TMI Blog2022 (1) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (Declaration) will lead to adverse civil consequences for the declarant as he would have to face consequences of enquiry or investigation or audit - Non-compliance to the principles of natural justice would impeach the decision making process, rendering the decision invalid in law. The rejection of the Declaration under the said scheme filed by the petitioner without rendering a personal hearing to the petitioner, leads to adverse civil consequences for the petitioner as the petitioner would have to face the consequences of enquiry or investigation or audit. The impugned orders are in gross violation of the principles of law laid down by this Court in the case of Thought Blurb would apply to the facts of this case. Whether the petitioner was eligible to make a Declaration under the said scheme and would fall under one of the categories of the persons who are eligible to make such Declaration under section 125(1) of the said scheme or not? - HELD THAT:- Section 125(1)(e) of the said scheme provides 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 audit has not been quan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice. By consent of parties, writ petition is heard finally. 2. By this petition filed under Article 226 of the Constitution of India, the petitioner prays for a writ of certiorari for quashing and setting aside the order of Designated Committee-I (comprised of respondent nos. 2 and 3) communicated through email dated 14th February, 2020 whereby rejecting the SVLDRS-1 Declaration dated 30th December, 2019 filed by the petitioner. The petitioner also prays that the proviso to Rule 6(2) read with Rule 6(3) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 (for short the said Scheme ) be read down and to accept the Declaration filed by the petitioner as the valid Declaration under Section 125 of the said Scheme and for other reliefs. 3. Some of the relevant facts for the purpose of deciding this writ petition are as under :- 4. The petitioner is engaged in providing construction services of commercial or industrial buildings and civil structures, other than residential complexes. It is the case of the petitioner that in the month of February 2019, an enquiry for investigation was narrated by the Directorate General of GST Intelligence, Zonal Unit, Mumbai. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter adjusting the said deposit of ₹ 90,00,000/- and declared as 0 zero. It is the case of the petitioner that as per the said Scheme, the petitioner was required to pay an amount of ₹ 64,44,270/- against which the petitioner had already paid a sum of ₹ 90 lakhs i.e. sum of ₹ 25,55,729/- in the excess of the final amount payable by the petitioner which amount is non-refundable under the said Scheme. 8. The petitioner made a representation before the respondent no.2 on 31st January, 2020 and gave a detailed explanation as to why the said Declaration filed by the petitioner on 30th December, 2019 should be accepted. The petitioner requested for an opportunity of personal hearing in compliance with the principles of natural justice, if the respondent no.2 did not agree to the said submissions made by the petitioner in the said representation before deciding the said issue. 9. The petitioner was communicated with the decision vide email dated 14th February, 2020 by the respondent no.2 thereby rejecting the said Declaration filed by the petitioner dated 30th December, 2019 without providing an opportunity of Personal hearing. The petitioner made another r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the petitioner invited our attention to the circular dated 27th August, 2019 issued by the CBIC, New Delhi clarifying the said Scheme. He relied upon Clause 10(g) of the said circular and submitted that the tax dues were quantified in the investigation or enquiry on or before 30th June, 2019 and thus Section 121(r) defining the terms quantified under the said Scheme was satisfied. 13. Learned counsel for the petitioner invited our attention to Frequently Asked Questions (FAQs) issued by the Central Government under the said Scheme and more particularly answer to question no. 53. He submits that the said answer to said question no. 53 is contrary to the provisions of the said Scheme including the clarifications already issued by circular dated 27th August, 2019. It is submitted that in any event, the modified amount of the tax dues even according to the respondents was less than the amount admitted and quantified by the petitioner during the course of recording the statement by the Investigating Officer. Learned counsel for the petitioner placed reliance on the following judgments :- (a) The Judgment of this Court in case of Saksham Facility Services Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the statement of objects and reasons, the respondent ought to have taken a liberal interpretation to the scheme as its intent was to unload the objector from legacy dispute under Central Excise and Service Tax and from allow the business to make a fresh beginning. 16. Mr. Jetly, learned senior counsel for the respondents on the other hand invited our attention to the impugned order dated 14th February, 2020 rejecting the said Declaration form submitted by the petitioner. He relied upon the communication dated 10th August, 2020 recording the reasons for rejection of the said Declaration form submitted by the petitioner. He submits that the petitioner was clearly informed that the investigation was still going on and the respondents were yet to quantify the tax liability, thus the amount admitted in the statement cannot be said to be final. He submits that the Designated-I Committee had sought clarification from the DGGI, Mumbai in which it was once again reported that the investigation was still going on and that they were yet to quantify the liability and hence the amount admitted in the statement could not be said to be final. Learned senior counsel placed reliance on S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner or even pursuant to the representation made by the petitioner. 22. Learned counsel for the petitioner once again invited our attention to Section 125 of the said Scheme and would submit that it is not necessary that investigation should be concluded prior to 30th June, 2019. Even if the investigation was pending on the said cut-off date, in view of the fact that the tax liabilities already having been quantified, the petitioner was eligible to apply under the said Scheme. 23. Learned counsel for the petitioner invited our attention to the averments made in paragraph 14 of the said affidavit-in-reply filed by the respondents admitting that the amount in the Declaration form filed by the petitioner and in the show-cause notice was different. The amount quantified by the respondents in the show-cause notice showed the amount lesser than the amount admitted and quantified by the petitioner. The Court has to take liberal view in the matter under the said Scheme. The stand taken by the respondents is totally against the object, purpose and the intent of the said Scheme. 24. It is submitted by the learned counsel for the petitioner that under section 125(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be determined upon adjudication. 27. Learned counsel for the petitioner submits that the day of issuance of the show cause notice by the respondents cannot be considered as the date of quantification. The quantification in the statement made on 28th February, 2021 and the declaration dated 30th December, 2019 under the said scheme happened much before issuance of the show cause notice dated 26th September, 2020. He submits that since the amount reflected in the show cause notice was lesser than the admitted amount in the statement made by the director of the petitioner, the benefit under the said scheme cannot be denied to the extent, amount admitted in the statement. 28. It is submitted that the stand taken by the respondents in the affidavit in reply and more particularly in paragraph 4 that the respondent no.3 had conveyed to the respondent no.2 about the on going investigation and that the investigation was pending vide letter dated 14th February, 2020 is incorrect. The said information was conveyed on 10th August, 2020 and not 14th February, 2020. On 14th February, 2020, the application of the petitioner was already rejected by the respondents. 29. Learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had considered the stand taken by the department in the affidavit in reply that the statement of the petitioner was recorded before the service tax authorities wherein the director of the petitioner had confessed that the service tax liability was ₹ 12,24,99,843/- and held the evidence as admissible quantification under the said scheme which was prior to the cut off date. This Court accordingly held that the decision of the respondents in declaring the petitioner as ineligible is unjustified. REASONS AND CONCLUSION : 33. It is not in dispute that pursuant to the summons issued on 15 th November, 2019 investigation was initiated against the petitioner by DGGI Mumbai. In pursuance to the said summons, statement of Mohd. Azhar Ali, director was recorded on 28th February, 2019. A perusal of the said statement of the said director recorded on 28th February, 2019 by the Senior Intelligence Officer, DGGI, Mumbai, Zonal Unit clearly indicates that the said director on behalf of the petitioner, had stated that it was his responsibility to give true and correct statement. The said enquiry was deemed to be a judicial proceeding within the meaning of section 193 and 228 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther sum of ₹ 60 lakhs after recording the said statement on 28th February, 2019 vide challan dated 5th March, 2019 and 12th March, 2019, totalling to ₹ 90 lakhs. The said statement made by the director of the petitioner on behalf of the petitioner was issued in terms of section 14 of the Central Excise Act read with section 83 of the Finance Act. 36. The respondents have not disputed the fact that the said statement was made by the petitioner through its director during the course of investigation carried out by the respondents against the petitioner. In the show cause cum notice dated 26th September, 2020 i.e. much after rejection of the said Declaration filed by the petitioner under the said scheme, it was also recorded that the said Mohd.Azhar Ali (Director) of the petitioner was called upon to appear before the Senior Intelligence Officer on 28th February, 2019 to tender the evidence by way of statement. The petitioner had submitted the copies of the income tax returns of various periods and also copies of service tax returns. In paragraph 3.3 of the show cause notice, a reference was made to the statement made by the said director on 28th February, 2019. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each the decision making process, rendering the decision invalid in law. 41. In our view, the issue as to whether the tax liability of the petitioner, was already quantified prior to the cut off date or not in the statement of the director of the petitioner recorded by the investigating officer during the course of enquiry or whether the quantify of tax dues determined by the respondents in the show cause notice or not itself was an issue which required personal hearing. If personal hearing would have been rendered to the petitioner, it could have pointed out admission of the quantification of tax dues of the petitioner during the course of recording statement of the director by the investigating officer and not disputed by the respondents. 42. In our view, rejection of the Declaration under the said scheme filed by the petitioner without rendering a personal hearing to the petitioner, leads to adverse civil consequences for the petitioner as the petitioner would have to face the consequences of enquiry or investigation or audit. The impugned orders are in gross violation of the principles of law laid down by this Court in the case of Thought Blurb (supra) would apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or before the 30th June, 2019 are eligible under the scheme. Section 121(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. A perusal of question no.53 of the Frequently Asked Questions issued by the Central Government of the said scheme clearly states that even if the amount quantified under enquiry, investigation or audit before 30th June, 2019 gets modified subsequently due to any such assessee, he/she shall be entitled to file a Declaration under the said SVLDR scheme. In our view, conjoint reading of the term quantified used in section 125(1) read with clause clause (e) of the said scheme and paragraph 4(a) and 10(g) of the circular dated 27th August, 2019 issued by CBIC makes it clear that even if the tax dues are admitted in the statement made by the assessee on or before 30th June, 2019, it would satisfy the term quantified within the meaning of clause (r) of section 121 of the said SVLDR scheme. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant under the scheme is an admission of tax dues or duty liability by the declarant before the cut off date which need not be of the exact figure upon determination by the authorities post 30th June, 2019. In that matter, this Court had considered the situation where the petitioner no.2 in his statement before the Senior Intelligence Officer on 12th June, 2019 had admitted the gross service tax liability of ₹ 1,73,12,978/-. The petitioner no.2 however while admitting the said amount did not include the service tax on Ocean Freight on which the petitioner claimed exemption. 52. This Court held that when there is provision of 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 granted. This Court held that when an authority relies upon a document, copy of the same should be made available to the aggrieved party so that the aggrieved party can respond to such document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make a Declaration in terms of the scheme under the said category. Rejection of a Declaration filed by the petitioner on the ground of being not eligible is thus perverse and not justified. The facts before this Court are identical to the facts before this Court in case of Sabareesh Pallikere (supra). We are bound by the principles laid down in the said judgment. We do not propose to take a different view in the matter. 55. This Court in case of Sabareesh Pallikere (supra) and Viztar International Private Limited ( (supra) has held that for eligibility under the said SVLDRS, the quantification need not be on completion of investigation as claimed by the petitioner therein. This Court in case of Sai Ram Mech Tech India Private Limited (supra) considered identical facts where the petitioner had made a statement before the Superintendent (Prev.) CGST and Central Excise, Palghar Commissionerate under sections 70 and 174 of the Central Goods and Services Tax Act, 2017 read with section 14 of the Central Excise Act, 1944 and section 83 of the Finance Act, 1994. In that matter, the director of the assessee was put a question by the Superintendent as to what was service tax liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of this case. We do not propose to take a different view in the matter. 58. Similar view has been taken by this Court in case of Suyog Telematics Limited (supra) wherein this Court had considered the statement made by the director of the petitioner during the course of investigation admitting the service tax liability and confirmation of the said statement having been made by the petitioner in the affidavit in reply filed by the authority and held the petitioner therein eligible to apply under the said scheme. 59. This Court in case of Thought Blurb (supra) has considered the objects and reasons and the purpose of introducing the said Sabka Vikas (Legacy Dispute Resolution Scheme, 2019) framed by the Government of India. The Government took cognizance of the fact that GST had completed two years. An area that concerns was that there were huge pending litigations from pre-GST regime. More than 3.75 lakhs crores were blocked in litigations in service tax and excise. There was need to unload this baggage and allow the business to move on and accordingly proposed a Legacy Dispute Resolution scheme that would allow quick closure of those litigations. The Finance Minister u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited vs. Union of India MANU/MH1428/2020 and observed that the scheme had the twin objectives of liquidation of past disputes pertaining to the subsumed taxes on the one hand and disclosure of unpaid taxes on the other hand. The concerned authorities should keep in mind the broad picture while dealing with a claim under the scheme. 64. This Court in the judgment in the case of Thought Blurb (supra) accordingly reiterated the principles laid down by this Court in case of Capgemini Technology Services Limited (supra) and also followed the principles laid down by the Delhi High Court in case of Vaishali Sharma vs. Union of India, MANU/DE1529/2020 and held 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. 65. In our view, the view taken by the respondents is not only contrary to various principles of law laid down by this Court in catena of decisions referred to aforesaid but also contrary to the objects and reasons and the intent of the Central Government in introducing the said scheme for the benefit of the ..... 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