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2023 (5) TMI 976 - HC - Service TaxRejection of petitioner’s application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground of “ineligibility” with the remarks, “incomplete and selective declaration” - amount as mentioned by the petitioner, did not cover the entire details of the duty and the amount deposited by the petitioner - petitioner was neither issued any notice nor afforded any opportunity to be heard by the designated committee before its application was rejected - violation of principles of natural justice. HELD THAT:- The procedure as contemplated under Section 127 of Finance Act conformed to the principles of natural justice and included an opportunity of affording the declarant an opportunity to be heard where there was a difference in the amount as computed by the declarant and the designated committee - It is clear that Rule 6(3) of the Rules also mandated that an opportunity to be heard be afforded to the declarant in case the amount of duty estimated by the declarant fell short of the estimate made by the designated committee. In this case, the petitioner was neither issued any notice nor afforded any opportunity to be heard by the designated committee before its application was rejected. The rejection of the petitioner’s application was communicated online and the only reason stated for rejection discernable from the remarks is: “incomplete and selective declaration”. There is no dispute that the petitioner had deposited the entire duty in respect of the four audit objections: the amount of ₹3,16,946/- on account of the alleged wrongful availment of cess; short payment of service tax of ₹92,385/- ascertained on reconciliation; wrongful availment of the Cenvat Credit amounting to ₹8,05,654/- on certain services – rent a cab, medical insurance and hotel accommodation; and alleged wrongful availment of the Cenvat Credit amounting to ₹82,81,915/- proportionate to exempted income. In terms of the SVLDR Scheme, the petitioner was entitled to waiver of the interest and penalty on deposit of the tax dues. Undisputedly, the petitioner had deposited the tax dues prior to 31.03.2019. Thus, there was no amount payable after the tax relief - The only controversy is that the petitioner had declared the duty amount as ₹82,81,915/- and had also indicated that the same amount had been deposited. The error on the part of the petitioner is that it did not include the duty amount, which related to the other three audit objections in the column of duty details and the duty paid. Clearly, this error was a curable one and did not affect the estimation of the amount payable after availing the benefit under the SVLDR Scheme. The petitioner had, in the course of proceedings prior to the SVLDR Scheme coming into force, paid the tax in respect of the said audit observations and had sought waiver of interest and penalty, which it claimed, was acceded to by the concerned Additional Commissioner, CGST. In Thought Blurb v. Union of India & Ors.[2020 (10) TMI 1135 - BOMBAY HIGH COURT], the Division Bench of the Bombay High Court had examined the legislative intent of the SVLDR Scheme and had held that the summary rejection of the application without affording the declarant an opportunity to be heard would violate the principles of natural justice. In the present case, the petitioner’s application has been rejected in violation of the principles of natural justice. As noted above, the petitioner had already deposited the tax dues. It had also made a request for waiver of interest and penalty prior to the SVLDR Scheme coming into force. On respondent no. 2 pursuing the petitioner to pay the interest and penalty, it had unequivocally expressed its intention to apply under the SVLDR Scheme. It had subsequently done so. Concededly, in terms of the SVLDR Scheme, the petitioner would be entitled to the waiver of interest and penalty as it had paid the requisite tax prior to the stipulated date - the legislative intent to enact the SVLDR Scheme was to include all taxpayers for offloading the baggage of disputes. All taxpayers, except those which were specifically excluded, were entitled to avail the benefit of the said Scheme. The SVLDR Scheme also covered cases where no disputes were pending and enabled the taxpayers to voluntarily pay taxes and avail amnesty under the SVLDR Scheme. The impugned order rejecting the petitioner’s declaration under the SVLDR Scheme is set aside and the designated authority is directed to process the petitioner’s declaration in accordance with the SVLDR Scheme as expeditiously as possible, and preferably within a period of eight weeks from today - petition allowed.
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