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TMI Blog2020 (11) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... y the investigating authority admitted the service tax liability of ₹ 60 lakhs (approximately) to be outstanding for the period from 2015-2016 to June, 2017. This was corroborated by the departmental authority in the letter dated 24.01.2018 which we have already noted and discussed. Therefore, present is a case where there is acknowledgment by the petitioner of the duty liability as well as by the department in its communication to the petitioner. Thus, it can be said that in the case of the petitioner the amount of duty involved had been quantified on or before 30.06.2019. In such circumstances, rejection of the application (declaration) of the petitioner on the ground of being ineligible with the remark that investigation was still going on and the duty amount was pending for quantification would not be justified. In a case where the amount estimated by the Designated Committee exceeds the amount declared by the declarant, then a hearing is given by the Designated Committee to the declarant before determining the amount to be paid by the declarant. In a situation where Designated Committee grants hearing to a declarant when the amount estimated by it exceeds the amount d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues (service tax dues) in connection with which the proprietor was summoned for appearance. Pursuant to such summons, proprietor had appeared before the authorities and his statement was recorded on 11.01.2018. Petitioner acknowledged in his statement that outstanding service tax dues for the period from 2015-2016 to June, 2017 was ₹ 60 lakhs (approximately). In this connection, Superintendent (Anti-Evasion, G-V), office of the Commissioner of CGST and Central Excise, Navi Mumbai wrote to the proprietor on 24.01.2018 reminding him that in his statement dated 11.01.2018 he had admitted service tax liability of ₹ 60 lakhs and had promised to discharge ₹ 15 lakhs by 15.01.2018 which had not been discharged. 5. It may be mentioned that the enquiry/investigation against the petitioner for alleged non-payment of service tax dues pertain to the period from April, 2013 to June, 2017. Petitioner had stated that service tax liability was ₹ 60 lakhs (approximately) which was outstanding for the period from 2015-2016 to June, 2017. According to the petitioner, the entire amount of service tax dues for the period from April, 2013 to June, 2017 worked out to ₹ 91 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. In the remarks column, it was mentioned that the application (declaration) was rejected as the investigation was still going on and the duty amount was pending for quantification. 11. Aggrieved, present Writ Petition has been filed seeking the reliefs as indicated above. 12. Respondents have filed affidavit. Stand taken in the affidavit is that in response to summons, proprietor of the petitioner had appeared before the Investigating Officer on 11.01.2018 whereafter his statement was recorded. In his statement the proprietor admitted that an amount of ₹ 60 lakhs was the approximate outstanding service tax liability for the period from 2015-2016 to June, 2017 and had agreed to discharge ₹ 15 lakhs. Further stand taken is that the scheme provides for eligibility to file declaration under four categories, namely, - i) Arrears ; ii) Litigation ; iii) Investigation, Enquiry or Audit ; and iv) Voluntary Disclosure 13. It is stated that when the scheme was launched, investigation was still going on against the petitioner. Therefore, from amongst the four categories, petitioner could have filed declaration only under one category i.e. investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by stating that service tax liability of ₹ 60 lakhs (approximately) was still outstanding for the period from 2015-2016 to June, 2017. Referring to the said statement, Superintendent (Anti-Evasion, G-V), CGST and Central Excise, Navi Mumbai wrote to the proprietor of the petitioner on 24.01.2018 reminding him that he had admitted service tax liability of the petitioner at ₹ 60 lakhs (approximately) and had promised to discharge ₹ 15 lakhs by 15.01.2018 which he had not discharged. 18. Having noticed the above, we may briefly refer to the relevant provisions of the scheme. Section 120 to section 135 forming part of Chapter V of the Finance (No.2) Act, 2019 (briefly the Act hereinafter) comprises the scheme. Section 123 defines tax dues for the purposes of the scheme. As per clause (c) of section 123, where an enquiry or investigation or audit is pending against the declarant, the amount of duty payable under any of the indirect tax enactment which has been quantified on or before 30.06.2019 would be the tax dues . The word quantified has been defined in section 121(r) to mean a written communication of the amount of duty payable under the indirect tax en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable by the declarant. 23. From a conjoint reading of sub sections (1), (2) and (3) of section 127, the picture that emerges is that if the amount estimated by the Designated Committee is equal to the amount declared by the declarant, then the Designated Committee shall issue a statement in electronic form indicating the amount payable by the declarant. However, if the amount estimated by the Designated Committee is higher than the amount declared by the declarant, the Designated Committee shall give an opportunity of hearing to the declarant. 24. Once the determined amount is paid, discharge certificate is issued by the Designated Committee under sub section (8) of section 127. 25. Respondents have relied upon section 125(1)(e) to contend that a person who has been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit had not been quantified on or before 30.06.2019 would not be eligible to make the declaration. On this ground, declaration of the petitioner has been rejected by the Designated Committee, which has been justified. 26. In the circular dated 27.08.2019 relied upon by learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that proprietor of the petitioner in his statement recorded on 11.01.2018 by the investigating authority admitted the service tax liability of ₹ 60 lakhs (approximately) to be outstanding for the period from 2015-2016 to June, 2017. This was corroborated by the departmental authority in the letter dated 24.01.2018 which we have already noted and discussed. Therefore, present is a case where there is acknowledgment by the petitioner of the duty liability as well as by the department in its communication to the petitioner. Thus, it can be said that in the case of the petitioner the amount of duty involved had been quantified on or before 30.06.2019. In such circumstances, rejection of the application (declaration) of the petitioner on the ground of being ineligible with the remark that investigation was still going on and the duty amount was pending for quantification would not be justified. 28. This position has also been explained by the department itself in the form of frequently asked questions (FAQs). Question Nos.3 and 45 and the answers provided thereto are relevant and those are reproduced hereunder :- Q3. If an enquiry or investigation or audit has started ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Designated Committee exceeds the amount declared by the declarant, then a hearing is given by the Designated Committee to the declarant before determining the amount to be paid by the declarant. In a situation where Designated Committee grants hearing to a declarant when the amount estimated by it exceeds the amount declared by the declarant, then it would be wholly inconceivable that before an application (declaration) is rejected on the ground of ineligibility, no hearing is granted to the declarant. In Thought Blurb (supra), it was held as under :- 51. We have already discussed that under sub sections (2) and (3) of section 127 in a case where the amount estimated by the Designated Committee exceeds the amount declared by the declarant, then an intimation has to be given to the declarant in the specified form about the estimate determined by the Designated Committee which is required to be paid by the declarant. However, before insisting on payment of the excess amount or the higher amount the Designated Committee is required to give an opportunity of hearing to the declarant. In a situation when the amount estimated by the Designated Committee is in excess of the ..... 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