Belated ST-3 returns and audit findings showing self-quantified service tax dues under SVLDRS; declaration rejection set aside.

Rejection of an SVLDRS, 2019 declaration on the ground that tax dues were not "quantified" on or before 30.06.2019 was held unsustainable. The HC found that belated ST-3 returns for 2014-2015 to 2017-2018, read with the audit findings, evidenced self-quantification of service tax liability; the minor variance in figures did not negate quantification, and the subsequent show cause notice merely reflected the audited quantification. The declarant was therefore eligible for relief under the Scheme, rendering the show cause notice proposals unwarranted, and the petition was allowed.

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Issues Involved:
1. Rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS, 2019).
2. Confirmation of demand in Order in Original No.06/2022(c) dated 31.01.2022.

Issue 1: Rejection of Application under SVLDRS, 2019

The petitioner challenged the Impugned Communication dated 08.11.2019 rejecting their application under SVLDRS, 2019. The application was auto-rejected with the endorsement: "Quantification of tax dues was not done on or before 30.06.2019." The petitioner argued that there was proper quantification of tax before the cutoff date, as evidenced by the filing of ST-3 returns and the amounts declared therein. The learned counsel for the petitioner contended that the rejection violated principles of natural justice as no personal hearing was granted. The petitioner also relied on Circulars issued by the Central Board of Indirect Taxes and Customs, which clarified that quantification communicated to the party or admitted by them before 30.06.2019 qualifies under the scheme.

Issue 2: Confirmation of Demand in Order in Original No.06/2022(c)

The petitioner also challenged the Order in Original No.06/2022(c) dated 31.01.2022, which confirmed the demand proposed in Show Cause Notice No.84/2019-ST dated 08.11.2019. The petitioner argued that the amount declared in the returns matched the amount demanded in the Show Cause Notice, with only a minor variation. The respondents contended that the petitioner was not entitled to file an application under the scheme as there was no quantification of tax before 30.06.2019. They cited Section 127 of SVLDRS, 2019, which mandates personal hearing only if the estimated amount payable exceeds the declared amount.

Judgment:

The Court found that there was no dispute between the amounts declared by the petitioner and the amounts quantified in the Show Cause Notice. The variance was only Rs. 1,93,440/-. The Court noted that the Circulars of the Board, while not binding on the Court, are binding on the authorities acting under the Finance Act, 2019. The Court concluded that the petitioner had quantified the liability before 30.06.2019 by filing returns and thus was entitled to relief under the scheme. Consequently, the proposals in the Show Cause Notice and the Order in Original were deemed unwarranted.

Order:

Both writ petitions were allowed. The Designated Authority was directed to issue Form SVLDRS-3 and Form SVLDRS-4. The petitioner was instructed to discharge the tax liability as per their application filed on 25.12.2019. The Impugned Order in Original No.06/2022(c) dated 31.01.2022 was quashed. No costs were imposed, and connected miscellaneous petitions were closed.

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