High Court directs re-consideration of SVLDRS declaration, emphasizes fair tax liability determination.

The High Court of Bombay set aside the impugned order and directed the authorities to re-consider the Petitioner's SVLDRS1 declaration, taking into account the deposit made towards the service tax demanded under the show cause notice. The Court emphasized the need for a fair and accurate determination of the tax liability under the scheme, urging the authorities to verify the factual position and pass appropriate orders. The Petition was allowed in favor of the Petitioner with no order as to costs.

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Issues:
1. Interpretation of Sabka Vishwas (Dispute Resolution) Scheme, 2019.
2. Consideration of deposits made after show cause notice but before adjudication.
3. Applicability of circular dated 12.12.2019 regarding adjustment of deposits.
4. Discrepancy in estimated tax payable under SVLDRS scheme.
5. Availability of alternate remedy in appeal.

Issue 1: Interpretation of Sabka Vishwas (Dispute Resolution) Scheme, 2019

The Petitioner had opted for the Sabka Vishwas dispute resolution scheme (SVLDRS) under the category of "arrears" after the enactment of the Finance (No. 2) Act, 2019. The scheme required pending disputes as of 30.06.2019 to be eligible, with exceptions for cases where a final hearing had already taken place. The Petitioner filed necessary declarations and communicated their choice to settle under the scheme. However, discrepancies arose in the estimation of the amount payable under the scheme, leading to a dispute regarding the correct amount owed by the Petitioner.

Issue 2: Consideration of deposits made after show cause notice but before adjudication

The Petitioner had made deposits totaling &8377; 32,12,000/- towards the demanded service tax after receiving the show cause notice but before the final adjudication. Despite the circular dated 12.12.2019 allowing for adjustment of such deposits, the Commissioner and the Designated Committee did not consider these payments while confirming the demanded amount in the Order-in-Original. The Petitioner contended that the failure to account for these deposits led to double tax liability being imposed, urging the authorities to re-consider the declaration and adjust the deposit amount in the revised statement of tax payable.

Issue 3: Applicability of circular dated 12.12.2019 regarding adjustment of deposits

The circular dated 12.12.2019 clarified the adjustment of amounts paid after the issuance of a show cause notice but before adjudication. Despite the Petitioner's submissions and communication regarding the deposits made, the adjudicating authority and the Designated Committee did not acknowledge or adjust the &8377; 32,12,000/- deposited by the Petitioner. The Petitioner argued that the failure to consider these deposits was arbitrary and discriminatory, leading to erroneous double tax liability. The Petitioner sought relief based on the provisions of the circular to adjust the deposited amount in the calculation of tax payable under the SVLDRS scheme.

Issue 4: Discrepancy in estimated tax payable under SVLDRS scheme

The Designated Committee issued Form SVLDRS-2 estimating the payable amount at &8377; 82,80,167/-, which was higher than the amount declared by the Petitioner in Form SVLDRS-1. Despite the Petitioner's objections and submission of written reasons for disagreement, the Committee issued Form SVLDRS-3 without considering the deposits made by the Petitioner. The Petitioner highlighted the discrepancy between the amounts claimed to have been paid and the records maintained by the department, emphasizing the need for a proper verification process to determine the accurate tax liability under the scheme.

Issue 5: Availability of alternate remedy in appeal

The Respondents contended that the Petitioner had an alternate remedy available in appeal against the adjudication order and the decision of the Designated Committee. However, the Court found the authorities' approach to be hyper-technical and emphasized the need for a fair consideration of the Petitioner's claims based on the material provided. The Court set aside the impugned order and directed the authorities to re-consider the Petitioner's declaration, verify the claimed deposit, and issue a revised statement of tax payable under the SVLDRS scheme. The Court emphasized the importance of proper verification and fair treatment of legitimate claims under the scheme.

In conclusion, the High Court of Bombay set aside the impugned order and directed the authorities to re-consider the Petitioner's SVLDRS1 declaration, taking into account the deposit of &8377; 32,12,000/- made towards the service tax demanded under the show cause notice. The Court emphasized the need for a fair and accurate determination of the tax liability under the scheme, urging the authorities to verify the factual position and pass appropriate orders. The Petition was allowed in favor of the Petitioner with no order as to costs.

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