TMI Blog2023 (1) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of Show Cause Notice or upon adjudication. It is not in dispute that on 15 February 2018, the Superintendent of the Director General of GSTI and his team visited its office and Petitioner vide its letter dated 15 February 2018 informed the Superintendent that it had handed over the PPL to MCGM. From the definition of enquiry and investigation as set out above, it is clear that search of premises as in the case of Petitioner on 15 February 2018 falls under enquiry or investigation as defined in Section 121(m). By the said communication it was submitted that the Petitioner is entitled to the cenvat input tax credits since ultimate sale of flats was liable to tax as they had paid the same there would be no reason to issue Show Cause Notice nor impose any penalty and the proceedings be closed as they had complied with provisions of the Service Tax, MVAT and GST law. There has been no reply to this communication. The Designated Committee instead of issuing Form 3 and followed with Form 4 to Petitioner, issued a Show Cause Notice dated 21 June 2021. It is only pursuant to communication dated 14 February 2022 when request was made by Petitioner to issue Form SVLDRS-4 that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner CGST Central Excise, Mumbai, rejecting declaration in Form-SVLDRS-1 dated 20 December 2019 filed by the Petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 ( SVLDR Scheme ). 2. Petitioner is a company incorporated under the Companies Act, 1956 and is inter alia engaged in the business of real estate and related activities. Petitioner is stated to be registered under the Service Tax Rules, 1994 and upon coming into force of the CGST Act with effect from 1 July 2017, Petitioner is stated to have registered under the CGST Act as well. 3. Petitioner s case is that it had constructed a Public Parking Lot (PPL) on plot of land bearing No. C.S. No.2/1629 of Lower Parel Division, Plot No. 249, 249-A of Worli Scheme No. 52, G/S Ward, Opp. Hind Cycle Company, B. P. Road, Mumbai 400025 (the said plot ). 4. That the Municipal Corporation of Greater Mumbai ( MCGM) by its letter dated 5 May 2012 approved the proposal of grant of incentive FSI over and above the normal FSI to the Petitioner against the construction of the said PPL on the said plot. 5. Pursuant to the visit of the Superintendent, Directorate General of GST Intelligence, Mumbai ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm SVLDRS-2A in case any other date and time of personal hearing was desired. Petitioner submitted Form SVLDRS-2A dated 22 January 2020. 13. By an e-mail dated 29 January 2020, Petitioner was informed that it had not attended the personal hearing and was requested to contact the SVLDRS Cell in respect of its application. 14. It is the case of the Petitioner that thereafter, Petitioner did not receive any other communication, but to its surprise received a Show Cause Notice dated 21 June 2021 from Respondent No.6- Deputy Director, Directorate General of GST Intelligence to show cause as under:- A. The extended period envisaged under proviso to sub-section (1) of section 73 of the Finance Act, 1994 read with Rule 14 of the Cenvat Credit Rules, 2004 which has been kept in force in the GST era vide section 142 174 of the Central Goods and Services Tax Act, 2017 should not be invoked to demand the Service Tax evaded by them for the reasons discussed above: B. An amount equal to Cenvat credit to the tune of s. 1,25,96,355/- (Rupees One crore twenty five lakhs ninety six thousand three hundred fifty five only) inclusive of Education Cess, Higher Secondary Education Cess, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d interest. 18. Later vide letter dated 14 February 2022, Petitioner requested the Designated Committee to issue to the Petitioner Form SVLDRS-4. 19. Vide communication dated 17 February 2022, Respondent No.4 -Additional Commissioner of CGST and Central Excise informed Petitioner that Form SVLDRS-1 file by Petitioner had been rejected on 20 March 2020 and enclosed copy of the said letter dated nil March 2020 rejecting the declaration filed by Petitioner. 20. It is the Petitioner s case that Petitioner never received the said communication of rejection of the declaration on 20 March 2020 either from Respondent No.4 or from the Designated Committed, prior to the 4th Respondent s letter dated 17 February 2022, by which the letter dated Nil March, 2020 rejecting the declaration was enclosed. 21. Aggrieved by the aforesaid, Petitioner has preferred this Writ Petition submitting that rejection of the declaration filed by Petitioner under Section 125(2) of the Finance Act, 2019 is ex-facie, arbitrary, unreasonable and contrary to the scheme and in breach of principles of natural justice and liable to be set aside on the grounds mentioned in the petition. The Petitioner has pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.5 could not have rejected the declaration. 26. He further submits that the rejection letter refers to and relies upon a DGGI report dated 27 February 2020 to submit that the amount has not been quantified but the said verification report has not thus been furnished to Petitioner nor Petitioner has been granted an opportunity to deal with the same, making the rejection in breach of the principles of natural justice. 27. Reliance has also been placed by learned Counsel for Petitioner on Section 123(c) of the Finance Act, 2019, to submit that this is a case where the amount of duty payable under Service Tax law has been quantified on or before 30 June 2019. 28. Learned Counsel also refers to Clause (e) of Section 125(1) to submit that all persons are eligible to make a declaration except, inter alia, who have 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 quantified on or before the 30 June 2019. 29. Learned Counsel also refers to the letter dated 23 March 2018 from Petitioner to DGGSTI, Mumbai to submit that the said communication clearly admits Cenvat Credit taken of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing) is issued to clarify the dispute and in the present case although the Petitioner was requested to appear before the Designated Committed on 21 January 2020 at 3.00 p.m. to clarify the matter, Petitioner did not appear for the personal hearing. 38. With respect to the manual rejection of the application of Petitioner, it is submitted that the Board vide letter F. No. 267/55/2020/CX-8/Pt-1 dated 4 May 2020 has informed the field formation that whenever the SVLDRS-2 is issued to the declarant, there is no funtionality in the SVLDRS portal to reject the application online and therefore, the board has instructed that such applications may be rejected manually on merits. 39. It is submitted that since the Petitioner was not eligible for the Scheme as the tax amount was not quantified as on 30 June 2019, Petitioners declaration was rejected, pursuant to communication from the DGGI, Mumbai dated 27 February 2020 to the Designated Committee. 40. It is further submitted on behalf of the Respondents that the Show Cause Notice issued to Petitioner is dated 21 June 2021, which demonstrates that the amount was not quantified as on 30 June 2019. Therefore, Petitioner could not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a person eligible to make a declaration. The Scheme shall be 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. 48. Chapter V of the Finance Act, 2019 provides for the relief available under the Scheme, declaration to be made thereunder, the verification of declaration by the Designated Committee, the statement by Designated Committee, issue of discharge certificate, restrictions of the scheme and the power to make rules to issue orders, instructions, etc. 49. Before we proceed further, it would be apposite to set out the various provisions, clarifications, Frequently Asked Questions(FAQs), relied upon on behalf of the parties. 50. Section 121 defines various terms that are used in the Scheme. Section 121(m) defines enquiry or investigation as under:- 121 . (m) enquiry or investigation , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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. FAQ.53. The amount quantified under an enquiry, investigation or audit on or before 30.06.2019 gets modified subsequently due to any reason. Will I still be eligible to file a declaration under the Scheme? Ans . Only such cases of enquiry, investigation or audit are covered under the Scheme where the duty/tax demand has been finally worked out on or before 30.06.2019. In other words, all the evidence/document gathering process is over and the tax liability has been worked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, 2019. 49. Reverting back to the facts of the present case, we find that on the one hand there is a letter of respondent No.3 to the petitioner quantifying the service tax liability for the period 1st April, 2016 to 31st March, 2017 at Rs.47,44,937.00 which quantification is before the cut off date of 30 th June, 2019 and on the other hand for the second period i.e. from 1st April, 2017 to 30th June, 2017 there is a letter dated 18th June, 2019 of the petitioner addressed to respondent No.3 admitting service tax liability for an amount of Rs.10,74,011.00 which again is before the cut off date of 30th June, 2019. Thus, petitioner s tax dues were quantified on or before 30th June, 2019. 50. In that view of the matter, we have no hesitation to hold that petitioner was eligible to file the application (declaration) as per the scheme under the category of enquiry or investigation or audit whose tax dues stood quantified on or before 30 th June, 2019. 18. Subsequently, in M/s G.R.Palle Electricals Vs. Union of India, 2020 TIOL-2031-HC-MUM-ST=2021(45) G.S.T.L.10(Bom.), this Court held as follows:- 27. We have already noticed that proprietor of the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court reiterated the above position and held as under :- 22.3. Clause (g) of paragraph 10 makes it abundantly clear that cases under an enquiry, investigation or audit where the duty demand had been quantified on or before 30.06.2019 would be eligible under the scheme. The word quantified has been defined under the scheme as a written communication of the amount of duty payable under the indirect tax enactment. In such circumstances, Board clarified that such written communication would include a letter intimating duty demand or duty liability admitted by the person during enquiry, investigation or audit etc. Reverting back to the facts of the present case we find that there is clear admission / acknowledgment by the petitioner about the service tax liability. The acknowledgment is dated 06.2019 i.e., before 30.06.2019 both in the form of letter by the petitioner as well as statement of its Director, Shri. Sanjay R. Shirke. In fact, on a pointed query by the Senior Intelligence Officer as to whether petitioner accepted and admitted the revised service tax liability of Rs.2,47,32,456.00, the Director in his statement had clearly admitted and accepted the said amount as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Secondary Higher Education Cess and Krishi Kalyan Cess, totalling to Rs. 4,60,96,697/- for the relevant period which has been paid together with interest through Service Tax challans which were also furnished to the DGGSTI. 59. A perusal of the said communication dated 23 March 2018 indicates that the company had availed Cenvat Credit including cenvat for construction of PPL for MCGM and has furnished the service tax returns for the respective periods as well as the profit centre wise details of such cenvat availed including for the period from 1 April 2012 to 30 June 2017. 60. It is stated in the said letter that pursuant to the ascertainment of cenvat credit of Service Tax, Education Cess, Secondary Higher Education Cess and Krishi Kalyan Cess, the company has ascertained applicable interest of Rs. 1,80,81,197/- on service tax, interest of Rs. 3,46,099/- on education cess, interest of Rs. 1,73,043/- on Secondary Higher Education Cess and interest of Rs. 14,137/- on Krishi Kalyan Cess for the relevant period. 61. By the said communication it was submitted that the Petitioner is entitled to the cenvat input tax credits since ultimate sale of flats was liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of dealing with the same, the application of Petitioner is sought to be rejected. It is not explained as to why if information was furnished to the Designated Committee vide letter dated 27 February 2020, a clarification was sought from the Petitioner on 22 January 2020, a date prior to the communication by the investigating agency. 65. As noted above, the SVLDR Scheme is a legislation introduced for liquidation of legacy disputes on the one hand and recovery of unpaid taxes to the government on the other. The Respondent cannot contend that the portal was not updated. Once SVLDRS-2 has been issued and there has also been a follow up from the Respondents with respect to the said Form as well as the hearing that was fixed at the appointed date and time, the Respondent-Authorities cannot renege on the same. Particularly so in the peculiar facts and circumstances of this case, where admittedly, the rejection of SVLDRS-1 was not communicated to Petitioner on 20 March 2020, but only communicated to them on 17 February 2022 i.e. after a request came from Petitioner to issue Form SVLDRS-4. 66. Therefore, having held that the amount of Rs. 4,60,96,697/-, is the amount quantified pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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