2024 (12) TMI 679 - HC - Service Tax

Bombay HC quashes rejection of Sabka Vishwas application, directs recalculation under Section 126 provisions

The Bombay HC allowed a challenge to rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The petitioner's application ... Quantification of duty before cut-off date - disqualification under Section 125(1)(e) of the SVLDR Scheme - verification and counter offer by Designated Authority under Section 126 of the SVLDR Scheme - recalculation and payment with interest as remedial directionQuantification of duty before cut-off date - disqualification under Section 125(1)(e) of the SVLDR Scheme - Whether the petitioner was disqualified under Section 125(1)(e) of the SVLDR Scheme for not having the duty quantified on or before 30 June 2019. - HELD THAT: - The Court found that quantification of the petitioner's liability was made prior to 30 June 2019. A statement recorded pursuant to summons on 28 June 2018 showed admission of liability (approximate) and an undertaking to pay, and on 15 April 2019 the petitioner informed the authorities of payments made for the relevant years. The Scheme's disqualification under Section 125(1)(e) applies where there is no quantification on or before 30 June 2019, not where figures subsequently differ. A show cause notice issued after 30 June 2019 does not negate earlier quantification. Accordingly, the petitioner's declaration could not be rejected on the ground of ineligibility under Section 125(1)(e). [Paras 11, 12, 13]Petitioner was not disqualified under Section 125(1)(e) and the rejection on that ground was incorrect.Verification and counter offer by Designated Authority under Section 126 of the SVLDR Scheme - recalculation and payment with interest as remedial direction - Whether the respondents should be directed to accept the petitioner's declaration and proceed with verification/recalculation and payment under the Scheme. - HELD THAT: - Although Section 126 empowers the Designated Authority to verify declared figures and make a counter offer, the petitioner's application was rejected at the threshold on eligibility grounds and thus verification under Section 126 did not occur. The petitioner has offered to substitute the higher figure and to pay the balance with interest. Given the eligibility finding and the fact that the Scheme period has ended, the Court directed that the rejections be quashed, ordered the respondents to recalculate the amount taking the quantified figure as indicated, and to intimate the sum payable so the petitioner may make payment with interest. The Court specified interest at 6% per annum from 1 January 2020 until the date of intimation and gave timeframes for payment and issuance of final certificate under Section 127. [Paras 14, 16]Rejections quashed; respondents directed to recalculate taking the quantified figure, intimate amount payable, allow petitioner to pay the balance with interest, and issue final certificate on payment.Final Conclusion: The writ petition is allowed: the rejections of the SVLDR Scheme declarations are quashed; the respondents to recalculate and intimate the amount payable taking the previously quantified duty figure into account, the petitioner to pay the balance with interest as directed, and the respondents to issue the final certificate upon payment. Issues:Challenge to rejection under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 based on duty quantification date.Analysis:The petitioner challenged the rejection of their application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, stating that they were ineligible due to duty quantification after 30 June 2019. The petitioner, engaged in dry cleaning services, had admitted a service tax liability during a summons in June 2018. The petitioner later applied under the SVLDR Scheme, mentioning duty and pre-deposit amounts. The application was rejected twice, citing non-quantification before the deadline. The petitioner argued that quantification was admitted in the summons statement and was willing to pay the difference. The respondent contended that the petitioner's application figures did not match later quantifications. However, the court found that quantification was done before the deadline, and a mere difference in figures did not disqualify the petitioner under Section 125 (1) (e) of the SVLDR Scheme.The court noted that the SVLDR Scheme did not specify who should quantify the duty amount and that disqualification under Section 125 (1) (e) applies only if there is no quantification before the deadline. The court emphasized that the petitioner had quantified the duty amount before 30 June 2019, despite a later show cause notice with a different figure. The Designated Authority could verify figures and provide a counter-offer, but in this case, the rejection was premature. The court accepted the petitioner's willingness to pay the difference and interest, considering the scheme's conclusion and previous decisions supporting the petitioner's case.Based on the above analysis, the court quashed the rejection of the petitioner's SVLDR Scheme applications and directed the respondents to accept them. The respondents were instructed to recalculate the payable amount using the correct duty figure and inform the petitioner to make the payment with interest. The petitioner was given four weeks to make the payment, after which the respondents were to issue a final certificate under the SVLDR Scheme. The court concluded by making the rule absolute in favor of the petitioner, with no cost order.