TMI Blog2021 (2) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... l mean a written communication of the amount of duty payable including a letter intimating duty demand or duty liability admitted by the person concerned during inquiry, investigation or audit. For eligibility under the scheme, the quantification need not be on completion of investigation by issuing show-cause notice or the amount that may be determined upon adjudication. Though petitioners had made a mistake in not disclosing this figure of ₹ 6,13,91,021.00 in the first declaration, the situation was rectified by filing the second declaration before rejection of the first declaration disclosing the aforesaid figure. We find that the second declaration was filed on 10.01.2020 whereas the first declaration was rejected on 12.02.2020 - the quantum of service tax liability of the petitioner was the amount of service tax liability of the petitioners quantified in terms of the scheme on admission of the petitioners prior to the cut off date of 30.06.2019 i.e. ₹ 6 crores approximately which roughly corresponds to the declared figure of ₹ 6,13,91,021.00 in the second declaration. In such circumstances, rejection of the second declaration of the petitioners on the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On that date his statement was recorded under section 14 of the Central Excise Act, 1944 read with section 174 of the Central Goods and Services Tax Act, 2017 (briefly the CGST Act hereinafter) as well as under section 70 of the said Act. Question No.5 put to petitioner No.2 was as to what was the service tax and GST liability of petitioner No.1 as on February, 2018. In his reply petitioner No.2 stated that till February, 2018 service tax liability would be ₹ 6 crore approximately and GST liability would be ₹ 5.1 crore approximately, total amounting to ₹ 11.10 crores. He admitted that despite charging and collecting service tax from the clients, the same was not deposited into the government exchequer. 5. Following the above statement, several communications were exchanged between the petitioners and the Directorate General of GST Intelligence including one dated 31.08.2018 whereby the Senior Intelligence Officer referred to the statement of petitioner No.2 dated 30.03.2018 and the admission that petitioner No.1 had service tax and GST liability of ₹ 11.10 crores. 6. In the meanwhile, Central Government introduced the scheme under the Finance (No.2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is stated that there was some technical issue in the portal of the scheme which necessitated issuing of order in physical form. It is stated that verification regarding the outstanding service tax dues of the petitioners were sought for from the Directorate General of GST Intelligence which was an internal communication between two different wings of the department. As per verification report of the Directorate General of GST Intelligence, service tax amount had not been quantified before 30.06.2019 which is the cut off date under the scheme. Therefore, petitioners were not eligible under the scheme. After giving an opportunity of hearing to the petitioners, the declarations were rejected. However, it has been pointed out that in the first declaration dated 27.11.2019, petitioners had declared service tax dues of ₹ 5,16,24,145.00 with deposit of ₹ 2,97,91,340.00. But in their second declaration dated 10.01.2020, petitioners had declared service tax dues of ₹ 6,13,91,021.00 with deposit of ₹ 2,97,91,340.00. Thus, in a span of only 43 days, there was vast discrepancy in the service tax liability disclosed by the petitioners in the two declarations i.e. ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k to the circular dated 27th August, 2019 of the Board, it is seen that certain clarifications were issued on various issues in the context of the scheme and the rules made thereunder. As per paragraph 10(g) of the said circular, the following issue was clarified in the context of the various provisions of the Finance (No.2) Act 2019 and the Rules made thereunder :- Cases under an enquiry, investigation or audit where the duty demand has been quantified on or before the 30th day of June, 2019 are eligible under the scheme. Section 2(r) defines quantified as a written communication of the amount of duty payable under the indirect tax enactment. It is clarified that such written communication will include a letter intimating duty demand; or duty liability admitted by the person during enquiry, investigation or audit; or audit report etc. 48. Thus as per the above clarification, written communication in terms of section 121(r) will include a letter intimating duty demand or duty liability admitted by the person during enquiry, investigation or audit etc. This has been also explained in the form of frequently asked questions (FAQs) prepared by the department on 24th Decembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person is eligible to opt for the Scheme? Ans. No. If an audit, enquiry or investigation has started, and the amount of duty/duty payable has not been quantified on or before 30th June, 2019, the person shall not be eligible to opt for the Scheme under the enquiry or investigation or audit category. Quantified means a written communication of the amount of duty payable under the indirect tax enactment [Section 121(r)]. Such written communication will include a letter intimating duty demand; or duty liability admitted by the person during enquiry, investigation or audit; or audit report etc. [Para 10(g) of Circular No 1071/4/2019-CX dated 27th August, 2019]. * * * * Q45. With respect to cases under enquiry, investigation or audit what is meant by written communication quantifying demand ? Ans . Written communication will include a letter intimating duty/tax demand or duty/tax liability admitted by the person during enquiry, investigation or audit or audit report etc. 19. Finally in Saksham Facility Private Limited Vs. Union of India, 2020 TIOL-2108-HC-MUM-ST, where a similar issue had cropped up, this court reiterated the above posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be determined upon adjudication. 21. In so far the present case is concerned, there is no dispute that petitioner No.2 in his statement made before the Directorate General of GST Intelligence on 30.03.2018 had admitted service tax liability to the extent of ₹ 6 crore approximately. This was accepted by the respondents and in the subsequent communications issued to the petitioners on 31.08.2018 as well as on 16.05.2019 respondents had relied upon and referred to the admission of petitioner No.2 to the extent of service tax liability of ₹ 6 crore. To remove any doubt on this count, we find that after rejection of the two declarations of the petitioners, respondent No.6 has issued show cause cum demand notice dated 30.12.2020 alleging amongst others that petitioners have defaulted in payment of service tax to the extent of ₹ 6,13,91,021.00 for the period from 2013-14 to 2017-18 (upto June, 2017) which is the exact figure of service tax liability disclosed by the petitioners in the second declaration dated 10.01.2020. 22. Though petitioners had made a mistake in not disclosing this figure of ₹ 6,13,91,021.00 in the first declaration, the situation was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned prior to 30.06.2019 and subsequently quantified by the departmental authorities would not be material to determine eligibility in terms of the scheme under the category of inquiry, investigation or audit. What is relevant is admission of tax dues or duty liability by the declarant before the cut off date. Of course the figure or quantum admitted must have some resemblance to the actual dues. In our view, petitioner had fulfilled the said requirement and therefore he was eligible to make the declaration in terms of the scheme under the aforesaid category. Rejection of his declaration therefore on the ground of ineligibility is not justified. 25. That apart, in Thought Blurb (supra) we have held that when there is a provision for granting personal hearing in a case where the declarant disputes the estimated amount, it would be in complete defiance of logic and contrary to the very object of the scheme to reject a declaration on the ground of being ineligible without giving a chance to the declarant to explain as to why its declaration should be accepted and relief under the scheme be extended to it. It was held as under :- 51. We have already discussed that under su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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