2021 (2) TMI 252 - HC - Service Tax

Petitioner granted relief under Sabka Vishwas Scheme due to incorrect rejection process. Natural justice upheld.

M/s. E.I. Dupont India Private Limited Versus Designated Committee-1

M/s. E.I. Dupont India Private Limited Versus Designated Committee-1 - TMI Issues Involved:1. Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.2. Legality of the statement issued in Form SVLDRS-2.3. Rejection of the application under the Scheme.4. Violation of principles of natural justice.Issue-wise Detailed Analysis:1. Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:The petitioner sought to avail benefits under the Scheme, 2019, for settlement of excise duty. The core issue was whether the petitioner was eligible under the category of investigation, enquiry, or audit. The petitioner argued that the duty amount was quantified by the respondent through a letter dated 28.06.2019, which directed the petitioner to discharge the tax liability. The respondent contended that the letter was interim and the final amount was not determined before the cut-off date of 30.06.2019, making the petitioner ineligible. The court found that the letter dated 28.06.2019 did quantify the tax dues, making the petitioner eligible under the Scheme.2. Legality of the statement issued in Form SVLDRS-2:The petitioner challenged the issuance of Form SVLDRS-2, arguing it was contrary to the provisions of the Scheme. According to Section 127 of the Finance Act, 2019, if the amount estimated by the Designated Committee equals the amount declared by the declarant, Form SVLDRS-3 should be issued. The Designated Committee had estimated the same amount declared by the petitioner, yet issued Form SVLDRS-2, which was deemed unnecessary and in contravention of the Scheme. The court held that issuing Form SVLDRS-2 was incorrect as the estimated amount matched the declared amount.3. Rejection of the application under the Scheme:The application was rejected on the grounds that it was not eligible under the category of investigation, enquiry, or audit. The rejection letters dated 05.05.2020 and 11.06.2020 stated the application did not fulfill the criteria and no clarification was provided by the petitioner. The court found that the rejection was based on an incorrect interpretation of eligibility and that the petitioner had complied with the Scheme's requirements. The court quashed the rejection letters, directing the Designated Committee to reconsider the application.4. Violation of principles of natural justice:The petitioner argued that the rejection was in violation of natural justice principles as no opportunity for a hearing was provided. The court noted that the Form SVLDRS-2 did not specify the variance in the quantified amount, and no proper notice or opportunity for a hearing was given. The court emphasized that any order with civil consequences must be passed after giving an opportunity to be heard. The court held that the rejection process was unfair and violated natural justice principles.Conclusion:The court quashed the statement in Form SVLDRS-2 and the rejection letters dated 05.05.2020 and 11.06.2020. It directed the Designated Committee to decide the application afresh, providing an opportunity for a hearing and passing a reasoned order within 8 days from the receipt of the court's order. The writ application was allowed, and the civil application for stay was disposed of accordingly.