Court quashes rejection under Sabka Vishwas Scheme, emphasizes procedural fairness.

The court quashed the rejection of the petitioner's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, citing failure to provide an opportunity to respond and communicate effectively. The court emphasized adherence to procedural fairness and natural justice, directing the respondents to reconsider the declaration within eight weeks, highlighting the scheme's intent to resolve legacy disputes successfully.

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Issues Involved:
1. Rejection of declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme).
2. Quantification of duty payable under the SVLDR Scheme.
3. Compliance with principles of natural justice.

Detailed Analysis:

1. Rejection of Declaration under the SVLDR Scheme:
The petitioner challenged the rejection of their declaration in Form-SVLDRS-1 dated 20 December 2019 under the SVLDR Scheme by the Deputy Commissioner, CGST & Central Excise, Mumbai. The declaration was rejected on the grounds that the amount of duty had not been quantified as on 30 June 2019, as communicated by the Directorate General of GST Intelligence (DGGI) on 27 February 2020.

2. Quantification of Duty Payable:
The petitioner argued that the amount of duty payable was quantified before the cut-off date of 30 June 2019. They referred to their communications dated 23 March 2018 and 11 June 2018, where they had ascertained and furnished details of Cenvat Credit of Service Tax, Education Cess, Secondary & Higher Education Cess, and Krishi Kalyan Cess, totaling Rs. 4,60,96,697/-. This amount was claimed to be quantified within the meaning of Section 121(r) of the Finance Act, 2019, which defines "quantified" as a written communication of the amount of duty payable.

3. Compliance with Principles of Natural Justice:
The petitioner contended that the rejection of their declaration was arbitrary, unreasonable, and in breach of the principles of natural justice. They argued that the rejection letter dated Nil March 2020 was not communicated to them until 17 February 2022, which deprived them of an opportunity to respond. Furthermore, the petitioner highlighted that the SVLDRS portal indicated their status as "Agreed by Taxpayer" even after the rejection date, suggesting a lack of proper communication and procedural irregularities.

Court's Observations and Judgment:

Quantification and Eligibility:
The court referred to Section 123(c) and Section 125(1)(e) of the Finance Act, 2019, and noted that for eligibility under the SVLDR Scheme, the amount of duty payable must be quantified on or before 30 June 2019. The court cited previous judgments, including RS HR Team Solutions Pvt. Ltd. vs. Union of India, which clarified that a written communication of the amount of duty payable, including a letter intimating duty demand or duty liability admitted by the person during enquiry, investigation, or audit, would suffice for quantification.

Principles of Natural Justice:
The court found that the petitioner had not been given an opportunity to deal with the DGGI's report dated 27 February 2020, which was relied upon to reject the declaration. The court emphasized that the SVLDR Scheme was intended to resolve legacy disputes and should be approached with a view to make the scheme successful. The court held that the rejection of the petitioner's declaration without proper communication and opportunity to respond was in breach of the principles of natural justice.

Decision:
The court quashed and set aside the communication dated Nil March 2020 and the Show Cause Notice dated 21 June 2021. The respondents were directed to constitute a Designated Committee to consider the petitioner's declaration and issue Form SVLDRS-3 and Form SVLDRS-4 after giving a reasonable opportunity of hearing to the petitioner within eight weeks from the date of the order.

Conclusion:
The petition was allowed, and the respondents were directed to comply with the court's instructions to reconsider the petitioner's declaration under the SVLDR Scheme. The court emphasized the importance of adhering to procedural fairness and the principles of natural justice in the implementation of the scheme.

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