2023 (7) TMI 1240 - HC - Service Tax

SVLDRS declaration for admitted duty liability during inquiry: 'tax dues quantified' u/s125(1)(e); rejection quashed

Rejection of a declaration under SVLDRS on the ground that 'tax dues' were not quantified on or before 30.06.2019 was held unsustainable. Interpreting ... Rejection of SVLDRS application filed by the petitioner - it is alleged that the quantification of tax liability was not done before 30.06.2019 - HELD THAT:- As per Section 125(1)(e), though benefit of the scheme was to be given where there was a quantification on or before 30.06.2019 and in the perception of the department that quantification was not done before that relevant date appears to be misconceived. It is apparent from the letter dated 21.05.2019 of the petitioner that it was the case of the petitioner that during the course of verification of record, the petitioner had agreed to the points raised during the verification/scrutiny quantifying the amount. It was even admitted by the statement made on behalf of the assessee as is evident from the statement of 03.06.2020. Communications of the revenue authorities of 24.10.2019 as well as SVLDRS forms 1 and 2 indicate that there was no discrepancy in the figures of the outstanding amounts in the perception of the department and the ones that the petitioner had paid and informed accordingly to the department before 30.06.2019 i.e. on 21.05.2019. Apparently, therefore, the perception of the department that there was no “quantification” before 30.06.2019 is clearly misconceived. Support can be drawn from the circular of the department itself dated 27.08.2019 wherein in para 10 (g) thereof a clarification was made that “quantified” would also include a written communication intimating duty demand or duty liability admitted by a person during inquiry. That admission in the facts of the case had come on 21.05.2019 for the dues already paid and admitted by the assessee which was not even disputed as has now come on record by virtue of an order being OIO passed on 20.06.2023 pursuant to the investigation proceedings wherein the figure of outstanding tax dues is quantified at the same figure as that in the communication dated 21.05.2019. The amount in question stood quantified before the cut-off date in accordance with the circulars of the department and thus the action on the part of the department making the petitioner ineligible to file declaration under the scheme is required to be quashed and set aside - the impugned order set aside - respondents are directed to accept the declaration filed by the petitioner on 03.12.2019 as per SVLRDS-1 and close the issue including the OIO dated 28.06.2023 - petition allowed. Issues Involved:1. Amendment of the application.2. Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS).3. Quantification of tax dues before the cut-off date.4. Interpretation of relevant provisions and circulars.Summary:1. Amendment of the Application:Having heard learned advocates for the parties, application for amendment is allowed. Necessary amendment be carried out forthwith.2. Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS):By way of this petition, the petitioner has prayed to issue a writ in the nature of certiorari or mandamus calling for the records pertaining to the petitioner's case and also quash and set aside the order dated 05.05.2020 rejecting the declaration filed by the petitioner bearing Application Reference No LD0312190000359 dated 03.12.2019 vide letter dated 05.05.2020 and to direct respondent no. 2 to process the same on merits. The petitioner has further prayed to quash and set aside the impugned order dated 07.09.2020 rejecting the SVLDRS application filed by the petitioner and to direct respondent no. 2 to process the same on merits.3. Quantification of Tax Dues Before the Cut-off Date:It appears that by communication dated 05.05.2020, the declaration of the petitioner was rejected on the ground that the declared tax had not been quantified and communicated on or before 30.06.2019. The petitioner contended that the tax liabilities were quantified and communicated to the authorities on 21.05.2019 and this was supported by various communications and statements made during the inquiry. The court found that the perception of the department that there was no quantification before 30.06.2019 is clearly misconceived. The letter dated 21.05.2019 and subsequent communications indicated that the tax liabilities were indeed quantified before the cut-off date.4. Interpretation of Relevant Provisions and Circulars:The court referred to a circular of the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes & Customs, particularly para 10(g), which clarified that a written communication intimating duty demand or duty liability admitted by the person during inquiry, investigation, or audit would be considered as quantification. The court also distinguished the decision in the case of Chaque Jour Hr. Services Pvt. Ltd. vs. Union of India & Ors. and relied on the decision of the Delhi High Court in the case of Seventh Plane Networks Pvt. Ltd. vs. Union of India & Ors., which advocated for a liberal interpretation of the SVLDRS, 2019.Conclusion:In view of the above, the impugned orders dated 05.05.2020 and 07.09.2020 are hereby quashed and set aside. The respondents are directed to accept the declaration filed by the petitioner on 03.12.2019 as per SVLRDS-1 and close the issue including the OIO dated 28.06.2023. Petition is accordingly allowed. Rule is made absolute accordingly. Direct service is permitted.