TaxTMI 
TaxTMI 
2024 (2) TMI 1218
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....e nature of mandamus striking down and setting aside e-mail communication dated 27.01.2020, informing rejection of application filed under Sabka Vishwas Scheme and Form SVLDRS-1 generated on-line on 28.01.2020 informing the grounds of rejection; (ii) consequently, to direct the respondents to consider the SVLDRS-1 filed vide ARN No LD 1612190001379 dated 16.12.2019 as legally proper and acceptable under the scheme; (iii) to grant costs of this petition to the petitioner herein, and (iii) to pass such other order, or orders, as may be deemed fit and proper in the interests of justice." Brief Facts 2. The petitioner, at the relevant time, was engaged in providing Works Contract services under HSN Code 995412, as defined under erstwhile Section 65(105)(zzq) of the Finance Act, 1994 (hereafter 'the Act'). The petitioner was able to discharge only part of its service tax liability for the financial years 2012-2013 to 2017-2018 (upto 30.06.2017). 3. The officers of the Anti-Evasion Wing of the erstwhile Service Tax Commissionerate, Delhi, and Directorate General of the Central Excise Intelligence (DGCEI), Delhi Zonal and Delhi South Commissionerate of ....
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....istration of the Scheme. 10. On 16.12.2019, the petitioner preferred three applications under Scheme for the period April 2012 to June, 2017. Whereas, the two applications for the period April, 2012 to March, 2013 and April, 2013 to March, 2014 were filed in the category of cases where Show Cause Notices were pending, the application for the period April, 2014 to June, 2017 was filed in the category of 'investigation, inquiry or audit'. The two applications in the category of pending Show Cause Notice were accepted but the application under the category 'investigation, inquiry or audit' was rejected. This has led the petitioner to file of the present petition. 11. The application of the petitioner was rejected, essentially, on the ground that as on the cut-off date, that is, 30.06.2019, the investigation was pending and the amount of duty involved was not quantified. The chart indicating the filing of the applications and their status is mentioned below for ready reference: S.No. Particulars Relevant period SVLDRS status 1 SCN dated 13.07.2015 April 2012 to March 2013 Accepted by the department and discharge certificate issued 2 SCN dated 10.03.2....
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..../ investigation/enquiry where the tax dues have been quantified on or before 30.6.2019, a show cause notice is issued after 30-6-2019. Similarly, a case, which was under appeal as on 30-6-2019, may attain finality in view of appeal period being over etc. It is clarified that the eligibility with respect to a category in such cases shall be as it was on the relevant date ie., 30-6-2019." 15. He relied upon a judgment of this Court in Seventh Plane Networks Pvt. Ltd. v. Union of India:2020 SCC OnLine Del 2446 to contend that once the amount declared under the Scheme was quantified during the investigation, the assessee would be eligible under the Scheme and its eligibility would not be impacted if later during the investigation, reduction of demand is sought. He further relied upon the judgment of the Hon'ble Bombay High Court in the case of Landmark Associates v. Union of India :2021 SCC OnLine Bom 2162 and contended that if the department had issued a notice of recovery under Section 87 of the Act, the application under the Scheme cannot be rejected on the ground that the tax dues were not quantified. 16. The learned counsel further submitted that only because the amount quan....
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....ed in the case of the petitioner. He further submitted that there is no provision in the Finance Act, 2019 which provides for an opportunity of being heard. Reasons and Conclusion 19. The only question to be addressed in the present petition is whether the service tax payable by the petitioner had been quantified in terms of Section 121(r) of the Finance Act (No. 2), 2019 prior to 30.06.2019. This Court in Hans Uttam Finance Limited (supra) had analysed the object of the Scheme and held as under: "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 preGST (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. 23. Section 122 of the Finance Act (No. 2), 2019 stipulates twenty nine separate enactments, which were ....
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.... 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; (d) where the amount has been voluntarily disclosed by the declarant, then, the total amount of du....
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....entral 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 obvious that Clause (c) of Section 123 of the Finance Act (No....
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....s 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 context of the provisions of the Financ....
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....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 found that t....
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....statement 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 worksheet and found it correct as per my records/documents. Further, I am complet....
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.... 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 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, 2 019. 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 ....
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....ove, Section 123(c) of the Finance Act (No. 2), 2019 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." 20. This court held that in cases where an inquiry, audit or investigation is pending, the quantification of the tax dues can be ascertained from the written communication. It is not necessary that the written communication, in which the amount of duty payable is quantified must emanate from the concerned tax department. The said amount of tax dues can be ascertained from the written communication emanating from the taxpayer as well subject to the same being part of the record. The unilateral communication, which is disputed and is not accepted by the department, however, cannot be considered as quantification of tax due. 21. This Court held that the written communication or statement....
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....nking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary; (iii) in a case where the person to whom a notice under this section is sent, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and all the consequences of this Chapter shall follow; (c) the Central Excise Officer may, on an authorisation by the [Principal Commissioner of Central Excise or] Commissioner of Central Excise, in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, m....
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....s "tax dues" if there is no dispute regarding the same. The Scheme also covers cases where investigations, enquiries and audit are pending. 23. The Scheme was introduced by the enactment of the Finance Act No. 2 of 2019 (hereafter 'the Act'). Chapter V of the Act (Sections 120 to 135) provided the statutory framework for the Scheme. Section 122 of the Act specified various enactments, which were covered under the Scheme. 24. The principal object of the Scheme was to put an end to the disputes in order to enable the assessees to move on to the new regime without the baggage of legacy disputes. The Central Board of Indirect Taxes and Customs (hereafter 'CBIC'), in excise of the powers under Section 133 of the Act, issued a Circular dated 27.08.2019 (Circular No. 1071/4/2019-CX.8) explaining the provisions of the Scheme. 25. There are two components of the Scheme. One is dispute resolution and one is amnesty. The dispute resolution component is intended to put an end to disputes that are pending in various forums. The amnesty component is intended to give tax payers, who have not correctly discharged their liability, to come clean and pay their tax dues. The....
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....3) of section 73A, as the case may be, in such manner as may be prescribed. (2) Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section (1): Provided that the Chief Commissioner of Central Excise may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years." 26. A bare perusal of Section 73C of the Act makes it clear that any such order is provisional in nature till such time, the proceedings under Section 73 or 73A of the Act are pending. The order is passed to protect the interest of Revenue till such time, a determination of the amount due from the assessee is made under Section 73 or 73A of the Act. On the other hand, Section 87 of the Act gives power to the Revenue to recover the amount due from the assessee by one or more of the modes provided therein. The provisions of Section 87 of the Act provides for the manner of recovery of the dues, the same is not for protecting the interest of Revenue till the pendency ....
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....er Section 73 of the Finance Act, 1994 along with interest applicable under Section 75 of the Finance Act, 1994." 29. It is, thus, apparent that on 15.03.2019, the petitioner had provided the computation sheet which quantified the tax dues payable by the petitioner for the concerned period. In terms of the law laid down by this Court, the said communication qualifies as written communication quantifying the tax dues, albeit emanating from the petitioner. There is no material dispute as to this quantification. The Revenue has, in fact, accepted the calculation of the tax dues furnished by the petitioner. Thus, for the purposes of Section 123(c) read with Section 121(r) of the Act, the tax dues stand quantified in terms of "a written communication of the amount of duty payable under the indirect tax enactment;" as an admission of liability in a written communication for the purpose of Section 123(c) read with Section 121(r) of the Scheme in the Finance Act (No. 2), 2019. This is not a case where the department is not in agreement with the quantification as provided by the petitioner. It is apparent that the respondents have never disputed or doubted the calculations submitted by t....
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....nt to explain as to why his application (declaration) should be accepted and relief under the scheme should be extended to him. Summary rejection of an application without affording any opportunity of hearing to the declarant would be in violation of the principles of natural justice. Rejection of application (declaration) will lead to adverse civil consequences for the declarant as he would have to face the consequences of enquiry or investigation or audit. As has been held by us in Capgemini Technology Services India Limited (supra) it is axiomatic that when a person is visited by adverse civil consequences, principles of natural justice like notice and hearing would have to be complied with. Non-compliance to the principles of natural justice would impeach the decision-making process rendering the decision invalid in law." 33. This Court in Carpet Export Promotion Council v. Union of India & Anr. : 2023:DHC:3549:DB had respectfully concurred with the view taken by the Bombay High Court and noted that the legislative intent to enact the Scheme was to offload the baggage of disputes. The scope of coverage of Scheme is required to be interpreted liberally and taxpayer cannot be ....