Sabka Vishwas Scheme entitlement for taxpayers with pending investigations affirmed; relief to be reconsidered after hearing

The commentary addresses eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme where inquiry, audit or investigation was pending and tax liability was quantified by written communication. It explains that written quantification may emanate from the taxpayer if it forms part of the record and is not a unilateral disputed assertion; such communication constituted an admission of liability for the purposes of scheme quantification, leading to entitlement to scheme relief. A summary rejection without hearing infringes natural justice; the declaration must be reconsidered, an opportunity of hearing afforded, and a speaking order issued granting consequential relief if quantification stands.

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Issues Involved:
1. Rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. Quantification of tax dues before the cut-off date.
3. Adherence to principles of natural justice.

Summary:

1. Rejection of Application under Sabka Vishwas Scheme:
The petitioner filed a writ petition challenging the rejection of their application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, for the period April 2014 to June 2017. The rejection was based on the grounds that the investigation was pending, and the amount of duty involved was not quantified as of the cut-off date, 30.06.2019.

2. Quantification of Tax Dues Before the Cut-off Date:
The petitioner argued that the tax dues were quantified in the notice under Section 87 of the Finance Act, 1994, issued on 06.03.2019, which directed the petitioner's bank to deposit the amount due. The petitioner contended that this notice indicated the department's awareness of the amount payable, thus meeting the requirement of quantification under the Scheme. The petitioner had also submitted a revised computation sheet on 15.03.2019, which formed the basis of the Show Cause Notice issued on 30.06.2020.

The court held that the quantification of tax dues could be ascertained from any written communication, including those emanating from the taxpayer, provided it was part of the record and not disputed by the department. The court noted that the department had accepted the petitioner's calculations and issued a recovery notice under Section 87 of the Act, indicating that the tax dues were quantified.

3. Adherence to Principles of Natural Justice:
The court emphasized the need for adherence to the principles of natural justice, noting that the rejection of the petitioner's application without affording an opportunity for a personal hearing violated these principles. The court referenced previous judgments, including those of the Bombay High Court, which held that summary rejection of applications under the Scheme without a hearing was contrary to natural justice and the legislative intent of the Scheme.

Conclusion:
The court directed the respondents to consider the petitioner's declaration as valid under the category of "investigation, enquiry, and audit" and to grant consequential reliefs. The respondents were instructed to provide an opportunity for a hearing and to pass a speaking order with due communication to the petitioner. The petition was allowed in these terms.

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