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Issues: (i) Whether the appellant company's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was barred as a voluntary disclosure made after enquiry or investigation; (ii) whether the adjudicating authority was required to examine the appellant company's claim of CENVAT credit while determining the service tax demand and consequential penalty; (iii) whether the penalty imposed on the company's officers under Section 78A of the Finance Act, 1994 was sustainable.
Issue (i): Whether the appellant company's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was barred as a voluntary disclosure made after enquiry or investigation.
Analysis: The declaration was filed after search and investigation, but the relevant statutory bar applied where the person had already been subjected to enquiry or investigation by the relevant date. The search of the appellant's premises occurred after 30.06.2019, and the clarification issued by the Board was applied to hold that the appellant did not fall within the barred category. The designated committee had already issued the discharge statement, and the later non-payment of the amount shown therein did not justify treating the declaration as barred on that ground.
Conclusion: The appellant company was not barred from availing the Scheme on this ground.
Issue (ii): Whether the adjudicating authority was required to examine the appellant company's claim of CENVAT credit while determining the service tax demand and consequential penalty.
Analysis: The right to CENVAT credit was treated as accruing on receipt of eligible inputs or input services and could not be denied merely because ST-3 returns were not filed, if entitlement was otherwise established by documentary evidence. Procedural non-reporting was held not to override substantive eligibility, and the beneficial nature of the credit scheme required liberal construction. The original order was therefore found deficient to the extent it rejected the credit claim without proper verification of the underlying documents, and a de novo examination was directed for recomputation of the net tax liability and related penalty.
Conclusion: The matter was remanded to the original authority for fresh consideration of the CENVAT credit claim and recomputation of liability.
Issue (iii): Whether the penalty imposed on the company's officers under Section 78A of the Finance Act, 1994 was sustainable.
Analysis: The company had collected service tax from customers but failed to remit it to the Government for the disputed period, while the officers concerned were in charge of the company and aware of the tax default. On those facts, the statutory conditions for fastening personal penalty on the responsible officers were treated as satisfied.
Conclusion: The penalties on the officers were sustained and their appeals were dismissed.
Final Conclusion: The company obtained partial relief by way of remand for fresh adjudication on CENVAT credit and net liability, but the personal penalties on the officers were upheld.
Ratio Decidendi: A credit claim supported by underlying records cannot be rejected solely for non-filing of returns if entitlement is otherwise verifiable, but officers in charge of a company that collects and retains service tax without remittance may be penalised where statutory responsibility and knowledge are established.
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