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TMI Blog2021 (2) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... dressed to respondent No.3 admitting service tax liability for an amount of ₹ 10,74,011.00 which again is before the cut off date of 30th June, 2019. Thus, petitioner s tax dues were quantified on or before 30th June, 2019, there are no hesitation to hold that petitioner was eligible to file the application (declaration) as per the scheme under the category of enquiry or investigation or audit whose tax dues stood quantified on or before 30th June, 2019. The object of the scheme is to encourage persons to go for settlement who had bonafidely declared outstanding tax dues prior to the cut off date of 30.06.2019. The fact that there could be discrepancy in the figure of tax dues admitted by the person concerned prior to 30.06.2019 and subsequently quantified by the departmental authorities would not be material to determine eligibility in terms of the scheme under the category of inquiry, investigation or audit. What is relevant is admission of tax dues or duty liability by the declarant before the cut off date. Of course the figure or quantum admitted must have some resemblance to the actual dues. In our view, petitioner had fulfilled the said requirement and therefore he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded on oath by the said officer on 06.07.2018. In his statement, petitioner admitted that the total service tax liability for the period under consideration was around ₹ 1.93 crores, further stating that after initiation of inquiry, petitioner had paid service tax of ₹ 18 lakhs besides undertaking to discharge ₹ 50 lakhs by 02.09.2018 and a further amount of ₹ 32 lakhs by December 2018. It was also stated that the remaining amount of service tax liability would be paid by March 2019 along with interest due. 6. Similar statement of the petitioner was recorded on 06.06.2019 under section 14 of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994 and section 174 of the Central Goods and Services Tax Act, 2017. In question No.1 of the statement itself, petitioner was asked as to whether he had paid the entire service tax liability of ₹ 1.75 crores. In his reply, petitioner stated that he had paid ₹ 3.30 lakhs in the months of September 2018 and October 2018; and made further payment of ₹ 10.10 lakhs on 03.06.2019. Balance amount could not be paid because of crisis faced by non-banking financial companies which had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fact, designated committee i.e. respondent No.1 had called for a verification report from DGGI, Pune to verify correctness of the claim of the petitioner. Based on the verification report of the DGGI, petitioner s declaration was rejected on 31.01.2020. 13.2. In such circumstances, respondent No.1 was justified in rejecting the declaration of the petitioner and no case for interference has been made out. 14. Learned counsel for the petitioner has referred to the statements made by the petitioner before the Senior Intelligence Officer during the course of the investigation on 06.07.2018 and 06.06.2019 and submits that from the said statements it is evidently clear that petitioner had admitted service tax liability to be around ₹ 1.93 crores. These two statements are prior to the cut off date of 30.06.2019. The subsequent statement made on 25.09.2019 which is post 30.06.2019 only reiterates what was stated in the earlier two statements though in the later statement he had admitted service tax liability of ₹ 2,08,29,640.00. Referring to section 121(r) of the Finance (No.2) Act, 2019 as well as to the circular dated 27.08.2019 of the Central Board of Indirect Taxe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing issue was clarified in the context of the various provisions of the Finance (No.2) Act 2019 and the Rules made thereunder :- Cases under an enquiry, investigation or audit where the duty demand has been quantified on or before the 30th day of June, 2019 are eligible under the scheme. Section 2(r) defines quantified as a written communication of the amount of duty payable under the indirect tax enactment. It is clarified that such written communication will include a letter intimating duty demand; or duty liability admitted by the person during enquiry, investigation or audit; or audit report etc. 48. Thus as per the above clarification, written communication in terms of section 121(r) will include a letter intimating duty demand or duty liability admitted by the person during enquiry, investigation or audit etc. This has been also explained in the form of frequently asked questions (FAQs) prepared by the department on 24th December, 2019. 49. Reverting back to the facts of the present case, we find that on the one hand there is a letter of respondent No.3 to the petitioner quantifying the service tax liability for the period 1st April, 2016 to 31st March, 2017 at & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Scheme under the enquiry or investigation or audit category. Quantified means a written communication of the amount of duty payable under the indirect tax enactment [Section 121(r)]. Such written communication will include a letter intimating duty demand; or duty liability admitted by the person during enquiry, investigation or audit; or audit report etc. [Para 10(g) of Circular No 1071/4/2019- CX dated 27th August, 2019]. * * * * Q45 .With respect to cases under enquiry, investigation or audit what is meant by written communication quantifying demand ? Ans . Written communication will include a letter intimating duty/tax demand or duty/tax liability admitted by the person during enquiry, investigation or audit or audit report etc. 20. Finally in Saksham Facility Private Limited Vs. Union of India, 2020-TIOL-2108-HC-MUM-ST , where a similar issue had cropped up, this court reiterated the above position and held as under :- 22.3. Clause (g) of paragraph 10 makes it abundantly clear that cases under an enquiry, investigation or audit where the duty demand had been quantified on or before 30.06.2019 would be eligible under the scheme. The w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability of the petitioner for the period 2013-14 to 2017-18 (upto June, 2017) would be around ₹ 1.93 crores. While petitioner did not give the exact figure of total service tax dues, he nonetheless admitted such dues to be around ₹ 1.93 crores which was subsequently enhanced in his statement dated 25.09.2019 to ₹ 2,08,29,640.00. From a conjoint reading of section 121(r) of the Finance (No.2) Act, 2019, circular of the Board dated 27.08.2019 and answers to question Nos. 3 and 45 of the Frequently Asked Questions, a view can legitimately be taken that the requirement under the scheme is admission of tax liability by the declarant during inquiry, investigation or audit report. It is not necessary that the figures on such admission should have mathematical precision or should be exactly the same as the subsequent quantification by the authorities in the form of show-cause notice etc. post 30.06.2019. The object of the scheme is to encourage persons to go for settlement who had bonafidely declared outstanding tax dues prior to the cut off date of 30.06.2019. The fact that there could be discrepancy in the figure of tax dues admitted by the person concerned prior to 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of application (declaration) will lead to adverse civil consequences for the declarant as he would have to face the consequences of enquiry or investigation or audit. As has been held by us in Capgemini Technology Services India Limited (supra) it is axiomatic that when a person is visited by adverse civil consequences, principles of natural justice like notice and hearing would have to be complied with. Non-compliance to the principles of natural justice would impeach the decision making process rendering the decision invalid in law. 24. Thus, on a thorough consideration of the matter, we set aside the order dated 31.01.2020 and remand the matter back to respondent No.1 to consider the declaration of the petitioner dated 24.12.2019 afresh as a valid declaration in terms of the scheme under the category of investigation, inquiry and audit and thereafter grant the consequential relief(s) to the petitioner. While doing so, respondent No.1 shall provide an opportunity of hearing to the petitioner and thereafter pass a speaking order with due communication to the petitioner. The above exercise shall be carried out within a period of eight weeks from the date of receipt of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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