Quantification and natural justice under the legacy dispute scheme led to setting aside rejection and remand for fresh hearing.

Under the legacy dispute resolution scheme, a written communication fixing duty liability before the cut-off date constitutes "quantification" for an audit-based declaration, making the declarant eligible. Where the committee's estimate matches the amount declared, issuance of Form SVLDRS-2 without a specific quantified variance is contrary to the statutory scheme. Rejection of the declaration without disclosing the actual basis of ineligibility and without a meaningful opportunity of hearing violates natural justice. The adverse communications were therefore set aside and the matter had to be reconsidered afresh after an effective hearing.

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Issues: (i) whether the petitioner's tax dues were quantified on or before the cut-off date so as to make the declaration under the legacy dispute resolution scheme maintainable; (ii) whether issuance of Form SVLDRS-2 was consistent with the statutory procedure where the amount estimated by the committee matched the amount declared; and (iii) whether rejection of the declaration without a specific and meaningful hearing violated natural justice.

Issue (i): whether the petitioner's tax dues were quantified on or before the cut-off date so as to make the declaration under the legacy dispute resolution scheme maintainable.

Analysis: Under Section 123(c) and Section 125(1)(e) of the Finance (No.2) Act, 2019, a declarant subjected to audit is eligible only if the duty involved has been quantified on or before 30 June 2019. The statutory expression "quantified" includes a written communication of duty liability. The letter dated 28.06.2019 was treated as a written communication fixing the duty liability and directing payment, and there was nothing to show that the quantification was only tentative or interim.

Conclusion: The petitioner was eligible to make the declaration under the scheme.

Issue (ii): whether issuance of Form SVLDRS-2 was consistent with the statutory procedure where the amount estimated by the committee matched the amount declared.

Analysis: Section 127 of the Finance (No.2) Act, 2019 and Rule 6 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 contemplate Form SVLDRS-2 where the committee's estimate exceeds the amount declared, followed by an opportunity of hearing, and Form SVLDRS-3 where the estimate equals the declaration. On the record, the amount estimated by the committee was the same as the amount declared, yet Form SVLDRS-2 was issued with only a vague note referring to a variance in quantification, without any specific basis or quantified difference.

Conclusion: The issuance of Form SVLDRS-2 was contrary to the statutory scheme.

Issue (iii): whether rejection of the declaration without a specific and meaningful hearing violated natural justice.

Analysis: The rejection letters did not disclose the actual variance relied upon, nor did they give the petitioner a real opportunity to meet the basis of proposed ineligibility. Since the decision had civil consequences, fairness required a proper opportunity to be heard before rejection. The rejection was therefore treated as mechanical and procedurally unfair.

Conclusion: The rejection of the declaration was vitiated by violation of natural justice.

Final Conclusion: The impugned statement and rejection communications were set aside, and the matter was required to be reconsidered afresh after granting an effective hearing to the petitioner.

Ratio Decidendi: For audit-based declarations under the scheme, a written communication fixing duty liability before the cut-off date constitutes quantification, and any adverse action under the scheme must conform strictly to the statutory procedure and the requirement of a meaningful hearing before rejection.

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