Show Cause Notice Nullified Due to Discharge Certificate Under Sabka Vishwas Scheme; NOIDA Affirmed as Body Corporate.

The HC set aside the impugned show cause notice demanding service tax, deeming it unsustainable due to the Discharge Certificate under the Sabka Vishwas Scheme, which conclusively settled the tax liability for the specified period. The court ruled that the petitioner was not liable for service tax on FOC material and confirmed NOIDA's status as a body corporate. All pending applications were disposed of.

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Issues Involved:
1. Validity of the impugned show cause notice dated 10.07.2020.
2. Applicability of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
3. Liability of the petitioner for service tax on free of cost (FOC) material.
4. Determination of NOIDA's status as a body corporate.

Summary:

1. Validity of the Impugned Show Cause Notice:
The petitioner challenged the show cause notice dated 10.07.2020, which demanded service tax of Rs. 2,67,26,113/- for the period 2014-15 to 2017-18. The notice was based on the assertion that the petitioner had issued FOC material invoices and misrepresented facts about the running bills. Additionally, it claimed the petitioner wrongly assumed NOIDA as a body corporate, affecting tax liability. The court found the notice unsustainable, stating that the Discharge Certificate issued under the Sabka Vishwas Scheme conclusively settled the matter for the specified period.

2. Applicability of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The petitioner had availed the Scheme, paying 50% of the proposed tax demand, and received a Discharge Certificate. The court held that the petitioner's declaration under the category of 'Litigation' was valid, and the Discharge Certificate conclusively resolved the tax liability for the period in question. The court rejected the Revenue's argument that Section 129(2)(c) of the Finance (No. 2) Act, 2019, applied, as the petitioner's declaration was not a 'Voluntary Disclosure.'

3. Liability for Service Tax on FOC Material:
The court referred to the Supreme Court's decision in Commissioner of Service Tax & Ors v. Bhayana Builders Private Limited & Ors., which stated that the value of free supply items not part of the contract is irrelevant in determining taxable service value. Therefore, the assumption that the petitioner was liable for tax on FOC material was deemed erroneous.

4. Determination of NOIDA's Status as a Body Corporate:
The court clarified that NOIDA is a body corporate as per Section 3 of the Uttar Pradesh Industrial Area Development Act, 1976. The Revenue's claim that NOIDA was not a body corporate was based on a misunderstanding. The court highlighted that NOIDA's status as a body corporate is explicitly stated in the statute, and the Revenue's contrary assumption was fundamentally flawed.

Conclusion:
The court allowed the petition, setting aside the impugned show cause notice. The Discharge Certificate was deemed conclusive for the matter and period covered, and the assumptions regarding FOC material and NOIDA's status were found to be erroneous. The pending applications were also disposed of.

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