Court Orders Reconsideration of Sabka Vishwas Scheme Declaration Rejection

The court set aside the order rejecting the petitioner's declaration under the Sabka Vishwas Scheme, emphasizing the need for quantification of tax dues by the cut-off date for eligibility. It ruled that the rejection without a personal hearing violated principles of natural justice. The court directed a reconsideration of the declaration, requiring a personal hearing and a reasoned decision within six weeks.

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Issues Involved:
1. Eligibility of the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. Quantification of service tax dues before the cut-off date of 30th June, 2019.
3. Rejection of the petitioner's declaration under the scheme.
4. Requirement of personal hearing before rejecting the declaration.
5. Compliance with principles of natural justice.

Detailed Analysis:

1. Eligibility of the Petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The petitioner sought to quash the order dated 24th February, 2020, which rejected its declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The petitioner contended that it was eligible under the scheme and that its declaration was valid. The petitioner relied on a circular from the Central Board of Indirect Taxes and Customs dated 27th August, 2019. The respondents countered that the petitioner was ineligible because the tax dues were not quantified by the cut-off date of 30th June, 2019.

2. Quantification of Service Tax Dues Before the Cut-off Date of 30th June, 2019:
The court examined whether the service tax dues were quantified on or before 30th June, 2019. The petitioner had provided details of its outstanding service tax liability up to June 2018 in a letter dated 14th September, 2018, and the office of the Commissioner, CGST, Mumbai (W) issued a notice under section 87(b) of the Finance Act, 1994 on 3rd December, 2018. Both dates were before the cut-off date. The court referred to previous judgments (Thought Blurb, M/s G.R.Palle Electricals, and Saksham Facility Private Limited) which clarified that written communication of the amount of duty payable, including a letter intimating duty demand or duty liability admitted during an inquiry, investigation, or audit, suffices for quantification.

3. Rejection of the Petitioner's Declaration Under the Scheme:
The petitioner's declaration was rejected on the ground that the tax dues were not finalized by the service tax department as of 30th June, 2019. The court found this view incorrect, noting that the quantification is for eligibility under the scheme and not for the purpose of investigating alleged tax evasion. The court held that the respondents were not justified in rejecting the declaration based on this ground.

4. Requirement of Personal Hearing Before Rejecting the Declaration:
The court emphasized that principles of natural justice require that a declarant be given an opportunity of hearing before rejecting a declaration. The court referred to its decision in Thought Blurb, stating that it would be illogical and contrary to the scheme's objective to reject a declaration without allowing the declarant to explain why their declaration should be accepted. The court noted that the respondents did not provide a personal hearing to the petitioner, which was a violation of the principles of natural justice.

5. Compliance with Principles of Natural Justice:
The court highlighted that when an authority relies on a document to take an adverse decision, the affected party must be provided with a copy of such document or its essence to defend its case properly. The respondents relied on a letter dated 5th February, 2020, but did not furnish a copy to the petitioner. This non-compliance with the principles of natural justice impeached the decision-making process, rendering the rejection invalid.

Conclusion:
The court set aside the order dated 24th February, 2020, and remanded the matter to respondent No.6 to reconsider the petitioner's declaration under the scheme, providing an opportunity for a personal hearing and passing a speaking order. The court directed the respondents to complete this exercise within six weeks from the date of receipt of the order. The writ petition was allowed to the extent indicated, with no order as to costs.

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