2020 (11) TMI 845 - HC - Service Tax

Court reinstates petitioner's Sabka Vishwas Scheme application, emphasizes natural justice principles. Committee to reconsider with a hearing.

M/s. G.R. Palle Electricals Versus Union of India & Ors.

M/s. G.R. Palle Electricals Versus Union of India & Ors. - 2021 (45) G. S. T. L. 10 (Bom.) , [2021] 87 G S.T.R. 132 (Bom) Issues Involved:1. Eligibility of the petitioner for the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.2. Quantification of service tax dues before the cut-off date.3. Principles of natural justice in rejecting the declaration without a hearing.Detailed Analysis:1. Eligibility of the Petitioner for the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:The petitioner sought to quash the order dated 22.01.2020 by the Designated Committee, which rejected its application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The petitioner contended that it was eligible under the scheme as the service tax dues were quantified before the cut-off date of 30.06.2019. The respondents argued that the petitioner was ineligible because the investigation was ongoing and the duty amount was not quantified before the specified date.2. Quantification of Service Tax Dues Before the Cut-Off Date:The petitioner, a proprietorship firm, admitted a service tax liability of Rs. 60 lakhs for the period from 2015-2016 to June 2017 in a statement recorded on 11.01.2018. This was corroborated by a letter from the Superintendent (Anti-Evasion, G-V), CGST and Central Excise, Navi Mumbai, dated 24.01.2018, reminding the petitioner of the admitted liability. The court referred to the scheme's provisions, particularly section 123(c) and section 121(r), which define 'tax dues' and 'quantified' respectively. It was noted that the quantification of duty through written communication or admission by the declarant before 30.06.2019 made the petitioner eligible under the scheme.3. Principles of Natural Justice in Rejecting the Declaration Without a Hearing:The court emphasized the importance of principles of natural justice, noting that the rejection of the petitioner's declaration without a hearing was unjustified. It referred to the scheme's provisions under section 127, which mandate a hearing if the amount estimated by the Designated Committee exceeds the amount declared by the declarant. The court found it illogical and contrary to the scheme's objectives to reject an application without affording the declarant an opportunity to explain. This was supported by the department's circulars and FAQs, which clarified that written communication of duty liability or admission by the declarant before the cut-off date suffices for eligibility.Conclusion:The court set aside the order dated 22.01.2020 and remanded the matter back to the Designated Committee to reconsider the petitioner's application as a valid declaration. The Designated Committee was directed to grant a hearing to the petitioner and issue a speaking order within six weeks. The writ petition was allowed, emphasizing a liberal approach to ensure the scheme's success and adherence to principles of natural justice.