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2023 (5) TMI 812
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....Service Tax (respondent no. 2) under Section 73(1) of the Finance Act, 1994 (hereafter 'the Act'). 2. By the impugned notice, the petitioner was called upon to show cause as to why: (i) service tax amounting to Rs.3,75,957/-, which was payable for the period of 2014-15 to 2017-18 (upto 30.06.2017) under the proviso to Section 73(1) of the Act should not be recovered by appropriating the said amount from the amounts paid by the petitioner on 10.04.2017 and 06.02.2019; (ii) interest amounting to Rs.34,87,497/- on delayed payment of service tax for the period of 2007-08 to 2016-17 not be recovered under the provisions of Section 75 of the Act; (iii) penalty under Section 76 of the Act not be levied; (iv) penalty under Section 77 of the Act along with cess not be imposed for contravention of various provisions of the Act and for not filing the service tax returns for the relevant period; and (v) penalty under Section 78(1) of the Act not be imposed for willful suppression of facts and contravention of various statutory provisions with an intent to evade payment of service tax. 3. It is the petitioner's case that it is entitled to the b....
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....d the petitioner to submit copies of the challan of service tax payment of Rs.30,00,000/- and some other records as a part of its investigation. Thereafter, by letters dated 08.02.2016 and 24.02.2016, respondent no. 2 requested the petitioner to deposit the declared amount of Rs.36,47,123/- along with interest and penalty. 11. The petitioner sent letters dated 07.02.2019 and 22.02.2019 informing respondent no. 2 that it had deposited a total amount of Rs.24,50,000/- as dues for the period of 2010-11 to 2016-17 against a total outstanding amount of Rs.27,65,557/- and assured that it would deposit the balance amount within a period of ten to fifteen days. The petitioner also forwarded a reconciliation statement indicating the amount of service tax payable and the amount paid by the petitioner. 12. Thereafter by a letter dated 03.06.2019, respondent no. 2 acknowledged the petitioner's letter dated 22.02.2019 and called upon the petitioner to provide copies of challan for the remaining service tax as well as the calculation sheet indicating the interest payable on the said amount. The petitioner responded by its letter dated 26.06.2019 and furnished a calculation of its interest ....
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....tioned declaration under the ground "others" with the remarks, "the AE branch has confirmed that the investigation has not been concluded and hence the demand has not been estimated or concluded on or before the stipulated date". 20. Thereafter, the respondents issued the impugned notice. Aggrieved by the same, the petitioner filed the present petition. Reasons & Conclusion 21. As noted above, the only question to be addressed in the present petition is whether the duty payable by the petitioner has been quantified in terms of Section 121(r) of the Finance Act (No. 2), 2019 (the Scheme) prior to 30.06.2019. 22. At the outset, it is relevant to note that the Scheme was introduced to settle the legacy cases. The Finance Minister of India, in her speech in the Parliament, had expressed concern regarding the huge backlog of pending litigations from the pre-GST (Goods and Services Tax) regime. She stated that an amount exceeding Rs.3.75 lakh crore was blocked in litigation in service tax and excise, which required unloading for business to continue. The objective of the Scheme was to allow quick closure of pending litigations centering around service tax and excise duty. ....
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....ce tax dues are Rs. 1000. Illustration 4: The show cause notice to a declarant was for an amount of duty of Rs. 1000. The order was for an amount of duty of Rs. 1000. The declarant files an appeal against this order of determination. The first appellate authority reduced the amount of duty to Rs. 900. The declarant files a second appeal. The amount of duty which is being disputed is Rs. 900 and hence tax dues are Rs. 900; (b) where a show cause notice under any of the indirect tax enactment has been received by the declarant on or before the 30th day of June, 2019, then, the amount of duty stated to be payable by the declarant in the said notice: Provided that if the said notice has been issued to the declarant and other persons making them jointly and severally liable for an amount, then, the amount indicated in the said notice as jointly and severally payable shall be taken to be the amount of duty payable by the declarant; (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; ....
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....ations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944." 28. It is apparent from the above that the legislative intent in enacting Chapter V of the Finance Act (No. 2), 2019 (the Scheme) was to maximize the sweep of the Scheme. It was to cover all situations where tax was payable except those cases, which were expressly excluded. 29. Clause (c) of Section 123 of the Finance Act (No. 2), 2019, which covers cases where enquiry, investigation or audit is pending, must be interpreted bearing the aforesaid legislative scheme in mind. In terms of Clause (c), the "tax dues" in cases where enquiry, investigation or audit was pending against a declarant meant the amount of duty payable under any indirect tax enactment, which was quantified on or before 30.06.2019. 30. The expression "quantified" has been defined under Section 121(r) of the Finance Act (No. 2), 2019 as under: "121. In this Scheme, unless the context otherwise requires, - *** *** *** (r) ''quantified", with its cognate expression, means a written communication of the amount of duty payable under the indirect tax enactment;" 31. It is obvio....
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....BIC had explained that there are two components of the Scheme - Dispute Resolution and Amnesty. Whereas the Dispute Resolution component is aimed at liquidating the legacy cases locked up in litigations in various forums; the Amnesty component is intended to give an opportunity to those who have failed to correctly discharge their liability to pay the tax dues. Further, it was stated that the scope of discretion is kept to the minimum. Paragraph 9 of the said Circular is relevant and reads as under: "9. Moreover, the scope of discretion has been kept to the minimum by linking the relief under this Scheme to the duty amount which is already known to both the Department and the taxpayer in the form of a show cause notice / order of determination or a written communication. The calculation of relief itself will be automated. Even in case of voluntary disclosure, no verification will be carried out by the Department. Still in the eventuality the declarant seeks the opportunity of being heard, the decision would be taken only after giving him this opportunity." 34. In addition to explaining the intent and scope of the Scheme, the CBIC had also clarified certain issues in the....
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.... Ans: Written communication will include a letter intimating duty/tax demand or duty/tax liability admitted by the person during enquiry, investigation or audit or audit report etc." [emphasis added] 37. Mr. Hossain, the learned counsel for the Revenue, had contended that tax duties could not be considered as quantified unless determined by the concerned authority. He had also referred to the decisions of the Co-ordinate Benches of this Court in Chaque Jour HR Services Pvt. Ltd. v. Union of India: 2020 SCC OnLine Del 2632 and in Karan Singh v. Designated Committee Sabka Vishwas Legacy Dispute Resolution Scheme & Anr.: 2021 SCC OnLine Del 3353 in support of his contention. 38. In Chaque Jour HR Services Pvt. Ltd. v. Union of India (supra) a Co-ordinate Bench of this Court had, inter alia, referred to the Circular dated 27.08.2019 and observed as under: "16. By virtue of the aforesaid circulars, the respondents have clarified that the benefit of the Scheme can also be given to those cases where the duty involved is quantified by way of an admission made by the declarant in a statement made on or before 30th June, 2019." 39. However, the Court in that case f....
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....ment of the proprietor of the petitioner (Sh. Kirit Kedarnath Rai) was recorded by the Senior Intelligence Officer. The Bombay High Court found that the questions posed and the responses of the assessee clearly indicated quantification of the tax dues. The relevant extract of the statement of the proprietor of the petitioner in that case, as referred to by the Bombay High Court, is set out below: "17.Q.20. Please peruse a work-sheet (Annexure-A) wherein the Service Tax liability of your firm M/s. K. N. Rai has been quantified on the basis of RA bills of taxable work orders submitted by you and as discussed and admitted hereinabove, the total Service Tax liability comes to the tune of Rs.1,26,54,725/- including all cesses for the period from 2014-15 to 2017-18 upto 30.06.2017. Please, go through the said work-sheet in detail and state whether you are completely agreed with the said Service Tax liability of Rs.1,26,54,725/-. Please also state by what time you are paying the said liability along with applicable amount of interest. Ans:- Yes, I have minutely gone through the said work-sheet and found it correct as per my records/documents. Further, I am completely agr....
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....t 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 30th 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. 10,74,011.00 which again is before the cut off date of 30th June, 2019. Thus, petitioner's tax dues were quantified on or before 30th June, 2019. 50. In that view of the matter, we have no hesitation to hold that petitioner was eligible to file the application (declaration) as per the scheme under the category of enquiry or investigation or audit whose tax dues stood quantified on or before 30th June, 2019." 44. A similar view was also expressed by the Bombay High Court in G.R. Palle Electricals v. Union of India & Ors.: 2020 SCC OnLine Bom 3137 and Saksham Facility Services Private Limited v. Union of India & Ors.: 2020 SCC OnLine Bom 3591. In a later decision in Jai Sai Ram Mech & Tech India P Ltd. v. Union of India & Ors.: 2021 SCC OnLine Bom 221....
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....019 is only applicable where enquiry, audit or investigation is pending. There is no question of final determination by the Department prior to conclusion of the said proceedings. Thus, the Revenue's contention that the expression "quantified" under Section 121(r) of the Finance Act (No. 2), 2019 would necessarily mean the duty as finally determined by the Department for the purpose of Section 123(c) of the Finance Act (No. 2), 2019 is unmerited. 47. We may now proceed to examine the facts of this case bearing the aforesaid principles in mind. 48. In the present case, the petitioner had filed a declaration on 24.12.2013 under the VCES declaring that a service tax of Rs.36,47,132/- was due on account of service tax, education cess and higher education cess. The petitioner had also paid Rs.18,50,000/- pursuant to the declaration made under the VCES. 49. However, the benefit of the VCES was denied to the petitioner for the reason that it had failed to pay the balance amount within the stipulated period. Subsequently, on 10.12.2015, an Anti Evasion Branch of the Service Tax Department conducted a search on the premises of the petitioner. On the said date, the statement of Sh. ....
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....ctor, M/s Hansuttam Finance Ltd., H-57, Cannaught Circus, New Delhi-110001. Sir, Subject: Service Tax investigation against M/s Hansuttam Finance Limited - reg. Please refer to your letter dated 22.02.2019 on the above mentioned subject. In this regard, you are requested to provide the copy of Challans of remaining Service Tax. Further, you are also requested to provide calculation sheet of Interest liability and deposit the same as soon as possible, so that the investigation might be concluded. Sd/- Superintendent Anti Evasion, Group-4 Central Excise & Service Tax, Central Tax" 54. The petitioner responded by a letter dated 26.06.2019, enclosing therewith a service tax reconciliation statement for a period of ten years with effect from 2007-08 to 2016-17 and the interest liability sheet. The service tax reconciliation sheet indicated that the petitioner's total service tax liability for the said period amounted to Rs.41,46,677/- against which the petitioner had paid a sum of Rs.18,50,000/- on 31.12.2013 and Rs.24,50,000/- thereafter. Thus, according to the petitioner, it had paid ....