Case Note & Summary
The petitioner, K. Raheja Private Limited, a company engaged in real estate, constructed a public parking lot (PPL) on a plot in Mumbai. The Municipal Corporation of Greater Mumbai (MCGM) granted incentive FSI to the petitioner in consideration of the construction of the PPL. The petitioner handed over the PPL to MCGM. Subsequently, the Directorate General of GST Intelligence (DGGSTI) visited the petitioner's office and sought details. The petitioner provided information regarding Cenvat credit availed. The petitioner filed a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme) on 20 December 2019, seeking to settle its service tax liability. The Deputy Commissioner CGST & Central Excise rejected the declaration by a communication dated March 2020, without granting any opportunity of hearing. The petitioner challenged this rejection by way of a writ petition. The respondents contended that the construction of the PPL was not a 'supply of service' and that the petitioner was not entitled to the scheme. The court analyzed the provisions of the SVLDR Scheme and the Finance Act, 1994. It held that the rejection without hearing was violative of natural justice. On merits, the court held that the construction of the PPL in lieu of incentive FSI constituted a 'supply of service' under Section 65B(44) of the Finance Act, 1994, as it was a reciprocal arrangement. The court also noted that the show cause notice was issued beyond the normal period of limitation, which was a matter for adjudication. The court allowed the petition, set aside the rejection, and directed the Designated Committee to consider the declaration afresh after granting an opportunity of hearing to the petitioner.
Headnote
A) Service Tax - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Rejection of Declaration - Natural Justice - The rejection of a declaration under the SVLDR Scheme without granting an opportunity of hearing to the declarant is violative of principles of natural justice, especially when the rejection is based on disputed facts and legal interpretation. The Designated Committee must consider the declaration on merits after hearing the declarant. (Paras 1-30) B) Service Tax - Supply of Service - Construction of Public Parking Lot in lieu of Incentive FSI - The construction of a public parking lot by a developer in consideration of additional FSI granted by the municipal corporation constitutes a 'supply of service' under Section 65B(44) of the Finance Act, 1994, and is exigible to service tax. The transaction is a reciprocal arrangement and not a gratuitous act. (Paras 31-45) C) Service Tax - Cenvat Credit - Reversal - Limitation - Where the service tax liability is disputed and the show cause notice is issued beyond the normal period of limitation, the question of limitation and the availability of Cenvat credit are matters to be adjudicated in the regular proceedings and cannot be a ground for rejecting the SVLDRS declaration without hearing. (Paras 46-55)
Issue of Consideration
Whether the rejection of the petitioner's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, without granting an opportunity of hearing, is sustainable in law, and whether the construction of a public parking lot in lieu of incentive FSI constitutes a 'supply of service' under the Finance Act, 1994.
Final Decision
The court allowed the writ petition, set aside the communication dated March 2020 rejecting the petitioner's declaration, and directed the Designated Committee under the SVLDR Scheme to consider the declaration afresh after granting an opportunity of hearing to the petitioner.
Law Points
- Sabka Vishwas (Legacy Dispute Resolution) Scheme
- 2019
- SVLDRS-1 declaration
- rejection of declaration
- natural justice
- opportunity of hearing
- supply of service
- construction of public parking lot
- incentive FSI
- Finance Act
- 1994
- Service Tax
- Cenvat credit
- show cause notice
- quantification of tax
- limitation
