Court Orders Reconsideration of Petitioner's Declaration Under Sabka Vishwas Scheme; Show Cause Actions Halted.

The HC quashed the order rejecting the petitioner's declaration under the Sabka Vishwas Scheme, directing the designated committee to reconsider it under 'voluntary disclosure' after granting a hearing. The process must conclude within eight weeks. Meanwhile, the respondents are restrained from acting on the show cause notice. The writ petition was disposed of, with all contentions open and no order on costs.

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Issues Involved:
1. Quashing of the order rejecting the petitioner’s declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. Direction to reconsider the petitioner’s declaration and grant relief under the scheme.
3. Quashing of the show cause cum demand notice issued by the Joint Commissioner, CGST & CX.

Issue-wise Detailed Analysis:

1. Quashing of the order rejecting the petitioner’s declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The petitioner, a private limited company engaged in providing manpower services, submitted a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, declaring service tax dues for the period from 01.04.2016 to 31.03.2017 amounting to Rs. 39,26,235. However, the declaration was rejected via email dated 21.01.2020 on grounds of ineligibility under section 125(1)(f)(i) read with section 121(m) of the Finance (No. 2) Act, 2019. The rejection was based on a letter dated 24.07.2019 issued to the petitioner by the Assistant Commissioner, CGST & CX, Belapur Commissionerate, which highlighted discrepancies between the petitioner’s service tax return and income tax return for the financial year 2015-16. The petitioner contended that the rejection violated principles of natural justice as no opportunity of hearing was provided and the order was unreasoned.

2. Direction to reconsider the petitioner’s declaration and grant relief under the scheme:
The court examined various provisions of the scheme and noted that while section 125(1) generally allows all persons to make a declaration, ineligibility under voluntary disclosure is specifically addressed in clause (f)(i). It was highlighted that under the scheme, discretion is vested in the designated committee to decide eligibility on a case-to-case basis, which must be exercised in a just, fair, and reasonable manner, complying with the principles of natural justice. The court emphasized that an opportunity of hearing should be granted to the declarant before rejection, particularly when the decision has civil consequences. This principle was reinforced by previous judgments, including Thought Blurb Vs. Union of India, which underscored the necessity of hearing before rejection to avoid arbitrary decisions.

3. Quashing of the show cause cum demand notice issued by the Joint Commissioner, CGST & CX:
During the pendency of the writ petition, the Joint Commissioner issued a show cause cum demand notice dated 24.12.2020, demanding service tax amounting to Rs. 54,40,259 for the periods 2015-16, 2016-17, and 2017-18. The petitioner amended the writ petition to challenge this notice as well. The court, while addressing the main issue of rejection of the declaration, directed that the respondents shall not proceed further with the show cause cum demand notice until the designated committee decides afresh on the petitioner’s declaration after granting an opportunity of hearing.

Conclusion:
The court set aside the order dated 21.01.2020 rejecting the petitioner’s declaration and directed the designated committee to reconsider the declaration under the category of 'voluntary disclosure' after providing an opportunity of hearing to the petitioner. The entire process was to be completed within eight weeks, and until then, the respondents were restrained from proceeding with the show cause cum demand notice dated 24.12.2020. All contentions were kept open, and the writ petition was disposed of without any order as to costs.

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