TMI Blog2022 (4) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... ue would have to be read together with the letter dated 23.07.2019 - On a conjoint reading of the two it would mean that the verification pertains to the period 2014- 2015. Therefore, on due consideration, it cannot be said that petitioner was subjected to any enquiry or investigation or audit as on 30.06.2019 and pertaining to the period covered by the declaration at the time of making the declaration. Under Sub-Sections (2) and (3) of Section 127, in a case where the amount estimated by the designated committee exceeds the amount declared by the declarant, then an intimation has to be given to the declarant. However, before insisting on payment of the higher amount determined by the designated committee, the declarant is required to be afforded an opportunity of hearing by the designated committee. If in a situation where the amount estimated by the designated committee is in excess of the amount declared by the declarant, an opportunity of hearing is required to be given by the designated committee to the declarant, then it would be in complete defiance of logic and contrary to the very object of the scheme to outrightly reject a declaration on the ground of ineligibility wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Scheme has facility for voluntary disclosure of tax dues. In such a case, the declarant has to pay the full tax declared but is not required to pay interest and penalty, besides being provided immunity from prosecution. 7 Petitioner filed declaration in the prescribed format online on 13.09.2019 under the category of voluntary disclosure declaring service tax dues of ₹ 1,72,93,758-00 for the period from April, 2016 to June, 2017. As per the procedure laid down the designated committee i.e. respondent No.4 chaired by respondent No.3 considered the declaration filed by the petitioner. However, vide the intimation dated 27.09.2019, declaration filed by the petitioner was rejected. 8 It is stated that petitioner was not subjected to enquiry / investigation till announcement of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on 05.07.2019. Petitioner was issued a letter on 23.07.2019 by the Superintendent (Anti-evasion) for verification of payment of service tax for the financial year 2014-15. It was not an investigation; certainly not for the period from April, 2016 to June, 2017. Subsequently, summons dated 11.09.2019 were issued to the petitioner for an enqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horised person (Managing Director) was recorded. In the circumstances, the Deputy Commissioner opined that tax payers who are subjected to enquiry or investigation or audit are not eligible to make a declaration under the aforesaid scheme. On the above basis it is stated that declaration of the petitioner could not be accepted as the petitioner was not eligible. Therefore, the intimation dated 27.09.2019 was issued. To support the above contention, reference has been made to various provisions of the Finance (No.2) Act, 2019. 12 Petitioner has filed reply to the counter affidavit of respondent Nos.3 and 4. It is stated that the declaration was made for the period from April, 2016 to June, 2017 i.e. for the years 2016-2017 and 2017- 2018 (up to June, 2017). Petitioner has stated that respondent No.2 i.e. Central Board of Indirect Taxes and Customs had issued another circular dated 12.12.2019 wherein it has been clarified that in cases where notices were issued on or after 01.07.2019 declarants are eligible. In this connection, it is stated that a tax payer facing audit, enquiry or investigation on or before 30.06.2019, would not be entitled to the benefits under the said scheme. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e enforced by the Central Government from a date to be notified. It provides that eligible persons shall declare the tax due and pay the same in accordance with the provisions of the scheme. It further provides for certain immunities including penalty, interest or any other proceedings under the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994 to those persons who pay the declared tax dues. 18 Central Board of Indirect Taxes and Customs issued circular dated 27.08.2019 stating that the Central Government had announced the scheme as part of the union budget for the year 2019-2020. It was stated thus:- 2. As may be appreciated, this scheme is a bold endeavour to unload the baggage relating to the legacy taxes viz. central excise tax that have been subsumed under GST and allow business to make a new beginning, and focus on GST. Therefore, it is incumbent upon all officers and staff of CBIC to partner with the trade and industry to make this scheme a grand success. 3. Dispute resolution and amnesty are the two components of this scheme. The dispute resolution component is aimed at liquidating the legacy cases locked up in litigation at various forums whereas th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggage of pre-GST regime and thereby allowing business to move ahead, but at the same time, to also ensure that the administrative machinery can focus fully in the smooth implementation of GST. This is the broad picture which should be kept in mind while considering a declaration seeking amnesty under the scheme. Therefore, a liberal view embedded with the principles of natural justice is called for. The approach should be to ensure that the scheme is successful. 21 Chapter V of Finance (No.2) Act, 2019, contains the scheme; as a matter of fact, Sections 120 to 135 under Chapter V comprises the scheme. 22 Section 121 provides for the definitions. As per Clause (g) audit has been defined to mean, any scrutiny, verification and checks carried out under the indirect tax enactment other than an enquiry or investigation and will commence when a written intimation from the Central Excise officer regarding conduct of audit is received. While Clause (i) defines declaration to mean a declaration filed under Section 125, under Clause (h) a declarant would mean a person who is eligible to make a declaration and file such declaration under Section 125. As per Clause (k) designated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarant. 27 Section 127 provides for issue of statement by the designated committee. As per Sub-Section (1) where the amount estimated to be payable by the declarant as estimated by the designated committee equals the amount declared by the declarant, then the designated committee shall issue a statement in electronic form indicating the amount payable by the declarant within the period prescribed. Sub- Section (2) deals with a situation where the amount estimated by the designated committee to be payable by the declarant exceeds the amount declared by the declarant, then the designated committee shall issue an estimate of the amount payable by the declarant in the prescribed form and within the prescribed period. In terms of Sub- Section (3), after issue of the estimate under Sub-Section (2), the designated committee shall give an opportunity of being heard to the declarant before issuing the statement in terms of Sub-Section (4). As per the proviso, on sufficient cause being shown by the declarant only one adjournment may be granted by the designated committee. Sub- Section (4) says that after hearing the declarant a statement in electronic form indicating the amount payable b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was mentioned that subsequently Board had received further references from field formations as well as from the trade seeking certain clarifications about the scheme. After considering the same Board issued the clarifications vide the above circular. In paragraph No.2 (v) it was clarified that for the purpose of eligibility under the scheme in some of the categories, such as, litigation, audit/enquiry/investigation etc, the relevant date is 30.06.2019. Two instances were mentioned. As per first instance, in a case under audit/investigation/enquiry where the tax dues have been quantified on or before 30.06.2019, a show cause notice is issued after 30.06.2019. Similarly, a case which was under appeal as on 30.06.2019 may attain finality in view of appeal period being over etc. Board has clarified that the eligibility with respect to a category in such cases shall be as it was on the relevant date i.e. 30.06.2019. 34 Board has also issued clarifications in the form of answers given to FAQs. Question No.1 is, who is eligible to file declaration under the scheme. The answer given thereto is that any person falling under the following categories is eligible, subject to other conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, designated committee found that provisions of Section 125 (1) (f) would be attracted thereby making the petitioner ineligible under the scheme. Therefore, designated committee decided to reject the declaration of the petitioner. 38 From the impugned intimation dated 27.09.2019 what is discernible is that petitioner had filed declaration under the category of voluntary disclosure . But invoking the provisions of Section 125 (1) (f), designated committee declared the petitioner to be ineligible under the scheme and therefore rejected the declaration. However, interestingly in the intimation dated 27.09.2019 there is no mention or reference to the time period in respect of which the voluntary disclosure was made. 39 As we have already seen, Section 125 of the Finance (No.2) Act, 2019, deals with eligibility to make a declaration under the scheme. Sub-Section (1) is couched in broad and positive language. It says that all persons are eligible to make a declaration under the scheme except those covered by the situations from (a) to (h). Though in the impugned intimation it is stated that declaration of the petitioner was rejected under Section 125 (1) (f), Mr. B.Narasimh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also has two parts. As per the first part, the declarant should not be subjected to any enquiry or investigation or audit at the time of making the declaration under the category voluntary disclosure . The second part is that if a person had filed the return under the concerned indirect tax enactment wherein he has indicated an amount of duty as payable but has not paid it. Then he would not be eligible to make a declaration under the category of voluntary disclosure . Thus, the two parts visualize two different situations. One is being subjected to any enquiry or investigation or audit at the time of making the declaration under the category of voluntary disclosure . The other is that the person had filed the return under the relevant indirect tax enactment wherein he has mentioned the amount of duty as payable but has not paid it. Evidently, the two situations are different and therefore the word or has been used as a disjunctive. 42 There is one more aspect. If we look at Section 129, we find that once a discharge certificate is issued under the scheme, the same shall be conclusive as to the matter and time period stated therein. In other words, for the said time period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt with respect to the matter and time period covered in the declaration. In fact, in a case of voluntary disclosure, proviso to Sub-Section (1) of Section 126 makes it very clear that no verification shall be made by the designated committee. Section 129 (2) (c) further says 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 discharge certificate, it shall be presumed that no such declaration was ever made. Consequently, proceedings under the applicable indirect tax enactment shall be instituted. 45 That being the position, respondent Nos.3 and 4 were not at all justified in rejecting the declaration of the petitioner. 46 Before parting with the record, there is one more aspect which we would like to advert. This relates to the aspect of natural justice. As we have noticed above, under Sub-Sections (2) and (3) of Section 127, in a case where the amount estimated by the designated committee exceeds the amount declared by the declarant, then an intimation has to be given to the declarant. However, before insisting on payment of the higher amount determined b ..... 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