2021 (2) TMI 515 - HC - Service Tax

Court allows petitioner's benefit claim under Sabka Vishwas Scheme, emphasizes timely admission of liability.

Sabareesh Pallikere, Proprietor of M/s. Finbros Marketing Versus Jurisdictional Designated Committee, Thane Commissionerate, Division IV, Range-II & Ors.

The court found that the petitioner was eligible to avail benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, as the service tax ... Rejection of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility of the petitioner or maintainability of his declaration to avail the benefits of the scheme under the category of investigation, enquiry or audit - quantification of the service tax dues of the petitioner for the related period was not quantified on or before 30th June, 2019 - HELD THAT:- The issue decided in the case of THOUGHT BLURB VERSUS UNION OF INDIA AND ORS. [2020 (10) TMI 1135 - BOMBAY HIGH COURT] where it was held that On the one hand there is a letter of respondent No.3 to the petitioner quantifying the service tax liability for the period 1st April, 2016 to 31st March, 2017 at ₹ 47,44,937.00 which quantification is before the cut off date of 30th June, 2019 and on the other hand for the second period i.e. from 1st April, 2017 to 30th June, 2017 there is a letter dated 18th June, 2019 of the petitioner addressed to respondent No.3 admitting service tax liability for an amount of ₹ 10,74,011.00 which again is before the cut off date of 30th June, 2019. Thus, petitioner’s tax dues were quantified on or before 30th June, 2019, there are no hesitation to hold that petitioner was eligible to file the application (declaration) as per the scheme under the category of enquiry or investigation or audit whose tax dues stood quantified on or before 30th June, 2019. The object of the scheme is to encourage persons to go for settlement who had bonafidely declared outstanding tax dues prior to the cut off date of 30.06.2019. The fact that there could be discrepancy in the figure of tax dues admitted by the person concerned prior to 30.06.2019 and subsequently quantified by the departmental authorities would not be material to determine eligibility in terms of the scheme under the category of inquiry, investigation or audit. What is relevant is admission of tax dues or duty liability by the declarant before the cut off date. Of course the figure or quantum admitted must have some resemblance to the actual dues. In our view, petitioner had fulfilled the said requirement and therefore he was eligible to make the declaration in terms of the scheme under the aforesaid category. Rejection of his declaration therefore on the ground of ineligibility is not justified. Matter remanded back to respondent No.1 to consider the declaration of the petitioner dated 24.12.2019 afresh as a valid declaration in terms of the scheme under the category of investigation, inquiry and audit and thereafter grant the consequential relief(s) to the petitioner - appeal allowed by way of remand. Issues Involved:1. Eligibility of the petitioner to avail benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.2. Whether the service tax dues of the petitioner were quantified on or before 30.06.2019.3. Validity of the rejection of the petitioner’s declaration under the scheme.Detailed Analysis:1. Eligibility of the petitioner to avail benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:The petitioner filed a declaration under the scheme on 24.12.2019, seeking relief for service tax dues. The scheme, introduced by the Central Government through the Finance (No.2) Act, 2019, aimed to resolve disputes related to central excise and service tax subsumed under GST. The petitioner’s eligibility under the scheme was contested on the grounds that the tax dues were not quantified by the cutoff date of 30.06.2019.2. Whether the service tax dues of the petitioner were quantified on or before 30.06.2019:The petitioner argued that the service tax liability was admitted in statements recorded on 06.07.2018 and 06.06.2019, where he acknowledged dues of around Rs. 1.93 crores. The respondents countered that the final quantification occurred only with the issuance of the show-cause notice on 11.11.2019, which was post the cutoff date. The court referred to previous judgments, such as Thought Blurb Vs. Union of India and M/s G.R. Palle Electricals Vs. Union of India, which clarified that 'quantified' means a written communication of the amount of duty payable, including letters intimating duty demand or admitted liability during inquiry, investigation, or audit. The court found that the petitioner’s admission of liability before 30.06.2019 met this requirement.3. Validity of the rejection of the petitioner’s declaration under the scheme:The court held that the rejection of the petitioner’s declaration on the ground of ineligibility was not justified. The petitioner had admitted the service tax liability in statements recorded before the cutoff date, which should be considered as quantification under the scheme. The court emphasized that the object of the scheme is to encourage settlements for those who had declared outstanding dues before 30.06.2019. The court also noted that principles of natural justice require an opportunity for the declarant to be heard before rejecting the declaration.Conclusion:The court set aside the order dated 31.01.2020 rejecting the petitioner’s declaration and remanded the matter back to the designated committee (respondent No.1) to reconsider the declaration as a valid one under the scheme. The committee was directed to provide an opportunity of hearing to the petitioner and pass a speaking order within eight weeks. The writ petition was allowed to this extent, with no order as to costs.