2026 (3) TMI 754 - HC - Service Tax

Discharge certificate under SVLDRS bars reopening of the same matter; administrative reopening held contrary to scheme finality.

The issue concerns whether a discharge certificate issued under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS-4) precludes reopening ... Validity of reopening adjudication after issuance of SVLDRS Discharge Certificate (SVLDRS-4) - Effect of CBIC guidance on eligibility under SVLDRS for show-cause notices issued after the cut-off date - demand-cum-Show Cause Notice issued under Section 66B, 68, 69 and 70 of the Finance Act, 1994 read with Rules 4, 5, 6 & 7 of the Service Tax Rules, 1994. Finality of discharge certificate under SVLDRS - HELD THAT:- The Court held that the issuance of the Discharge Certificate following acceptance of the SVLDRS-1 application, determination of the dues by the Designated Committee and payment by the petitioner was a determinative event which the adjudicating authority ought to have taken into account. The order in original proceeded ex parte and confirmed tax and penalties without recording any cognisance of the previously issued Discharge Certificate; that omission rendered the original adjudication unsustainable in law. [Paras 16, 19] The order in original reopening the matter after issuance of the Discharge Certificate is set aside as unsustainable for failure to consider the SVLDRS discharge. Effect of CBIC guidance on eligibility under SVLDRS for show-cause notices issued after the cut-off date - HELD THAT:- The Court examined the CBIC notification which indicated it would be desirable to provide an opportunity to taxpayers whose show-cause notices were issued on or after 01.07.2019 to avail SVLDRS subject to conditions. While the term 'desirable' does not itself create an unqualified enforceable right, the records showed the petitioner's application was accepted, processed, the amount determined and paid, and a Discharge Certificate issued. The appellate authority's categorical exclusion of the scheme on the sole ground of the date of the show-cause notice was therefore contrary to the CBIC guidance and untenable. [Paras 15, 17, 18] The appellate finding that SVLDRS was inapplicable by reason only of the show-cause notice date is set aside as contrary to the CBIC guidance and the factual conclusion that the scheme process had been completed. Final Conclusion: The High Court allowed the writ petition, set aside the impugned original and appellate orders for failure to appreciate the Discharge Certificate issued under SVLDRS and for misapplying the scheme's applicability in the light of CBIC guidance, and accordingly interfered with the departmental orders. Issues: (i) Whether issuance of a discharge certificate under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS-4) precludes reopening of proceedings and demands in respect of the same period and matter.Analysis: The petitioner applied under SVLDRS and the application was processed, amount determined, paid and a discharge certificate (SVLDRS-4) was issued. The scheme record contains a cut-off date but administrative guidance dated 12.12.2019 indicates that cases with show cause notices issued on or after 01.07.2019 may be given an opportunity to avail the scheme subject to conditions. The order in original did not notice or deal with the issuance of SVLDRS-4 and proceeded ex parte to confirm demands and penalties. Authorities and precedent cited establish that a duly issued discharge certificate under the scheme operates to conclude the declared matter and period, and that summary re-opening without addressing eligibility, processing and the discharge certificate undermines the scheme's object and principles of finality and natural justice.Conclusion: The order in original confirming demands and penalties and the appellate order affirming it are unsustainable; the discharge certificate issued under SVLDRS-4 bars reopening of the same matter and the writ petition succeeds in quashing the impugned orders in original and on appeal in favour of the petitioner.