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TMI Blog2024 (2) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... unication dated 27.01.2020, informing rejection of application filed under Sabka Vishwas Scheme and Form SVLDRS-1 generated on-line on 28.01.2020 informing the grounds of rejection; (ii) consequently, to direct the respondents to consider the SVLDRS-1 filed vide ARN No LD 1612190001379 dated 16.12.2019 as legally proper and acceptable under the scheme; (iii) to grant costs of this petition to the petitioner herein, and (iii) to pass such other order, or orders, as may be deemed fit and proper in the interests of justice." Brief Facts 2. The petitioner, at the relevant time, was engaged in providing Works Contract services under HSN Code 995412, as defined under erstwhile Section 65(105)(zzq) of the Finance Act, 1994 (hereafter 'the Act'). The petitioner was able to discharge only part of its service tax liability for the financial years 2012-2013 to 2017-2018 (upto 30.06.2017). 3. The officers of the Anti-Evasion Wing of the erstwhile Service Tax Commissionerate, Delhi, and Directorate General of the Central Excise Intelligence (DGCEI), Delhi Zonal and Delhi South Commissionerate of CGST, New Delhi initiated an investigation against the petitioner for non-payment of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to June, 2017. Whereas, the two applications for the period April, 2012 to March, 2013 and April, 2013 to March, 2014 were filed in the category of cases where Show Cause Notices were pending, the application for the period April, 2014 to June, 2017 was filed in the category of 'investigation, inquiry or audit'. The two applications in the category of pending Show Cause Notice were accepted but the application under the category 'investigation, inquiry or audit' was rejected. This has led the petitioner to file of the present petition. 11. The application of the petitioner was rejected, essentially, on the ground that as on the cut-off date, that is, 30.06.2019, the investigation was pending and the amount of duty involved was not quantified. The chart indicating the filing of the applications and their status is mentioned below for ready reference: S.No. Particulars Relevant period SVLDRS status 1 SCN dated 13.07.2015 April 2012 to March 2013 Accepted by the department and discharge certificate issued 2 SCN dated 10.03.2015 April 2013 to March 2014 Accepted by the department and discharge certificate issued 3 Balance amount which was under investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30-6-2019, may attain finality in view of appeal period being over etc. It is clarified that the eligibility with respect to a category in such cases shall be as it was on the relevant date ie., 30-6-2019." 15. He relied upon a judgment of this Court in Seventh Plane Networks Pvt. Ltd. v. Union of India:2020 SCC OnLine Del 2446 to contend that once the amount declared under the Scheme was quantified during the investigation, the assessee would be eligible under the Scheme and its eligibility would not be impacted if later during the investigation, reduction of demand is sought. He further relied upon the judgment of the Hon'ble Bombay High Court in the case of Landmark Associates v. Union of India :2021 SCC OnLine Bom 2162 and contended that if the department had issued a notice of recovery under Section 87 of the Act, the application under the Scheme cannot be rejected on the ground that the tax dues were not quantified. 16. The learned counsel further submitted that only because the amount quantified in the Show Cause Notice is lower than the amount declared by the petitioner, will not lead to disqualification under the Scheme. Even if, the amount declared was incorrect, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e only question to be addressed in the present petition is whether the service tax payable by the petitioner had been quantified in terms of Section 121(r) of the Finance Act (No. 2), 2019 prior to 30.06.2019. This Court in Hans Uttam Finance Limited (supra) had analysed the object of the Scheme and held as under: "22. At the outset, it is relevant to note that the Scheme was introduced to settle the legacy cases. The Finance Minister of India, in her speech in the Parliament, had expressed concern regarding the huge backlog of pending litigations from the preGST (Goods and Services Tax) regime. She stated that an amount exceeding Rs.3.75 lakh crore was blocked in litigation in service tax and excise, which required unloading for business to continue. The objective of the Scheme was to allow quick closure of pending litigations centering around service tax and excise duty. 23. Section 122 of the Finance Act (No. 2), 2019 stipulates twenty nine separate enactments, which were covered under the Scheme. Further, by virtue of Clause (c) of Section 122 of the Finance Act (No. 2), 2019, the Central Government was empowered to include, by a notification in the official gazette, any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is being disputed is Rs. 900 and hence tax dues are Rs. 900; (b) where a show cause notice under any of the indirect tax enactment has been received by the declarant on or before the 30th day of June, 2019, then, the amount of duty stated to be payable by the declarant in the said notice: Provided that if the said notice has been issued to the declarant and other persons making them jointly and severally liable for an amount, then, the amount indicated in the said notice as jointly and severally payable shall be taken to be the amount of duty payable by the declarant; (c) where an enquiry or investigation or audit is pending against the declarant, the amount of duty payable under any of the indirect tax enactment which has been quantified on or before the 30th day of June, 2019; (d) where the amount has been voluntarily disclosed by the declarant, then, the total amount of duty stated in the declaration; (e) where an amount in arrears relating to the declarant is due, the amount in arrears." 25. It is apparent from the above that the expression "tax dues" is defined in wide terms. It encompasses dues that were mentioned in show cause notice(s) or were subject matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation or audit is pending, must be interpreted bearing the aforesaid legislative scheme in mind. In terms of Clause (c), the "tax dues" in cases where enquiry, investigation or audit was pending against a declarant meant the amount of duty payable under any indirect tax enactment, which was quantified on or before 30.06.2019. 30. The expression "quantified" has been defined under Section 121(r) of the Finance Act (No. 2), 2019 as under: "121. In this Scheme, unless the context otherwise requires, - *** *** *** (r) ''quantified", with its cognate expression, means a written communication of the amount of duty payable under the indirect tax enactment;" 31. It is obvious that Clause (c) of Section 123 of the Finance Act (No. 2), 2019 covers cases where the matter had not reached the final determination, as it concerns cases where enquiry, investigation or audit is pending. It follows that the term "quantified" used in the context of amount of duty payable, in those cases, cannot mean the tax payable as finally determined as a result of conclusion of any audit, enquiry or investigation. It must necessarily mean a case where enquiry, audit or investigation is pending but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the scope of discretion has been kept to the minimum by linking the relief under this Scheme to the duty amount which is already known to both the Department and the taxpayer in the form of a show cause notice / order of determination or a written communication. The calculation of relief itself will be automated. Even in case of voluntary disclosure, no verification will be carried out by the Department. Still in the eventuality the declarant seeks the opportunity of being heard, the decision would be taken only after giving him this opportunity." 34. In addition to explaining the intent and scope of the Scheme, the CBIC had also clarified certain issues in the context of the provisions of the Finance Act (No. 2), 2019 and the rules made thereunder. In regard to cases under enquiry, investigation and audit, the CBIC had clarified as under: "(g) 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 wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dispute Resolution Scheme &Anr.: 2021 SCC OnLine Del 3353 in support of his contention. 38. In Chaque Jour HR Services Pvt. Ltd. v. Union of India (supra) a Co-ordinate Bench of this Court had, inter alia, referred to the Circular dated 27.08.2019 and observed as under: "16. By virtue of the aforesaid circulars, the respondents have clarified that the benefit of the Scheme can also be given to those cases where the duty involved is quantified by way of an admission made by the declarant in a statement made on or before 30th June, 2019." 39. However, the Court in that case found that there was a discord between the total dues as contemplated by the Department and those which the petitioner in that case had assured to pay. In the said context, the Court observed that purposive interpretation of the Scheme was required, and the Scheme could not be interpreted in a manner, which would run counter to its objective. In the said case, the Court found that although some dues were admitted by the declarant, the same did not cover the entire dues. Therefore, the object of the Scheme to put an end to the disputes would not be achieved. Accordingly, the Court repelled the contention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d admitted hereinabove, the total Service Tax liability comes to the tune of Rs. 1,26,54,725/- including all cesses for the period from 2014-15 to 2017-18 upto 30.06.2017. Please, go through the said work-sheet in detail and state whether you are completely agreed with the said Service Tax liability of Rs. 1,26,54,725/-. Please also state by what time you are paying the said liability along with applicable amount of interest. Ans:- Yes, I have minutely gone through the said worksheet and found it correct as per my records/documents. Further, I am completely agreed with the amount of Service Tax liability of Rs. 1,26,54,725/- for the period from 2014-15 to 2017-18 upto 30.06.2017 and in admittance of the same I confirm to pay the same along with applicable amount of interest. Further, with regard to time of payment of the said Service Tax liability, I have to state and request that I need some more time since we have some financial problem but as and when we get funds we shall pay the same." 43. The Bombay High Court found that there was a clear admission on the part of the petitioner and that the tax dues were quantified in terms of Section 121(r) of the Finance Act, 1994. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 30th June, 2019." 44. A similar view was also expressed by the Bombay High Court in G.R. Palle Electricals v. Union of India &Ors.: 2020 SCC OnLine Bom 3137 and Saksham Facility Services Private Limited v. Union of India &Ors.: 2020 SCC OnLine Bom 3591. In a later decision in Jai Sai Ram Mech & Tech India P Ltd. v. Union of India & Ors.: 2021 SCC OnLine Bom 221, a Division Bench of the Bombay High Court referred to its earlier decision and observed as under: "16. From the above, it is evident that all that would be required for being eligible under the above category is a written communication which will 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." 45. We are in respectfu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten communication, in which the amount of duty payable is quantified must emanate from the concerned tax department. The said amount of tax dues can be ascertained from the written communication emanating from the taxpayer as well subject to the same being part of the record. The unilateral communication, which is disputed and is not accepted by the department, however, cannot be considered as quantification of tax due. 21. This Court held that the written communication or statement by a department determining the amount of duty is not a necessary precondition for a taxpayer to be eligible for making a declaration under the Scheme. It was also held that an admission of the liability in any written communication or a statement recorded by the department is to be accepted as quantification of tax dues for the purpose of Section 129(3) read with Section 121(r) of the Scheme provided the dues are not disputed by the department and the department is proceeding on the basis of such quantification. 22. Two important facts that cannot be ignored in the present case are: first, that the department itself had issued a notice under Section 87 of the Act, and second, that the quantification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus amount, if any, to such person; [Provided that where the person (hereinafter referred to as predecessor) from whom the service tax or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all goods, in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining the written approval of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019-CX.8) explaining the provisions of the Scheme. 25. There are two components of the Scheme. One is dispute resolution and one is amnesty. The dispute resolution component is intended to put an end to disputes that are pending in various forums. The amnesty component is intended to give tax payers, who have not correctly discharged their liability, to come clean and pay their tax dues. The Scheme covers not only cases where show cause notice has been issued and disputes are pending before various authorities but also cases where enquiry, investigation or audit is pending against an assessee. In addition, it also covers cases where there was no dispute as to the arears as well as cases where taxpayers had come forward to voluntarily disclose their tax liability. 26. The petitioner had applied in the category where enquiry, investigation or audit is pending. 27. Section 123 of the Act defines the expression 'tax dues'. Clause (c) of Section 123 of the Act covers cases where enquiry or investigation or audit is pending. It specifies that the tax dues in such cases would be the amount of duty payable, which has been quantified on/or before 30.06.2019. Clause (c) of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 73A of the Act. On the other hand, Section 87 of the Act gives power to the Revenue to recover the amount due from the assessee by one or more of the modes provided therein. The provisions of Section 87 of the Act provides for the manner of recovery of the dues, the same is not for protecting the interest of Revenue till the pendency of the determination of the dues as provided in Section 73C of the Act. 27. In the present case, however, it is not the case of the department that the account of the petitioner was provisionally attached during the pendency of any proceedings under Section 73 or Section 73A of the Act. It is an admitted case that the order was passed under Section 87 of the Act for recovery of the amount due, which necessarily means that the tax payable by the petitioner had been determined and ascertained. The revenue had directed the bank to pay directly to the credit of the Central Government a sum of Rs.23.47 crores being the pending service tax liability of the petitioner. 28. Further, the Show Cause Notice dated 30.06.2020 is based solely on the computation sheet submitted by the petitioner on 15.03.2019. The relevant extract of the Show Cause Notice state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a case where the department is not in agreement with the quantification as provided by the petitioner. It is apparent that the respondents have never disputed or doubted the calculations submitted by the petitioner on 15.03.2019. In fact, the demand made in the Show Cause Notice is based on the documents provided by the petitioner, which includes the revised calculations. The said calculations have not been questioned. 30. Insofar as the arguments raised by the learned counsel for the respondents that the amount quantified under the Scheme does not match with the amount mentioned in the notice under Section 87 of the Act or the Show Cause Notice dated 30.06.2020 is concerned, it is pointed out by the learned counsel for the petitioner that the same is for the reason of a minor miscalculation on the part of the department and not for any other material reason. 31. The same in our opinion cannot be a ground for summarily rejecting the application filed by the petitioner. Having observed that the petitioner's application could not have been rejected on the ground that the amount had not been quantified as of cut-off date, that is, 30.06.2019, any error in the calculation is req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd noted that the legislative intent to enact the Scheme was to offload the baggage of disputes. The scope of coverage of Scheme is required to be interpreted liberally and taxpayer cannot be excluded merely because there were some obvious and non-material errors in the quantum of the duty details filled in the form. Any such interpretation would run contrary to the legislative object of the Scheme. 34. As noted above, the legislative intent underlying the enactment of the Scheme was to include all taxpayers for offloading the baggage of disputes. All taxpayers, except those which were specifically excluded, were entitled to avail the benefit of the said Scheme. The Scheme also covered cases where no disputes were pending and enabled the taxpayers to voluntarily pay taxes and avail amnesty under the Scheme. 35. As discussed above, it is clear that the tax dues had been quantified as required under Section 121(r) of the Finance Act (No. 2), 2019. 36. The respondents are directed to consider the declaration of the petitioner in terms of the Scheme as a valid declaration under the category of "investigation, enquiry and audit" and grant the consequential reliefs to the petitioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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