TMI Blog2021 (3) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... be eligible to make a declaration. Therefore, whenever and wherever the scheme talks about an enquiry or investigation or audit, the date 30.06.2019 carries considerable significance and becomes relevant. The enquiry or investigation or audit should commence prior to 30.06.2019. Though clause (f) of sub-section (1) of section 125 does not mention the date 30.06.2019 by simply saying that a person making a voluntary disclosure after being subjected to any enquiry or investigation or audit would not be eligible to make a declaration, the said provision if read and understood in the proper context would mean making of a voluntary disclosure after being subjected to an enquiry or investigation or audit on or before 30.06.2019. Such a view if taken would be a reasonable construct consistent with the objective of the scheme. The respondent No.4 was not justified in rejecting the declaration of the petitioner dated 26.12.2019 on the ground that petitioner was not eligible to file declaration under the category of voluntary disclosure since enquiry was initiated against the petitioner on 19.12.2019 whereafter petitioner filed declaration - the respondent No.4 was not justified in rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter). Petitioner was informed that an enquiry against it was being carried out. Summoning authority had reasons to believe that petitioner was in possession of facts / information / documents / records material to the above enquiry. Therefore, petitioner was asked to comply with the summons and furnish the information and documents as per the schedule to the summons. 6. On 19.12.2019, statements of Shri. Sanjay P. Ahire, Accountant and Shri. Kishan Chand Agarwal, Legal Consultant of the petitioner were recorded before the Superintendent, Anti-Evasion, Group 8 in the office of Mumbai South Commissionerate. In their statements, they admitted that service tax of ₹ 94,26,823.00 for the period from 2015-16 upto 30.06.2017 was payable by the petitioner with interest and penalty. 7. In the meanwhile, central government introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (briefly the scheme hereinafter) vide the Finance (No.2) Act, 2019. Objective of the scheme was to bring to an end pending litigations pertaining to service tax and central excise which stood subsumed with the goods and services tax (GST), in the process granting considerable relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with section 83 of the Finance Act, 1994 and section 70 of the CGST Act. In their statement, the two officials admitted service tax liability of the petitioner of ₹ 94,26,823.00 for the period from 01.04.2015 to 30.06.2017 payable along with interest and penalty. 15. Petitioner s declaration under the scheme was rejected on 29.01.2020 on the ground that petitioner had filed the declaration after initiation of enquiry. Therefore, petitioner was not eligible to file declaration under the category of voluntary disclosure in terms of section 125(1)(f) of the Finance (No.2) Act, 2019. 16. Since petitioner s declaration under the scheme was rejected, investigation initiated against the petitioner continued and as a result petitioner was called upon by the respondents to pay the outstanding dues with interest and penalty which has however not been complied with by the petitioner. 17. Basic stand taken by the respondents in their affidavit is that in terms of section 125(1)(f) of the Finance (No.2) Act, 2019, a person who makes a voluntary disclosure after being subjected to an enquiry or investigation would not be eligible to make a declaration. In the case of the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or audit would not be eligible to make a declaration under the scheme should not be read in isolation. It should be read in the overall context of the scheme and if so read it would mean that such enquiry or investigation or audit should be prior to 30.06.2019. In this connection, learned counsel for the petitioner has placed reliance on a decision of the Supreme Court in Tata Engineering and Locomotive Company Limited Vs. State of Bihar, (2000) 5 SCC 346. 20. Per contra, Mr. Jetly, learned senior counsel for the respondents has referred to the averments made in the reply affidavit and submits that designated committee has rightly rejected the declaration of the petitioner. Refuting the argument of Mr. Raichandani, learned counsel for the petitioner that the enquiry initiated against the petitioner as is discernible from the summons dated 19.12.2019 was under the CGST Act and not under the Finance Act, 1994 dealing with service tax, he submits that by inadvertence only section 70 of the CGST Act, 2017 was mentioned in the summons. However, it would be quite clear from the statement of the two officials of the petitioner recorded on 19.12.2019 that the subject matter of en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the language of sub-section (1) of section 127 it can safely be said that eligibility to make a declaration is the norm and ineligibility is the exception. As per clause (f)(i), a person making a voluntary disclosure after being subjected to any enquiry or investigation or audit shall not be eligible to make a declaration under the scheme. At this stage, we may mention that as per exclusion clauses (a), (c) and (e), those persons who have filed appeal before the appellate forum and such appeal had been heard finally on or before 30.06.2019 or those persons who have been issued a show cause notice under an indirect tax enactment and final hearing had taken place on or before 30.06.2019 or those persons who have been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation had not been quantified on or before 30.06.2019 would not be eligible to make a declaration. Clause (e) is just above clause (f) which deals with voluntary disclosure. As we have seen, clause (e) says that a person who has been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment (emphasis applied). 25. While at the scheme, we may also mention that as per the proviso to sub-section (1) of section 126, no verification shall be made by the designated committee in case where a voluntary disclosure of an amount of duty has been made by the declarant. This is perhaps because of the fact that under section 124(1)(e), where tax dues are payable on account of voluntary disclosure then no relief is available with respect to the tax dues. However, section 129(2)(c) makes it clear that in a case of voluntary disclosure where any material particular furnished in the declaration is subsequently found to be false within a period of one year of issue of the discharge certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted. 26. Question No.10 of the FAQs and the answer given thereto read as under:- Q.10. I have been subjected to an enquiry or investigation or audit under indirect tax enactment and I want to make a voluntary disclosure regarding the same. Am I eligible for the Scheme? Ans . No, you are not eligible to make a declaration under the vol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant. The enquiry or investigation or audit should commence prior to 30.06.2019. Though clause (f) of sub-section (1) of section 125 does not mention the date 30.06.2019 by simply saying that a person making a voluntary disclosure after being subjected to any enquiry or investigation or audit would not be eligible to make a declaration, the said provision if read and understood in the proper context would mean making of a voluntary disclosure after being subjected to an enquiry or investigation or audit on or before 30.06.2019. Such a view if taken would be a reasonable construct consistent with the objective of the scheme. 29. That being the position, we are of the opinion that respondent No.4 was not justified in rejecting the declaration of the petitioner dated 26.12.2019 on the ground that petitioner was not eligible to file declaration under the category of voluntary disclosure since enquiry was initiated against the petitioner on 19.12.2019 whereafter petitioner filed declaration. 30. Since on the basis of the above deliberations, we have come to the conclusion that respondent No.4 was not justified in rejecting the declaration of the petitioner, it would not be nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. We have one more reason to take such a view. As has rightly been declared by the Hon ble Finance Minister and what is clearly deducible from the statement of object and reasons, the scheme is a one time measure for liquidation of past disputes of central excise and service tax as well as to ensure disclosure of unpaid taxes by a person eligible to make a declaration. The basic thrust of the scheme is to unload the baggage of pending litigations centering around service tax and excise duty. Therefore the focus is to unload this baggage of pre-GST regime and allow business to move ahead. We are thus in complete agreement with the views expressed by the Delhi High Court in Vaishali Sharma Vs. Union of India, MANU/DE/1529/2020 that a liberal interpretation has to be given to the scheme as its intent is to unload the baggage relating to legacy disputes under central excise and service tax and to allow the business to make a fresh beginning. 32. Thus, upon thorough consideration of the above matter, we set aside and quash the order dated 29.01.2020 and remand the matter back to respondent No.4 for taking a fresh decision on the declaration filed by the petitioner on 26.12.2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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