Court sets aside rejection order, remands for reconsideration, emphasizing natural justice & scheme interpretation.

The court allowed the writ petition, set aside the rejection order, and remanded the matter back to the Designated Committee for reconsideration. The decision emphasized the importance of adhering to principles of natural justice and interpreting the scheme liberally to achieve its objective of liquidating legacy disputes.

---

---

Issues Involved:
1. Eligibility of the petitioner to file a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. Compliance with principles of natural justice in the rejection of the petitioner's declaration.
3. Interpretation and application of relevant sections of the Finance (No.2) Act, 2019 and related circulars.

Detailed Analysis:

1. Eligibility of the Petitioner to File a Declaration under the Scheme:
The petitioner sought to quash the rejection of their application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, and requested the court to direct the respondents to consider the application as valid. The petitioner, an unregistered partnership firm, was issued a show cause cum demand notice on 5th April, 2019, for non-payment of service tax dues amounting to Rs. 19,21,465.00 for the period from 2013-14 to 2017-18. The adjudicating authority confirmed the demand on 9th August, 2019. The petitioner filed a declaration under the scheme on 8th January, 2020, which was rejected on 14th February, 2020, on the grounds that the final hearing had taken place on 9th May, 2019, before the cut-off date of 30th June, 2019, making them ineligible under section 125(1)(c) of the Finance (No.2) Act, 2019.

2. Compliance with Principles of Natural Justice:
The court noted that the rejection order was devoid of any reason and was not preceded by any notice or hearing, violating the principles of natural justice. The court referred to a previous judgment in Thought Blurb Vs. Union of India, emphasizing that summary rejection without affording an opportunity of hearing to the declarant would be in violation of natural justice principles. The court highlighted that the scheme aims to liquidate legacy disputes and should be interpreted liberally to ensure its success.

3. Interpretation and Application of Relevant Sections of the Finance (No.2) Act, 2019 and Related Circulars:
The court analyzed various sections of the Finance (No.2) Act, 2019, including sections 121(c), 123(e), 124(1)(c), and 125(1)(c). It concluded that the petitioner’s case fell under the arrears category as defined under section 123(e) and section 121(c)(i), which includes cases where no appeal has been filed against an order before the expiry of the appeal period. The court referred to circulars dated 25th September, 2019, and 12th December, 2019, and FAQs prepared by the department, which clarified that cases like the petitioner’s could still fall under the arrears category once the adjudication order is passed and the appeal period is over.

The court concluded that the rejection of the petitioner’s declaration was not justified and set aside the rejection order. The matter was remanded back to the Designated Committee to consider the petitioner’s declaration as valid and grant consequential relief after giving an opportunity of hearing to the petitioners.

Conclusion:
The court allowed the writ petition, set aside the rejection order, and remanded the matter back to the Designated Committee for reconsideration. The decision emphasized the importance of adhering to principles of natural justice and interpreting the scheme liberally to achieve its objective of liquidating legacy disputes.

---