It could not be out of place to refer to a decision of Karnataka High Court in the case of Kiran Borewells Vs. Union of India wherein the impugned order was set aside finding that decision had been taken without providing an opportunity of hearing to the petitioner, adversely affecting the petitioner. It has been observed that in order passed by the authority adversely affecting rights of the parties should be in adherence to the principles of natural justice. This was a case in respect of SVLDRS.
In case of Chaque Jour HR Services Vs. Union of India6, Delhi High Court, while application under SVLDRS had been rejected by the authority on the premise that the disputed amount was not quantified and communicated prior to 30.6.2019 finding that the impugned order has been passed without hearing petitioner had set aside the impugned order and the matter was remanded to competent authority to hear the petitioner before passing order.
Having regard to foregoing discussion and decisions, we deem it appropriate that petitioner may have an opportunity of hearing. We therefore, consider it appropriate to set aside the impugned statement SVLDRS-3 dated 19th February, 2020.
In the result, impugned declaration in the form of SVLDRS-3 issued by respondent No. 4 on 19th February, 2020 is set aside restoring the proceedings before the authority. The concerned authority to give an opportunity of hearing to petitioner and decide the matter petitioner pursuant to Sabka Vishwas scheme.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. Heard. Rule. Rule made returnable forthwith. Learned counsel Mr. Karan Adik waives notice for the respondents. Heard finally by consent of parties.
2. Petitioner is before us questioning propriety and validity of the statement in form SVLDRS-3 bearing No. L190220SV300289 dated 19th February, 2020 (Exhibit “O”) praying to issue a writ/order setting aside the same with a further direction to allow declaration of petitioner in form SLVDRS-1 bearing ARN No. LD2812190003159 dated 28th December, 2019 (Exhibit “J”).
3. A few facts in the background leading to present petition may be necessary to be referred to in order to have proper perspective of the matter.
4. The petitioner company is engaged in providing services ‘Business Auxiliary Services’ and is registered with respondents under Service Tax Rules, 1994, and under Central Excise Goods and Services Tax Act, 2017 (for short “CGST Act”) with effect from 1st July, 2017.
5. The petitioner purports to refer to that service tax liability could not be discharged on time, the company being in severe financial crises, internal disputes and other difficulties, while petitioner had provided taxable services to various clients. In the circumstances, proceeding at the instance of department led to a notice to petitioner to show cause as to why income, as reflected in profit and loss account for the financial years 2012-13, 2013-14, 2014-15 and 2015-16 should not be treated as taxable service and why service tax amounting to Rs.9,27,39,338/- be demanded and recovered under provisions of Section 66 read with the proviso to section 73(1) of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994 for the period from January, 2013 to March, 2016 and as to why the amount of Rs. 1,83,35,195/- be not appropriated against service tax liabilities. The notice had been responded to and petitioner claims to have shown that service tax to the tune of Rs.2,43,04,283/- had been paid. As the situation had worsened, National Company Law Tribunal had appointed an independent Chairperson to handle all financial transactions. According to the petitioner, it has paid service tax of Rs. 2,62,21,678/-. However, due to ongoing disputes, necessary documents / challans could not be traced and produced.
6. While aforesaid proceedings were in progress, a scheme referred to as “Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (for short “SVLDRS”) had been introduced with effect from 1st September, 2019. A notification dated 21st August, 2019 had been issued, framing “Sabka Vishwas (Legacy Dispute Resolution) Rules, 2019”.
7. Chapter V of the Finance Act comprising sections 120 to 135 formulates the scheme providing for declaration of tax dues and payments by eligible persons and immunity from penalty, interest, prosecution etc. Section 123 under chapter V refers to tax dues to mean, inter alia, under clause (b) where a show-cause notice under any of the indirect tax enactments has been received by the declarant on or before 30th June, 2019, then the amount of duty, stated to be payable by declarant in the notice. Section 124 of the scheme is in respect of reliefs available to a declarant Section 124(2) of the scheme provides for, inter alia, deduction of pre-deposited amount or amount paid during inquiry, investigation or audit, further providing in case of pre-deposit or deposit exceeding the amount payable by declarant, as indicated in the statement issued by the designated committee, the declarant shall not be entitled to any refund. Section 125 declares that all persons shall be eligible to make a declaration, except from categories referred to thereunder. It further prescribes that a declaration under sub-section (1) shall be made on such electronic form, as may be prescribed (Form SVLDRS-I under the rules). Section 126 (1) requires designated committee to verify correctness of declaration made under Section 125.
8. Section 127 prescribes, inter alia, that where amount payable by a declarant as estimated by the designated committee exceeds amount declared by the declarant, then the designated committee shall issue in electronic form an estimate payable by the declarant. Sub-section (3) of Section 127 requires designated committee to give an opportunity of being heard to the declarant, if he so desires, before issuing statement indicating the amount payable by the declarant. It further provides for sufficient cause, accommodation of an adjournment. After hearing the declarant, as provided under Section 127(4) a statement in electronic form indicating the amount payable by declarant shall be issued. The provision also requires the declarant to pay the amount payable as indicated in the statement issued by the designated committee. On payment being made, and on production of proof of withdrawal of appeal, the committee is supposed to issue a discharge certificate in electronic form within thirty days thereafter.
9. The scheme appears to have been introduced seeking release of locked up indirect tax revenue demands under litigation from assessees or otherwise as a measure for liquidation of past litigation, inter alia, of Central Excise and Service Tax as well as to have disclosure of unpaid tax by persons eligible under the same for declaration.
10. While the scheme initially did not provide for amounts paid after issuance of show-cause notice before adjudication which were not appropriated during pendency of adjudication, such deposits are also deductible when issuing the statement indicating amount payable by the declarant pursuant to a Circular No. 1074/4/2019-CX.8 dated 12th December, 2019 had been issued.
11. Petitioner with a view to avail benefit of the scheme, applied online under Litigation Category under sub-category show-cause notice involving Duty Pending making a declaration in Form SVLDRS-1 dated 28th December, 2019. In the declaration, the petitioner had referred to show-cause notice amount of Rs.9,27,39,336/-, predeposit amount as Rs.2,62,21,678/-, and revenue dues payable as per the scheme to be Rs. 2,01,47,991/-.
12. Respondent No. 4 had issued an estimate in Form SVLDRS-2 dated 22.1.2020 stating that amount payable by petitioner is Rs.2,93,40,631/- considering predeposit amount of Rs.1,83,35,195/-. The petitioners were advised to submit Form-2A in case of disagreement and a date and time of personal hearing if desired. In response, petitioner filed Form No. SVLDRS-2A dated 27.1.2019, disagreeing with the estimate under SVLDR-2, stating that the amount deposited is Rs.2,62,21,678/- and that they had challans reflecting the same. The petitioner had also with an intention to pay the dues for discharge of service tax liability under under Sabka Vishwas scheme had approached the assistant director DGGSTI Zonal Unit with a view to de-freeze its bank account.
13. It appears that a declaration in Form No. SVLDRS-3 was issued on 19th February, 2020 by Respondent No. 4, referring to the amount payable by the Petitioner is Rs. 2,93,40,631/-.
14. It is contended that the petitioners had requested for hearing, however, no communication had been received at their end for quite a long time and while the petitioners searched on the official website, they came to know that SLVDRS 2B was issued on 31st January, 2020, fixing hearing on 6th February, 2020. According to the Petitioner, SVLDRS-2B Form cannot be downloaded. It is submitted that its intimation had not been received at the end of petitioners either on the registered ‘email id’ or on registered mobile via ‘SMS’. While this had been realized subsequent to 6th February, 2020, petitioner had made a personal representation before officers of Respondent No. 4 explaining its position and requesting to adjust amounts of deposits, as referred to by the petitioner, having regard to the circular dated 12th December, 2019. However, the same was not to any avail.
15. In the circumstances, petitioners tried to have correspondence with Respondent No. 4. A request had also been made to Respondent No. 3 to intervene to have restoration of the matter. Requests were made on 29th June, 2019 and 9th July, 2020. However, those were not responded to. The petitioner lodged their grievance on 25th July, 2020 to Central Board of Indirect Taxes and Customs at the grievance portal of respondent No. 1, which had been forwarded to respondent No. 3. The same is shown to have been closed on 24th August, 2020 with the remark that petitioner had neither attended hearing fixed for 24th January, 2020 and 6th February, 2020, nor had submitted any proof of payment to the office and based on the records available with the office, the designated committee No. 1 had issued Form No. SVLDRS-3. It is in these circumstances, the Petitioner is before us.
16. Learned counsel Mr. Mashelkar submits that while the petitioner desired personal hearing in support of declaration in Form SVLDRS – 1 over disagreement on the estimated amount in SVLDDRS-2, no hearing was afforded and the respondents purports to refer to and rely the electronic medium. He submits that even going by the same and as was depicted on the portal website communication to the official address of the petitioner, intimation of hearing ought to have been given to the petitioner either on ‘email id’ or by ‘SMS’ on the registered mobile phone. As to why the communications were not issued on ‘email id’ or for that matter on the mobile phone is not coming forth. He, therefore, submits that SVLDR-3 declaration is patently illegal as the petitioners have lost an opportunity of personal hearing, explaining / supporting claim of the payments, as referred to in the declaration. The impugned order is, thus, infirm, passed in violation of noble principles of natural justice and the same deserves to be set aside. It is contended that a hyper technical approach is being adopted.
17. The learned counsel for the petitioner purports to refer to and rely on a decisions of a division bench (of whichone of us Abhay Ahuja, J. as a member) of this court dated 25th September, 2020 in the case of Capgemini Technology Services India Ltd. Vs. Union of India 1 ; and Thought Blurb Vs. Union of India & Ors. dated 27th October, 2020 in Writ Petition No. 871 of 2020 wherein rejection of petitioners’ declaration communicated under Sabka Vishwas Scheme, 2019 had been set aside. Petitioner also refers to a decision of Gujrat High Court in the case of Vaghjibhai Bishnoi Vs. Income Tax Officer 2
18. The petition is being resisted on behalf of the respondents. It is being referred to that it is a lame excuse to claim that the petitioner had not been given notice of personal hearing through email or SMS. It is contended that notification regarding issuance of SVLDRS-2B is system generated service and while petitioner had received SVLDRS-2, it is difficult to believe that SVLDRS-2B form had not reached the petitioner. It is being contended that petitioner has not specifically come out as to when it came to know about SLVDRS-2B form.
19. It is submitted that the designated committee had issued SLVDRS-2B on 31st January, 2020 and had been made available on the portal which could have been accessed by the petitioner. While the Petitioner had received SLVDRS-2, SLVDRS-2B form ought to have been received by him. It is contended that SLVDRS-3 had been issued after due verification and considering the details. It would not be correct to say that no opportunity was afforded to the petitioner. The petitioner had failed to attend hearing on 24th January, 2020 and 6th February, 2020 and had not submitted payment receipts and having regard to records available, designated committee had issued SLVDRS-3 determining the amount payable as Rs. 2,93,40,631/-
20. It is submitted that petitioner has declared that notice amount as only Rs. 9,27,39,338/- (wrongly excluding the Education Cess and Secondary and Higher Education Cess). While the petitioner had opted for the Sabka Vishwas Scheme, the designated committee had correctly estimated tax dues on verification and consideration of facts, as has been referred to in the show-cause notice. It has also been referred to that an amount of Rs.1,83,35,195/- would be required to be appropriated against the service tax dues for the period from January, 2013 to March, 2016. The decision has been taken by following due procedure under the Sabka Vishwas scheme. Petitioner was given due opportunity of personal hearing. But, the Petitioner did not attend first hearing on 24.1.2020, and had requested for adjournment and accordingly personal hearing was fixed on 6th February, 2020 by issuing SVLDRS Form 2B. However, Petitioner once again failed to attend the hearing on that date.
21. The situation emerges there is no dispute on that petitioner is eligible person to claim benefit of Sabka Vishwas scheme and had accordingly had made a declaration in Form SVLDRS-1, as provided. The same was responded to by issuing SVLDRS-2 by the designated committee. While the estimate under SVLDRS-2 exceeded the amount declared by the petitioner, it will entail an opportunity to petitioner on its disagreement over the estimated amount before issuing statement SVLDRS-3 indicating the amount payable by the declarant. The scheme also provides for an accommodation of adjournment for hearing. Statement with regard to amount payable has been issued in Form SVLDRS-3 on 19th February, 2020. It is the case of the petitioner that communications are required to be made either on ‘email id’ or via ‘SMS’ on registered mobile/phone. While petitioner asserts the same, there is no definitive response on the same. It does not appear to be certain that communications had ever been issued to petitioner on ‘email id’ or via SMS on the registered mobile/phone. It may have to be referred to that there is no specific record made available about the same.
22. It would be pertinent to refer to the decision of Gujrat High Court in the case of Vaghjibhai Bishnoi (supra) wherein it is observed that the objective of computerization programme is to improve efficiency and effectiveness of tax administration; to provide management with reliable and accurate information with certainty in its accuracy.
23. Decisions in Capgemini Technology Services (supra) andThought Blurb Vs. Union of India & Ors. dated 27th October, 2020 in Writ Petition No. 871 of 2020 put emphasis on object underlying framing of scheme. The division bench deciding the matters has emphasised that the scheme has been formulated with a view to put an end to past disputes pertaining, inter alia, Central Excise and Service Tax etc., and to have disclosure of unpaid tax and realisation of locked up revenue. The scheme has been brought in to have amicable resolution of disputes securing interest of revenue and start the new GST regime and to give benefit to eligible persons participating in the scheme of waiver of interest, fine, penalty, immunity from prosecution. It has been observed that non compliance of principles of natural justice would impeach the decision making process rendering the decision invalid in law. It has also been observed that basic thrust of the scheme is to unload the baggage of pending litigations of indirect tax as well as excise duty and service tax, with a view to minimise load of pre-GST regime and to keep pace of business. The division bench has also referred to a decision of Delhi High Court in the case of Vaishali Sharma Vs. Union of India4 holding 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. It has been observed to the effect that before insisting on payment of excess amount or higher amount, the designated committee is required to give an opportunity of hearing to the declarants.
24. It could not be out of place to refer to a decision of Karnataka High Court in the case of Kiran Borewells Vs. Union of India5 wherein the impugned order was set aside finding that decision had been taken without providing an opportunity of hearing to the petitioner, adversely affecting the petitioner. It has been observed that in order passed by the authority adversely affecting rights of the parties should be in adherence to the principles of natural justice. This was a case in respect of SVLDRS.
25. In case of Chaque Jour HR Services Vs. Union of India6, Delhi High Court,, while application under SVLDRS had been rejected by the authority on the premise that the disputed amount was not quantified and communicated prior to 30.6.2019 finding that the impugned order has been passed without hearing petitioner had set aside the impugned order and the matter was remanded to competent authority to hear the petitioner before passing order.
26. Having regard to foregoing discussion and decisions, we deem it appropriate that petitioner may have an opportunity of hearing. We therefore, consider it appropriate to set aside the impugned statement SVLDRS-3 dated 19th February, 2020.
27. In the result, impugned declaration in the form of SVLDRS-3 issued by respondent No. 4 on 19th February, 2020 is set aside restoring the proceedings before the authority. The concerned authority to give an opportunity of hearing to petitioner and decide the matter petitioner pursuant to Sabka Vishwas scheme.
28. Rule is made absolute in the aforesaid terms and accordingly writ petition is disposed of.