Court quashes order, remands for reconsideration of CENVAT credit claim. Emphasizes natural justice principles.

The court set aside and quashed the impugned order dated 05.05.2020, remanding the matter back to the designated committee to reconsider the petitioner's declaration, including the claim of CENVAT credit as pre-deposit. The court emphasized the importance of adhering to principles of natural justice, directing the committee to provide a hearing to the petitioner and issue a speaking order within six weeks. The writ petition was allowed, with all contentions kept open, and no costs were awarded.

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Issues Involved:
1. Denial of personal hearing to the petitioner.
2. Non-consideration of CENVAT credit as pre-deposit.

Detailed Analysis:

Denial of Personal Hearing to the Petitioner:
The petitioner filed a petition under Article 226 of the Constitution of India seeking quashing of the order dated 05.05.2020 and a direction to the respondents to afford an opportunity of hearing under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The petitioner contended that due to the COVID-19 pandemic and the resultant lockdown, it was impossible to attend the personal hearing scheduled on 30.03.2020. The court observed that the designated committee had initially fixed the personal hearing on 19.03.2020, which was adjourned to 30.03.2020 upon the petitioner’s request. However, due to the nationwide lockdown starting from 25.03.2020, it was beyond comprehension how the petitioner could have attended the hearing on 30.03.2020. The court held that the adjourned date of personal hearing should not be considered the sole date of hearing in such exceptional circumstances. The court concluded that the petitioner was denied a fair opportunity of hearing, which vitiated the impugned order dated 05.05.2020.

Non-Consideration of CENVAT Credit as Pre-Deposit:
The petitioner declared an outstanding service tax liability of Rs. 8,00,78,066.00 and indicated a pre-deposit of Rs. 4,39,74,069.00, including CENVAT credit of Rs. 3,28,49,069.00. However, the designated committee excluded the CENVAT credit from the pre-deposit amount, considering only the cash payment of Rs. 1,11,25,000.00. The court noted that the designated committee relied on reports from the Deputy Director, DGGI Zonal Office, Mumbai, which were neither annexed to the impugned order nor furnished to the petitioner. The court emphasized that principles of natural justice require that any document relied upon for an adverse decision must be furnished to the affected party. The failure to provide these reports to the petitioner resulted in a violation of natural justice, further vitiating the decision-making process.

Conclusion:
The court set aside and quashed the impugned order dated 05.05.2020 in Form SVLDRS-3 and remanded the matter back to the designated committee (respondent No.4) to reconsider the petitioner’s declaration, including the claim of CENVAT credit as pre-deposit. The court directed the designated committee to provide an opportunity of hearing to the petitioner and pass a speaking order within six weeks from the date of receipt of the judgment. All contentions were kept open, and the writ petition was allowed to the extent mentioned. No order as to costs was made.

This judgment underscores the importance of adhering to principles of natural justice and fair play, especially in extraordinary circumstances like a pandemic, and the necessity of providing affected parties with all relevant documents relied upon for adverse decisions.

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