TaxTMI 
TaxTMI 
2022 (9) TMI 627
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.... service is not eligible under SVLDRS-2019. It was also communicated that SVLDRS-04 dated 07.02.2020 were issued erroneously. Therefore, SVLDRS applications having ARN Nos.-LD- 3112190020439, LD-3112190020561 and LD-3112190020627 all dated 31.12.2019 are rejected and further that demand of Rs.16,40,026/- stands outstanding as such. 2. The petitioner has also sought quashing of Letter dated 28.11.2019, Internal Audit Report dated 08.01.2021 and Show Cause Notice dated 08.01.2021. 3. Factual matrix, relevant and necessary for adjudication of the controversy involved in the present petition is stated infra. 4. The petitioner-firm involved in construction activities bearing Service Tax Registration, filed an online application for availing the benefit of SVLDRS (Sabka Vishwas) (Legacy Dispute Resolution) Scheme 2019 (hereinafter referred to as 'the Scheme of 2019) before the authority on 31.12.2019 and, thereafter, on 17.02.2020, the respondents-authorities also issued the discharge certificate or full and final settlement tax dues under Section 127 of the Finance (No.2) Act of 2019 read with Rule 9 of the Scheme of 2019. Respondent-authority issued 3 ARN Number to the petitio....
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.....2020 wherein, he referred to frequently asked questions and answers released by CBEC and requested to allow the application filed under the Scheme of 2019. As no relief was granted, this petition came to be filed not only aggrieved by rejection of declarations and denial of relief under the Scheme of 2019, but also against audit report and show cause notice. 10. Learned counsel for the petitioner contended that the petitioner had duly submitted the application seeking benefit of the Scheme of 2019 and the petitioner was also issued discharge certificate. Rejection by invoking powers under Section 129(2)(c) of the Finance (No.2) Act, 2019 is illegal and erroneous in law because petitioner is not covered under any of the exception categories enumerated in Section 125 of the Finance (No.2) Act, 2019. Pointed submission is that all persons except those, who have been excluded under any of the Clauses (a) to (h) are eligible to make declaration under the Scheme for reliefs stated therein. Rejection of petitioner's declaration by categorising it as person making 'Voluntary Disclosure' after being subjected to audit is based on patent misreading and misconstruction of the said provisi....
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....pportunity of hearing, but such opportunity was also not granted and decision was taken to reject declarations holding the petitioner ineligible to seek the benefit of the Scheme of 2019, therefore, respondents' action is vitiated due to violation of principles of natural justice. 13. Learned counsel for the petitioner stressed upon the frequently asked questions and answers released by CBEC, referred to in representation dated 20.10.2020, in particular clarifications on FAQ Nos.10 and 39 to submit that answers to those FAQs clarify that benefit of the Scheme of 2019 could be denied and declaration could be rejected only in those cases where a person 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 30.06.2019. As in the case of the petitioner, audit proceedings were drawn only after 30.06.2019, as clarified in answers to FAQs, the petitioner was not ineligible to avail the benefit of the Scheme of 2019. 14. As the petitioner was not only entitled to benefit of the Scheme of 2019 on the basis of declaration made by it and a discharge certificate was also....
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.... audit has already been initiated, but remained pending due to non submission of documents, in view of the powers under Section 129 (2)(c) of the Finance (No.2) Act, 2019, petitioner's SVLDRS applications on 3 ARN Numbers were rejected, which is in accordance with law. 17. Learned counsel for the respondents would further submit that where a person seeks benefit of the Scheme of 2019 under 'Voluntary Disclosure' after being subjected to audit, in terms of Clause (f) of Sub-Section (1) of Section 125 of the Scheme of 2019, he stands excluded from the benefit of the Scheme of 2019. The answers to FAQs, referred to by the petitioner have been wrongly interpreted and there is nothing in answers to any of the FAQs much less answers to FAQ Nos.10 and 39 to even remotely suggest that the petitioner would be eligible to make declaration under the 'Voluntary Disclosure' category as per Section 125(1)(f)(i) of the Scheme of 2019 and on the contrary, answer is otherwise that in such cases where a person has been subjected to an enquiry or investigation or audit under Indirect Tax enactment and if he wants to make a 'Voluntary Disclosure', he would not be eligible to make a declaration unde....
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....x due and pay the same in accordance with the provisions of the Scheme of 2019. It was also stated that the Scheme provides certain immunities including reliefs against penalty, interest or any other proceedings under the Central Excise Act, 1944 or Chapter V of the Finance Act 1994 to those persons, who pay the declared tax dues. 22. While proposing the Scheme as part of her budget speech in the year 2019-20, Hon'ble Finance Minister, Government of India stated as follows:- "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." 23. Further the Central Board of Indirect Taxes and Customs had also issued Circular on 27.08.2019 informing all the Principal Chief Commissioners/Chief Commissioners/Principal Director Generals and Director Generals ....
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....n 125 of the Finance (No.2) Act, 2019, certain category of persons were clearly excluded from the benefit of the Scheme. Section 125 of the Finance (No.2) Act, 2019, being relevant for our purpose is reproduced herein below:- "125. (1) All persons shall be eligible to make a declaration under this Scheme except the following, namely:- (a) who have filed an appeal before the appellate forum and such appeal has been heard finally on or before the 30th day of June, 2019; (b) who have been convicted for any offence punishable under any provision of the indirect tax enactment for the matter for which he intends to file a declaration; (c) who have been issued a show cause notice, under indirect tax enactment and the final hearing has taken place on or before the 30th day of June, 2019; (d) who have been issued a show cause notice under indirect tax enactment for an erroneous refund or refund; (e) who have 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 the 30th day of June, 2019; (f) a person making a volu....
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....n 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 30.06.2019, as provided in Clause (e) of Sub-Section (1) of Section 125 of the Finance (No.2) Act, 2019. 32. Just after that clause, another Clause (f) is incorporated which deals with yet another separate and distinct class of persons making 'Voluntary Disclosure' after being subjected to any enquiry or investigation or audit or those persons making a 'Voluntary Disclosure' having filed a return under Indirect Tax enactment wherein, he has indicated an amount of duty as payable, but has not paid it. 33. Clause (e) & Clause (f), as mentioned herein above are two distinct and separate categories. While in Clause (e), a cut off date of 30.06.2019 has been provided, the legislature, while excluding a person making a 'Voluntary Disclosure' has not provided the same cut off date i.e. 30.06.2019 in Clause (f). 34. On a plain reading of Clause (f) as stated, where a person seeks benefit of the Scheme by making a 'Voluntary Disclosure', after being subjected to any enquiry or investigation or audit, he also stands ex....
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..... Have you received any written communication from a Central Excise Officer with regard to any audit to be conducted? [Note : If you answer YES to this question, you are ineligible to proceed further under the VOLUNTARY DISCLOSURE category.] Yes No 8. Have you been subjected to any enquiry or investigation under the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994 in respect of the goods/services or both for which this declaration is being made by way of any of the following: (a) search of premises (b) issuance of summons (c) requiring the production of accounts, documents or other evidence (d) recording of statements [Note : If you answer YES to this question, you are ineligible to proceed further under the VOLUNTARY DISCLOSURE category.] Yes No 9. Have you filed any return for the period for which declaration is being made showing the amount of duty to be payable but not having paid it? [Note : If you answer YES to this question, you are ineligible to proceed further under the VOLUNTARY DISCLOSURE category.] Yes No 10. Have the tax dues with regard to the matter under enquiry, investigation o....
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....Audit Report dated 08.01.2021, it has been concluded that the petitioner has been held liable for payment of various dues along with interest and penalty on various heads. 41. It has been clearly stated in Para-4 thereof that though, the petitioner was requested to provide financial documents to conduct the audit vide Letter dated 28.11.2019 followed by reminders and summons on various dates, ultimately, petitioner provided copy of balance sheet, income tax returns and other relevant documents only on 04.01.2021. 42. It would thus be clear that the petitioner fell within the mischief of Clause (f) of Sub-Section (1) of Section 125 of the Finance (No.2) Act, 2019 and was thus, not entitled to avail the benefit of the Scheme of 2019 by submitting a declaration. The petitioner suppressed this most material fact of it having been subjected to audit proceedings vide intimation dated 28.11.2019 while submitting its declaration on 31.12.2019. This apparently was to mislead the authorities by withholding relevant information, upon disclosure of which, its declaration was not liable to be proceeded further. The petitioner by such suppression, procured benefit by way of issuance of dis....
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....elated to a different situation where a person has received an intimation for an enquiry or investigation on or before 30.06.2019. 47. The aforesaid two frequently FAQs and answers to that do not support the case of the petitioner at all. 48. Learned counsel for the petitioner has placed reliance upon the decision of the Bombay High Court in the case of Thought Blurb Versus Union of India (Supra). In the aforesaid decision, Scheme of 2019 was examined and it was observed that the Scheme has an objective of liquidation of past disputes pertaining to the subsumed on the one hand and disclosure of unpaid taxes on the other hand and further that the Scheme was intended to unload the baggage of huge pending litigations from pre-GST regime through a legacy dispute resolution mechanism. It was also observed that the approach should be to ensure that the Scheme is successful and, therefore, a liberal view embedded with the principles of natural justice is called for. With such an interpretation of a Scheme, declaration of the petitioner therein under the Scheme of 2019 was examined. Application of the petitioner was rejected on the ground of ineligibility with the remark that tax ....