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2022 (2) TMI 249 - HC - Service TaxSVLDRS - unfair classification of the case of the petitioner under “litigation” category, instead of “arrears” category - Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 - time limitation - Cenvat Credit - dues on account of improperly availed of Cenvat credit - HELD THAT:- Once the distinction between “litigation” category and “arrears” category is understood, no difficulty would arise in comprehending the category under which the case of the petitioner would fall. The petitioner was issued show cause notice on 24.4.2019 well before the cut-off date of 30th June, 2019 but, the show cause notice was adjudicated upon by an order passed on 29.12.2019. On the date on which the adjudication order was passed, the Scheme, 2019 was operational. Against this adjudication order, the petitioner could have filed an appeal as the limitation period of 90 days was available. But, the petitioner did not file any appeal and chose to file declaration in form SVLDRS-1 as the Scheme, 2019 was operational. The intention was obvious. It was to off-load the baggage; it was to settle the dispute arising from it’s past legacy of defaults, once and for all, so that it could make a new beginning under new GST regime. Adjudication of the show cause notice during the validity period of the Scheme, 2019 in this case is what transformed it into a case under “arrears” category which otherwise would have continued to be in “litigation” category. It would have been a different thing if show cause notice dated 24.4.2019 was not adjudicated upon during the validity period of the Scheme, 2019 - the action of the respondent in treating declaration filed by the petitioner as falling under “litigation” category instead of “arrears” category is contrary to the provisions of the Scheme and hence not permissible in law. On this count, the action of the department needs to be quashed and set aside. A separate case must be filed in respect of each of the four categories listed in clauses (a), (b), (c) and (d) of rule 3(2). It would also be clear that when a case is filed under any one of these categories, within that category the case is required to be considered and dealt with as if it is a single case and there cannot be any further breaking of the case on the basis of several demands made in the show cause notice. Once a case travels from the category of show cause notice (“litigation category”) under clauses (a) and (c) to the category under clause (b) which is of a “an amount in arrears” (arrears category) and the declaration is made under the category listed in clause (b) of rule 3(2), it would have to be treated as one single case for the purpose of Rules, 2019, no matter the show cause notice contained two demands of taxes, one under Finance Act, 1994 and the other under Cenvat Credit Rules, 2019. The respondent has fallen in error in not treating the declaration filed by the petitioner as constituting one single case in the category of “amount in arrears” and by considering two demands in the show cause notice, one relating to service tax dues and the other in relation to recovery of disallowed Cenvat credit, separately and individually, something not permitted under Rules, 2019. The respondent is directed to reconsider the case of the petitioner in the light of the observations made herein-above and in accordance with law as expeditiously as possible - petition allowed.
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