Bombay High Court set aside SVLDR Form 3 and allowed petition

Evershine Resource Management Pvt. Ltd. Vs Union of India and Ors. (Bombay High Court)

The petitioner is engaged in supply of manpower. It is registered with service tax department. It was issued show cause notice alleging short payment of service tax. It filed reply. In the mean time, SVLDRS Scheme was notified. It filed application in Form SVLDRS 1. It claimed that 50% of the tax dues were paid and hence, relief under the scheme would be nil. Form 2 was issued for the same amount. The petitioner filed reply producing challans showing payment. Despite the same, Form 3 was issued directing the petitioner to pay the same amount. This was challenged in writ petition.

The Hon’ble Bombay High Court set aside Form 3 and allowed the petition.

It held:

(i) the petitioner had not waived personal hearing and it had only agreed that the amount in Form 2 was correct;

(ii) relies on affidavit in reply filed by Respondent agreeing that the said amount was paid,

(iii) holds that it is only matter of verification whether the challans pertained to the show cause notice sought to be settled under the scheme or not;

(iv) accordingly, directs the Designated Committee to verify and issue Form 4, if challans are in order and consequential, show cause notice and order would be deemed to be quashed.

The matter was argued by our Partner Bharat Raichandani

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1. Petitioner had received a Show Cause Notice dated 24^th April 2019 proposing to demand service tax of Rs.80,08,864/- along with interest and penalty for the period 2013-14. Petitioner replied vide letter dated 3rd July 2019 contesting the demand on the grounds that major portion of demand of service tax on output services had already been remitted. Petitioner also submitted documentary evidence in support.

2. Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) was introduced vide Finance (2) Act 2019. Petitioner decided to take advantage of the scheme and filed an application in Form SVLDRS 1 on 13^th September 2019. Petitioner disclosed in Form 1 that the tax dues as per Show Cause Notice was Rs.80,08,864/- and the tax relief as per the scheme was Rs.40,04,432/-. The balance payable tax was Rs.40,04,432/- and the tax part remitted as Rs.40,04,432/-. Hence, balance payable was nil.

3. Respondent issued Form 2 on 6^th December 2019 where the figures indicated by petitioner was that the tax relief as per the scheme was Rs.40,04,432/-. Respondent however noted that balance tax payable was Rs.40,04,432/-. Respondent did not give credit to the sum of Rs.40,04,432/-though petitioner had claimed in Form 1 as having paid. In Form 2 respondent had issued it had noted that the amount of pre-deposit claimed in the application is not co-related with official records and petitioner was called upon to produce original payment challans at the time of hearing. Petitioner was not granted any hearing but, petitioner by its letter delivered on 12^th December 2019, forwarded copy of service tax challans for payments made together with the challan summary. Despite filing of copies of challans, petitioner was served with SVLDRS Form 3 once again mentioning that amount of Rs.40,04,432/- was payable.

Mr. Mishra states that petitioner had waived personal hearing by filing SVLDRS Form 2A and also agreed with the estimate in SVLDRS 2.

We agree with Mr. Raichandani that it only indicates that figure of Rs.40,04,432/- is what was agreed.

4. The short issue is whether petitioner has actually paid the amount as indicated by petitioner in Form 1. If it has been paid, Mr. Mishra also agrees, credit has to be given to the amount paid. Mr. Mishra states that atleast challans annexed to the petition does not show that any amount has been paid against dues under the Show Cause Notice which was being settled by petitioner under SVLDRS.

5. In Paragraph No. 9 of the affidavit in reply filed through one Mr. P. Sreerama Murthy affirmed on 13^th March 2023, it is averred as under:

9. xxxxx after receipt of the SVLDRS application by the petitioner, a verification report was called for from the Jurisdictional Assistant Commissioner CGST & C. Ex Thane, who vide his report dated 31.12.2019 have submitted as under;

“that the assessee vide E-mail dated 18.11.2019 have submitted the copies of Challans which have been verified from EASIEST payments and found that Rs.43,33,500/- had been paid by challans. However, on seeing the challans it was understood that they were from the date 19/06/2013 to 16/02/2015. Hence it was not clear whether these challans pertain to the show cause period or for further period also. Further it was also brought out that as per ST-3 returns the turnover was nil. Under the circumstances, it could not be conclusively verified whether the payment was actually made against the tax liability pertaining to the impugned SCN or otherwise and hence the same was not considered while issuing SVLDRS-2”.

(Emphasis supplied)

6. Therefore, in our view if petitioner is given an opportunity to produce the challans/receipt of the payments made to enable respondent to verify whether the payment was actually made against the tax liability pertaining to the concerned Show Cause Notice, the matter could be put to rest. Once petitioner satisfies the consequence thereof will be to consider the same as payment under the SVLDRS.

7. In the circumstances, we dispose the petition with the following directions.

(a) The Committee constituted under Section 126 of the SVLDRS will give hearing to petitioner within six weeks from today and the notice of hearing shall be communicated atleast five working days in advance.

During hearing petitioner shall produce the original challans to enable the Committee to verify whether the payments were made against the tax liability pertaining to the impugned Show Cause Notice. If petitioner is able to satisfy the Committee, the Committee shall issue Form 4 under the SVLDRS. Upon issuance of Form 4 the Show Cause Notice and Impugned Order in this petition will stand quashed and set aside.

(b) If petitioner is unable to satisfy the Committee that the payment made was against the tax liability pertaining to the impugned Show Cause Notice then respondent may take further steps based on the Impugned Order dated 25^th February 2021.

(c) Petitioner’s rights and contentions to challenge the Impugned Order will always be open.

8. Petition disposed. No order as to costs.