Pre-cut-off admission of duty liability can satisfy scheme quantification, and adverse material must be disclosed before rejection.

For eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, a case is treated as quantified when there is a pre-cut-off written communication of duty liability or an admission of liability during enquiry or investigation, even if the later adjudicated figure differs. On that basis, the declarant's service tax dues were held not to be ineligible merely because the post-cut-off notice increased the amount by disallowing an exemption claim. The rejection was also found unsustainable because the adverse report was not furnished and no hearing was granted; reliance on undisclosed material breached natural justice.

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Issues: (i) Whether the declarant's service tax dues were quantified on or before 30.06.2019 so as to make the declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 eligible under the investigation or enquiry category; (ii) Whether rejection of the declaration without furnishing the adverse report and without granting a hearing was sustainable.

Issue (i): Whether the declarant's service tax dues were quantified on or before 30.06.2019 so as to make the declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 eligible under the investigation or enquiry category.

Analysis: The scheme treats a case as quantified where there is a written communication of the amount of duty payable, which includes a duty demand intimated in writing or a liability admitted by the person during enquiry or investigation. The admitted liability need not match post-cut-off adjudication figures with mathematical precision. The material placed showed a pre-cut-off statement admitting substantial service tax liability, and the later show cause notice only enhanced the figure by disallowing the claimed exemption on ocean freight.

Conclusion: The declaration was not liable to be rejected on the ground that the dues were not quantified by 30.06.2019; the declarant was eligible to be considered under the scheme.

Issue (ii): Whether rejection of the declaration without furnishing the adverse report and without granting a hearing was sustainable.

Analysis: Where the designated authority relies on an adverse report to deny relief under the scheme, fairness requires that the declarant be supplied the material relied upon and be given an opportunity to explain its case. A summary rejection on the basis of an undisclosed report causes adverse civil consequences and offends natural justice. The impugned decision was therefore vitiated on this ground as well.

Conclusion: The rejection was unsustainable for breach of natural justice.

Final Conclusion: The impugned rejection was set aside and the matter was remanded to the designated committee for fresh consideration of the declaration after hearing the declarant and issuing a speaking order.

Ratio Decidendi: For eligibility under the enquiry, investigation or audit category of the scheme, pre-cut-off admission or written communication of duty liability constitutes quantification, and any adverse material relied upon for rejection must be disclosed and tested through a hearing.

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