Case Law Details

Case Name : Airlink Communication Pvt Ltd Vs Union of India (Gujarat High Court)
Appeal Number : R/Special Civil Application No. 10702 of 2020
Date of Judgement/Order : 01/12/2020
Related Assessment Year :
Courts : All High Courts (6285) Gujarat High Court (630)

Airlink Communication Pvt Ltd Vs Union of India (Gujarat High Court)

Mr. Ankit Shah, learned counsel for the respondent – Department has only submitted that according to the instructions received and as stated in the affidavit in reply since the subsequent quantification which the Department treats as final qualification being later in point of time to the cut off date, the Department was not in a position to entertain the application and as such it had rejected the application.

We are not inclined to accept the submission of Shri Shah and the view of the Department. The quantification communication on 20.05.2019 was a final quantification according to the Department. If the Department had committed an error and it is corrected subsequently, then such quantification or the revised figure should relate back to the original quantification and it would only be substituting the figures and nothing more. The mistake committed by the Department was also an apparent mistake and a glaring mistake that they included the taxable services subsequent to the period of investigation and because of the said reason, a huge amount of liability had been raised. Depriving the petitioners for the fault of the Department, would be unfair and unreasonable.

We, therefore, hold that the quantification communicated on 27.12.2019 to be a quantification substituting the figures in the communication dated 20.05.2019 thus the quantification being prior to 30.06.2019. The reason for rejecting / not entertaining the application of the petitioners under the Scheme deserves to be set aside.

The application of the petitioners under the Scheme deserves to be treated as within time and should be processed accordingly.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT 

1. We have heard Shri Hasit Dave, the learned counsel for the petitioners and Shri Ankit Shah, the learned counsel appearing for the respondent – Department.

2 An inquiry was pending against the petitioners before the Intelligence Office of the Service Tax, Vapi on the ground that they had shown lesser taxable value in the service tax returns to evade tax liability. A detailed investigation was carried out and upon verification of all the documents produced by the petitioners and after recording the statements, the competent authority directed the petitioners to pay differential service tax demand of Rs.82,26,42,852/- vide communication dated 20.05.2019 (Annexure-D to the petition).

3 The matter remained pending and in the meantime the Central Government floated the Scheme by the name “SVLDRS-2019” on 01.09.2019. The petitioners wanted to avail the benefit of the said Scheme. According to the said Scheme, where the liability had been quantified prior to 30.06.2019, the assessees could apply under the Scheme by making a deposit of 50% of the quantified amount. The last date for applying under the Scheme was 31.12.2019.

4 While going through the records, apparently the petitioners found that the quantification of Rs.82,26,42,852/- as stated vide communication dated 20.05.2019 was incorrect. They accordingly submitted to the Assistant Director, DGCEI, Vapi on 23.11.2019 (Annexure-E) requesting to recalculate the amount as the quantification had included the transactions of the period after April, 2015 which could not have been done. The said request of the petitioners was considered by the Competent Authority and vide communication dated 27.12.2019 (Annexure-G to the petition) the office of the Directorate General of Goods and Services Tax Intelligence, Regional Unit, Vapi communicated to the petitioners that there was apparently a mistake and the revised quantified amount was much less at Rs.4,99,03,524/-.

5 Pursuant to the above intimation of the correction of the quantified amount, the petitioners submitted on the online portal of the Scheme on 31.12.2019 expressing their willingness to avail the benefit. It may be noted that subject to acceptance of the request under the Scheme, the petitioners would be liable to make the deposit of 50% of the quantified amount. However, the application of the petitioners under the Scheme was not accepted for the reason as stated in the Form SVLDRS-1 (Annexure-I to the petition) that “the service tax liability was not quantified  and communicated finally before 30.06.2019 i.e. cut off date for SVLDRS”.

6  The petitionersclaim to have made the representation after the said communication stating that there was no fault of the petitioners in the quantification and it was the department that had committed mistake which it subsequently rectified, and therefore, the petitioners’ application under the Scheme ought to be accepted and entertained.

7 When no further communication was received by the petitioners, they approached this Court by way of the present petition. Notices were issued and counter affidavit has been filed on behalf of respondent Nos.1 to 4. In the counter affidavit, the facts as stated by the petitioner and as recorded above are admitted. In paras 39 and 40 of the affidavit in reply the same version is repeated that the tax liability was revised and demand of Rs.4,99,03,524/- was raised vide communication dated 27.12.2019. However, as the said quantification was made after 30.06.2019, the petitioners were ineligible to apply under the Scheme.

8 The only question before us to be considered is whether the quantification of the petitioners’ liability as communicated vide letter dated 27.12.2019 should be deemed to be quantification relating back to the earlier quantification dated 20.05.2019 or not. If it relates back to the original quantification of 20.05.2019, then the petitioners would be covered and eligible under the Scheme for availing its benefit.

9  In the present case, the admitted position is that the original quantification made on 20.05.2019 was incorrect. A huge demand of more than Rs.82 crores came to be raised towards the service tax and at that stage there was no Scheme in existence. The Scheme came into existence only w.e.f. 01.09.2019 and its benefit was available till 30.12.2019 for the assessees to apply. During this period from September to December, 2019, the petitioners noticed the mistake committed by the Department and accordingly represented vide letter dated 23.11.2019. The Department realized its mistake and ultimately corrected the demand raised from Rs.82,26,42,852/- and reduced it to Rs.4,99,03,524/-.

10 The petitioners may not have been in a position to deposit Rs.41 crore and odd (being 50% of the initial demand) to avail the benefit of the Scheme, but having received the communication of an amount which was almost 6% of the earlier demand raised, thought it proper and in their interest to apply under the Scheme. The petitioners applied within the time on 31.12.2019.

11 The amount had been wrongly quantified for no fault of the petitioners. It was an apparent mistake made by the Department. The Department thus ought not to have rejected the application of the petitioners by alleging that the quantification had been made after the cut off date. The quantification had been made much prior to the cut off date on 20.05.2019 and according to the Department that was the final quantification and not provisional quantification, but definitely it was an erroneous quantification. The Department realized its mistake, but much later and accordingly corrected it, therefore, in all fairness the Department ought to have treated the quantification made on 27.12.2019 to be substituting the figure communicated vide communication dated 20.05.2019. If this had been done, apparently the application of the petitioners under the Scheme would be entertained and the petitioners would be entitled to claim its benefit.

12.  Mr. Ankit Shah, learned counsel for the respondent – Department has only submitted that according to the instructions received and as stated in the affidavit in reply since the subsequent quantification which the Department treats as final qualification being later in point of time to the cut off date, the Department was not in a position to entertain the application and as such it had rejected the application.

13. We are not inclined to accept the submission of Shri Shah and the view of the Department. The quantification communication on 20.05.2019 was a final quantification according to the Department. If the Department had committed an error and it is corrected subsequently, then such quantification or the revised figure should relate back to the original quantification and it would only be substituting the figures and nothing more. The mistake committed by the Department was also an apparent mistake and a glaring mistake that they included the taxable services subsequent to the period of investigation and because of the said reason, a huge amount of liability had been raised. Depriving the petitioners for the fault of the Department, would be unfair and unreasonable.

14.  We, therefore, hold that the quantification communicated on 27.12.2019 to be a quantification substituting the figures in the communication dated 20.05.2019 thus the quantification being prior to 30.06.2019. The reason for rejecting / not entertaining the application of the petitioners under the Scheme deserves to be set aside.

15. The application of the petitioners under the Scheme deserves to be treated as within time and should be processed accordingly.

16.  We accordingly allow this petition and set aside the reason for rejection as communicated vide Annexure-I. The application to be treated within time and to be processed accordingly and necessary forms for making the deposit under the Scheme to be communicated forthwith to the petitioners where upon the petitioners shall make the deposit within 15 days of the said communication.

Direct service is permitted.

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