TaxTMI 
TaxTMI 
2020 (10) TMI 1135
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....me and thereafter, to accept the same. 3. According to the petitioner, it is a partnership firm duly registered under the Partnership Act, 1932 engaged in the business of providing advertising and design services to its customers. Petitioner was registered as a service provider under the Finance Act, 1994. 4. Service tax authorities initiated investigation against the petitioner pertaining to payment of service tax for two periods i.e. for the period 1st April, 2016 to 31st March, 2017 and again for the period 1st April, 2017 to 30th June, 2017. Vide letter dated 21st May, 2019 respondent No.3 informed the petitioner regarding the enquiry being conducted against it. It was stated that petitioner had not paid service tax liability of Rs. 47,44,937.00 for the period 2016-17. Accordingly, petitioner was requested to immediately pay the service tax liability alongwith applicable interest and penalty. Petitioner was also requested to file the return for the year 2017-18 and to pay the service tax liability alongwith applicable interest and penalty. 5. It is stated that vide letter dated 18th June, 2019 issued by the petitioner to respondent No.3 petitioner stated about certain ....
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....on (declaration) of the petitioner is not only in violation of the principles of natural justice but also in contravention of various provisions of the scheme. Such rejection is contrary to the very intent and object of the scheme. 12. This court by order dated 25th September, 2020 directed the respondents to file affidavit in reply, whereafter affidavit in reply was filed on behalf of the respondents. 13. Stand taken by the respondents in their affidavit is that based on intelligence input investigation was initiated against the petitioner on 10th March, 2014 regarding payment of service tax for the period from 2012 to 2017. However, respondent No.3 vide letter dated 21st May, 2019 quantified the amount payable at Rs. 47,44,937.00 for the period 201617 as previous liability was discharged by the petitioner. It is stated that petitioner vide the letter dated 18th June, 2019 accepted this liability for the period 2016-17 and on its own quantified its liability for the period 1st April, 2017 to 30th June, 2017 at Rs. 10,74,011.00 though petitioner did not submit necessary documents for verification and quantification of actual liability. 14. Referring to the scheme, it is st....
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....eiterated that petitioner is eligible to file the declaration under the scheme. Said declaration was rejected on the ground that tax dues were not finalized on or before 30th June, 2019 but no opportunity was given to the petitioner to present or explain its case. Referring to section 125 of the scheme read with section 121(r) thereof he submits that the amount of dues payable by the petitioner whose case was under investigation stood quantified before 30th June, 2019. Reference has been made to the circular dated 27th August, 2019 of the Central Board of Indirect Taxes and Customs in this connection. Regarding the discrepancy in the amount of taxes quantified for the period 1st April, 2017 to 30th June, 2017, it is submitted that in its letter dated 18th June, 2019 petitioner had admitted the liability of Rs. 10,14,011.00 for the period 1st April, 2017 to 30th June, 2017. However, on account of calculation mistake petitioner had disclosed a higher amount of Rs. 12,09,732.00 for the said period in the application (declaration) which cannot be held against the petitioner. Referring to sub sections (3) and (4) of section 127 it is contended that the Designated Committee is required t....
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....roduced by the Finance (No.2) Act, 2019 and notified in the Gazette of India, Extraordinary on 1st August, 2019. While proposing the scheme as part of her budget speech for the year 2019-20, Hon'ble Finance Minister, Government of India stated thus :- "GST has just completed two years. An area that concerns me is that we have huge pending litigations from pre-GST regime. More than Rs. 3.75 lakh crore is blocked in litigations in service tax and excise. There is a need to unload this baggage and allow the business to move on. I, therefore, propose, a Legacy Dispute Resolution scheme that will allow quick closure of these litigations. I would urge the trade and business to avail this opportunity and be free from legacy litigations." 25. Statement of object and reasons with respect to the scheme reads as under :- "The scheme is a one time measure for liquidation of past disputes of central excise and service tax as well as to ensure disclosure of unpaid taxes by a person eligible to make a declaration. The scheme shall be enforced by the Central Government from a date to be notified. It provides that eligible persons shall declare the tax due and pay the same in a....
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.... dispute resolution and amnesty are the two components of this scheme. The dispute resolution component is aimed at liquidating the legacy cases whereas the amnesty component gives an opportunity to those who have failed to correctly discharge their tax liability to pay the tax dues. After saying so, the Board concluded as under :- "12. The Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 has the potential to liquidate the huge outstanding litigation and free the taxpayers from the burden of litigation and investigation under the legacy taxes. The administrative machinery of the Government will also be able to fully focus on helping the taxpayers in the smooth implementation of GST. Thus, the importance of making this scheme a grand success cannot be overstated. The Principal Chief Commissioners/Principal Directors General/ Chief Commissioners/Directors General and all officers and staff are instructed to familiarize themselves with this scheme and actively ensure its smooth implementation." 28. Before adverting to the relevant provisions of the scheme, we may also note that in Capgemini Technology Services India Limited Vs. Union of India, MANU/MH/1428/2020, this....
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....er :- "123. For the purposes of the scheme, "tax dues" means - (a) ................ (b) ................ (c) where an enquiry or investigation or audit is pending against the declarant, the amount of duty payable under any of the indirect tax enactment which has been quantified on or before the 30th day of June, 2019; (d) .................. (e) .................." 33. Therefore, in a case where an enquiry or investigation or audit is pending against a declarant, the amount of duty payable under any of the indirect tax enactment has to be quantified on or before 30th June, 2019 and that quantified amount would be treated as the tax dues for the purposes of the scheme. 34. Reliefs available to a declarant under the scheme are provided in section 124. As per section 124(1)(d)(ii), where the tax dues are linked to an enquiry, investigation or audit against the declarant and the amount quantified on or before 30th June, 2019 is more than rupees fifty lakhs, then, fifty percent of the tax dues. 35. Section 125 deals with eligibility of persons to make a declaration under the scheme. Sub section (1) provides a negative list of....
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....r than the amount declared by the declarant, the Designated Committee shall give an opportunity of hearing to the declarant. 40. There is a provision for rectification of errors in section 128 and under section 129 every discharge certificate issued under section 126 shall be conclusive as to the matter and the time period stated therein. Once such a discharge certificate is issued, the declarant shall not be liable to pay any further duty, interest or penalty for the matter and time period covered by the discharge certificate besides being protected from prosecution; further no matter and time period covered by such declaration shall be re-opened. 41. While power to make rules has been conferred on the Central Government under section 132, the Board has been conferred power under section 133 to issue orders, instructions and directions to various authorities for proper administration of the scheme and it shall be the duty of such persons employed in the execution of the scheme to observe and follow such orders, instructions and directions. 42. Central Government has framed the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 (briefly "the Rules" hereinafter) w....
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....s rejoinder affidavit has reiterated that in its letter dated 18th June, 2019 it had admitted the tax liability of Rs. 10,74,011.00 for the period from 1st April, 2017 to 30th June, 2017. The discrepancy in the two figures has been attributed to calculation error at the time of filing the declaration which could have been explained to the Designated Committee if the petitioner was given an opportunity of hearing. Respondents in their affidavit have specifically stated that petitioner had filed the declaration under the investigation head. Requirement of eligibility in case of such a declarant is that the tax dues should be quantified on or before 30th June, 2019. Since the tax dues were not quantified on or before 30th June, 2019, petitioner was not entitled to file application (declaration) under the scheme to avail the benefits. Accordingly, application of the petitioner was rejected. 45. After noticing the contours of the dispute, we may now examine the same. As per section 125(1)(e), a person who has been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before 30th Ju....
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....ntified" as a written communication of the amount of duty payable under the indirect tax enactment. It is clarified that such written communication will include a letter intimating duty demand; or duty liability admitted by the person during enquiry, investigation or audit; or audit report etc." 48. Thus as per the above clarification, written communication in terms of section 121(r) will include a letter intimating duty demand or duty liability admitted by the person during enquiry, investigation or audit etc. This has been also explained in the form of frequently asked questions (FAQs) prepared by the department on 24th December, 2019. 49. Reverting back to the facts of the present case, we find that on the one hand there is a letter of respondent No.3 to the petitioner quantifying the service tax liability for the period 1st April, 2016 to 31st March, 2017 at Rs. 47,44,937.00 which quantification is before the cut off date of 30^th June, 2019 and on the other hand for the second period i.e. from 1st April, 2017 to 30th June, 2017 there is a letter dated 18th June, 2019 of the petitioner addressed to respondent No.3 admitting service tax liability for an amount of Rs. 10,74....
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....sons, the scheme is a one time measure for liquidation of past disputes of central excise and service tax as well as to ensure disclosure of unpaid taxes by a person eligible to make a declaration. The basic thrust of the scheme is to unload the baggage of pending litigations centering around service tax and excise duty. Therefore the focus is to unload this baggage of pre-GST regime and allow business to move ahead. We are thus in complete agreement with the views expressed by the Delhi High Court in Vaishali Sharma Vs. Union of India, MANU/DE/1529/2020 that a liberal interpretation has to be given to the scheme as its intent is to unload the baggage relating to legacy disputes under central excise and service tax and to allow the business to make a fresh beginning. 53. Regarding the mistake in declaring the tax dues in the application (declaration) for the later period, we may mention that Gauhati High Court in Assam Cricket Association Vs. Union of India, MANU/GH/0280/2020 has taken the view that a bonafide and a curable mistake in making the declaration should be allowed to be rectified. In so far the present case is concerned, we have already noticed that because of the mis....