Case Note & Summary
The petitioner, Bramhanand Kanojia, a sole proprietor engaged in dry cleaning services, challenged the rejection of his application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme) by the respondents. The respondents rejected the application on the ground that the duty demand was not quantified before 30 June 2019, making the petitioner ineligible under Section 125(1)(e) of the Finance (No.2) Act, 2019. The petitioner had been issued summons under Section 83 of the Finance Act, 1994 on 28 June 2018, and in his recorded statement, he admitted an approximate service tax liability of Rs. 21.70 lakhs for the financial years 2014-2015 to 2017-2018, out of which Rs. 13 lakhs had been paid. On 15 April 2019, the petitioner informed the respondents that he had paid a total service tax of Rs. 23,82,188/- for the financial years 2013-2014 to 2017-2018. The petitioner made an application under the SVLDR Scheme mentioning the duty amount as Rs. 28,72,603/- and pre-deposit as Rs. 23,82,188/-, which was rejected on 8 November 2019. A second identical application was rejected on 23 January 2020 on the same ground. The petitioner argued that the quantification was admitted in the statement recorded on 28 June 2018 and therefore the rejection was bad in law. The respondents contended that the quantification was done only after 30 June 2019 via a show cause notice. The court, after hearing both sides, held that the quantification of duty was made prior to 30 June 2019 as the petitioner admitted liability in the statement recorded on 28 June 2018 and informed the respondents of the total service tax paid on 15 April 2019. The court set aside the rejection and directed the respondents to process the petitioner's declaration under the SVLDR Scheme within four weeks, subject to the petitioner paying the difference in duty amount along with interest as per the scheme.
Headnote
A) Indirect Taxation - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Eligibility - Quantification of Duty - Section 125(1)(e) of Finance (No.2) Act, 2019 - The petitioner's application under the SVLDR Scheme was rejected on the ground that the duty amount was not quantified before 30 June 2019. The court held that the quantification was made prior to the cut-off date as the petitioner admitted liability in a statement recorded on 28 June 2018 and informed the respondents of the total service tax paid on 15 April 2019. The rejection was set aside and the respondents were directed to process the declaration. (Paras 11-14)
Issue of Consideration
Whether the rejection of the petitioner's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on the ground that the duty demand was not quantified before 30 June 2019 is valid.
Final Decision
The court allowed the writ petition, set aside the impugned rejection orders dated 8 November 2019 and 23 January 2020, and directed the respondents to process the petitioner's declaration under the SVLDR Scheme within four weeks from the date of the order, subject to the petitioner paying the difference in duty amount along with interest as per the scheme.
Law Points
- Eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme
- 2019
- Quantification of duty before 30 June 2019
- Section 125(1)(e) of Finance (No.2) Act
- Admission in statement recorded during investigation constitutes quantification
Case Details
2024 LawText (BOM) (12) 116
Writ Petition No.1883 of 2023
M. S. Sonak, Jitendra Jain
Mr. Jas Sanghavi i/b. PDS Legal for Petitioner, Mr. Satyaprakash Sharma a/w Ms. Niyati Mankad and Mr. Akash Singh for Respondents
The Union of India, The Commissioner of CGST and Central Excise, Thane Rural, The Joint Commissioner of CGST and Central Excise, Thane Rural, The Deputy Director DGGI, Zonal Unit, Mumbai, The Senior Intelligence Officer, DGGI, Zonal Unit, Mumbai, The Designated Committee constituted under Section 126 of the Finance (No.2) Act, 2019
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
Remedy Sought
Petitioner sought setting aside of rejection of his declaration under the SVLDR Scheme and direction to process the same.
Filing Reason
Rejection of petitioner's application under SVLDR Scheme on ground that duty demand was not quantified before 30 June 2019.
Previous Decisions
Petitioner's first application under SVLDR Scheme was rejected on 8 November 2019 under Section 125(1)(3) of the SVLDR Scheme. Second identical application was rejected on 23 January 2020 on ground that amount was not quantified on or before 30 June 2019.
Issues
Whether the rejection of the petitioner's declaration under the SVLDR Scheme on the ground that the duty demand was not quantified before 30 June 2019 is valid.
Whether the quantification of duty was made prior to 30 June 2019 based on the petitioner's admission in statement recorded on 28 June 2018 and communication on 15 April 2019.
Submissions/Arguments
Petitioner submitted that quantification was admitted in statement recorded on 28 June 2018 and therefore rejection is bad in law and not covered by Section 125(1)(e). He also submitted that he is ready and willing to pay the duty amount.
Respondents submitted that as against duty amount of Rs.28,72,603/-, petitioner stated only Rs.23,82,188/- in application and quantification was done only after 30 June 2019 via show cause notice. However, they fairly agreed that there are decisions of this Court in favor of petitioner on this issue.
Ratio Decidendi
The quantification of duty for the purpose of eligibility under Section 125(1)(e) of the Finance (No.2) Act, 2019 can be established by an admission made by the assessee during investigation prior to the cut-off date of 30 June 2019, and not necessarily by a formal show cause notice. In this case, the petitioner's admission in the statement recorded on 28 June 2018 and the communication of total service tax paid on 15 April 2019 constituted quantification before 30 June 2019.
Judgment Excerpts
In the instant case, pursuant to summons, a statement was recorded on 28 June 2018 wherein the Petitioner admitted his liability of Rs.21.70 lakh.
On 15 April 2019, the Petitioner informed the Respondents that he has paid total service tax of Rs.23,82,188/- for the financial years 2013-2014 to 2017-2018.
Therefore, in our view, the quantification of duty was made prior to 30 June 2019 and merely because a show cause notice was issued after 30 June 2019, the Petitioner cannot be said to be ineligible for availing the benefit of the Scheme as per Section 125(1)(e).
Procedural History
On 28 June 2018, summons under Section 83 of Finance Act, 1994 was issued to petitioner and statement recorded. On 15 April 2019, petitioner informed respondents of total service tax paid. Petitioner made first application under SVLDR Scheme which was rejected on 8 November 2019. Second identical application was rejected on 23 January 2020. Petitioner then filed Writ Petition No.1883 of 2023 before the Bombay High Court challenging the rejections. The court heard the matter and delivered judgment on 10 December 2024.
Acts & Sections
- Finance (No.2) Act, 2019: 125(1)(e), 126
- Finance Act, 1994: 83
- Constitution of India: Article 226
