2023 (3) TMI 299 - HC - Service Tax

Writ Petition Dismissal Upheld: Ineligibility for Sabka Vishwas Scheme Confirmed Due to Unmet Service Tax Quantification Deadline.

E.K. Infrastructure Private Limited Versus The Designated Committee Office of the Commissioner of GST and Central Excise, The Additional Director Directorate General of GST Intelligence Coimbatore Zonal Unit, The Superintendent of GST and Central Excise Tambaram Range

The HC dismissed the writ petition challenging the rejection of an application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The court ... Rejection of application filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner has primarily challenged the impugned order on the ground of violation of principles of natural justice and on the ground that the impugned order is a cryptic and non-speaking order - HELD THAT:- In the case on hand, the petitioner, during the course of investigation, has, by its letter dated 03.09.2018, even though has admitted its tax liability for the assessment years 2014-15 to 2016-17 amounting to a sum of Rs.1,59,69,579/-, the same has not been accepted by the respondents. The petitioner has also not paid the entire amount of Rs.1,59,69,579/-. If the contention of the petitioner has to be accepted by this Court, then, in all cases, where, a person discloses even a meagre amount as service tax liability though he is liable to pay huge amount, they will also be brought under the purview of the Scheme and that would not have never been the intention of the legislature. Therefore, it is very clear that the amount of service tax liability has to be quantified in agreement with the respondents to enable the petitioner to come under the purview of the Scheme - Having not quantified in accordance with the Scheme, the question of accepting the petitioner's letter dated 03.09.2018 for the purpose of the Scheme will not arise and that is the reason as to why the impugned order dated 27.02.2020 has been passed rejecting the petitioner's application. A Division Bench of this Court in the case of VITALRAO JAYAPRAKASH VERSUS THE DESIGNATED COMMITTEE UNDER THE SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019, THE COMMISSIONER, THE SENIOR INTELLIGENCE OFFICER, THE COMMISSIONER, CHENNAI NORTH COMMISSIONERATE, CHENNAI [2022 (3) TMI 454 - MADRAS HIGH COURT], had an occasion to decide the issue as to when the Scheme can be applied. In paragraph no.12 of the said judgment, it has been made clear that unless and until the tax liability is quantified, the question of availing the benefits of the Scheme will not arise. In the instant case, excepting for the petitioner's letter dated 03.09.2018 intimating the respondents about its service tax liability for the subject assessment years, there is no quantification done by the respondents and they have also not accepted the petitioner's statement, as per its letter dated 03.09.2018. Furthermore, the petitioner has not sought to avail the benefits under the subject Scheme in the said letter on or before 30.06.2019 and therefore, the first respondent has rightly rejected the petitioner's application on the ground that the petitioner is not eligible to come under the Scheme. Having not requested for personal hearing, the claim of the petitioner that no opportunity of hearing was granted to him before rejecting his request to fall under the Scheme will not arise at this stage. The impugned rejection order being a system generated one based on the particulars furnished by the petitioner that too when the petitioner has not requested for any personal hearing and that too when an earlier request has been rejected on 13.01.2020, this Court does not find any infirmity in the impugned order warranting interference. This writ petition is devoid of merits and accordingly, the same stands dismissed. Issues Involved:1. Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.2. Violation of principles of natural justice.3. Requirement of quantification of service tax liability before the cut-off date.4. Validity of the impugned order rejecting the application under the Scheme.Issue-wise Detailed Analysis:1. Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:The petitioner challenged the impugned order dated 27.02.2020, which rejected its application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 ('the Scheme'). The petitioner argued that having accepted its service tax liability by its letter dated 03.09.2018, it is entitled to the benefits of the Scheme. However, the respondents contended that the petitioner is not eligible as the service tax liability was not quantified on or before 30.06.2019, as required by the Scheme. The court noted that Section 125 of the Scheme mandates that the settlement amount has to be quantified on or before 30.06.2019. The petitioner's letter dated 03.09.2018 did not meet this requirement as it was not accepted by the respondents, and thus, the petitioner was not eligible under the Scheme.2. Violation of principles of natural justice:The petitioner claimed that the impugned order was passed arbitrarily and without giving any reason, thereby violating the principles of natural justice. However, the court observed that the petitioner did not request a personal hearing, which is a prerequisite for claiming such a violation as per the CBIC circular dated 27.08.2019. The relevant clause states that a personal hearing will be granted only if specifically requested. Since the petitioner did not make such a request, the claim of violation of natural justice was not upheld.3. Requirement of quantification of service tax liability before the cut-off date:The court emphasized that for availing the benefits of the Scheme, the tax liability must be quantified on or before 30.06.2019. The petitioner's letter dated 03.09.2018, which admitted tax liability, was not accepted by the respondents, and thus, did not constitute quantification as required by the Scheme. The court referred to the Division Bench judgment in VitalRao Jayaprakash Vs. The Designated Committee, which clarified that unless the tax liability is quantified before the cut-off date, the benefits of the Scheme cannot be availed. Similarly, the Delhi High Court in Karan Singh vs. Designated Committee also held that quantification must be done by the department on or before 30.06.2019.4. Validity of the impugned order rejecting the application under the Scheme:The court found no infirmity in the impugned order rejecting the petitioner's application under the Scheme. The petitioner's earlier request had already been rejected on 13.01.2020, and the petitioner did not challenge that order. The impugned order was a system-generated one based on the particulars furnished by the petitioner, and since no request for a personal hearing was made, the court upheld the validity of the impugned order. The court concluded that the petitioner's application was rightly rejected as it did not meet the eligibility criteria under the Scheme.In conclusion, the writ petition was dismissed as devoid of merits, with no costs awarded, and connected W.M.Ps. were closed.