had already interpreted this circular to mean that members of RAI, who had proceedings initiated against them for non-payment of service tax on rented immovable property, were eligible to file declarations.

Key Evidence and Findings

The petitioner complied with the interim order of the Supreme Court dated 14.10.2011, which required them to deposit 50% of the arrears and provide a solvent surety for the remaining amount. This compliance was communicated to the relevant tax authorities. Despite this, the petitioner's declaration under the SVLDRS was rejected by the respondents on the basis that their appeal before the Supreme Court did not originate from a show cause notice or demand of duty.

Application of Law to Facts

The Court applied the clarifications provided in the circular and the precedent set by the Bombay High Court, determining that the petitioner's case was indeed covered under the SVLDRS. The rejection of the petitioner's declaration was found to be contrary to the circular, which was binding on the respondents.

Treatment of Competing Arguments

The respondents contended that the petitioner was ineligible to file a declaration as the appeal before the Supreme Court did not arise from a show cause notice. However, the Court, relying on the circular and the Bombay High Court's interpretation, concluded that such a procedural technicality did not preclude the petitioner from availing the scheme's benefits.

Conclusions

The Court concluded that the petitioner was eligible to file a declaration under the SVLDRS, and the rejection by the respondents was incorrect. The matter was remanded to the designated Committee for reconsideration in light of the clarificatory circular and the judgment of the Bombay High Court.

SIGNIFICANT HOLDINGS

The Court held that the impugned order rejecting the petitioner's declaration was set aside. The matter was remanded to the designated Committee to pass a fresh order in accordance with the clarificatory circular and the precedent set by the Bombay High Court in Nilkamal Limited and Ors.

Preserve verbatim quotes of crucial legal reasoning

The Court referenced the circular's clarification: "such persons are allowed to file a declaration under the Scheme and avail the benefits." This was pivotal in determining the petitioner's eligibility under the SVLDRS.

Core Principles Established

The judgment reinforced the principle that binding circulars, which clarify the application of statutory schemes, must be adhered to by the authorities. It also established that procedural technicalities should not impede the substantive rights of parties eligible under statutory schemes.

Final Determinations on Each Issue

The Court determined that the petitioner was eligible to file a declaration under the SVLDRS, and the rejection of their declaration was contrary to the applicable circular. The designated Committee was instructed to reconsider the petitioner's declaration in accordance with the circular and relevant judicial precedents.