Case Note & Summary
The petitioner, a service tax assessee, had been issued quantification letters by the service tax authorities for the period 2013-2014, and he also filed returns for later periods. The Central Government introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to settle legacy disputes. The petitioner filed declarations under the Scheme for the periods 2015-2016, 2016-2017, and 2017-2018 (up to June 2017) on 30 December 2019, claiming eligibility. The Designated Committee, however, rejected the declarations on the grounds that the petitioner had filed nil returns, an investigation was pending, and the data in the application did not match the records. The rejection orders were passed without affording the petitioner any opportunity of being heard. The petitioner contended that his tax liabilities had already been quantified by the Department for earlier periods and that he was entitled to the benefit of the Scheme. After the rejection, the Department issued a show-cause notice proposing to demand service tax along with interest and penalties. The petitioner filed the present writ petition seeking to quash the rejection orders and to direct the authorities to accept his declaration and issue a discharge certificate. The primary legal issue was whether the Designated Committee's rejection of the declaration without granting a personal hearing violated the principles of natural justice. The petitioner argued that the tax liability was already quantified and that he was eligible under the Scheme, and that the rejection without hearing was arbitrary. The respondents argued that the petitioner was not eligible because the tax liability had not been quantified as on the cut-off date of 30 June 2019, and therefore no personal hearing was required. The Court noted that the petitioner's specific averments regarding the earlier quantification of tax liabilities were not disputed by the respondents in their affidavit-in-reply, indicating that the question of eligibility was itself a matter of dispute. The Court observed that the rejection orders were passed without any opportunity of hearing and held that if the authorities believed the petitioner was ineligible, they ought to have given him a hearing before rejecting the declaration. The Court found the respondents' stand that no personal hearing was warranted because the petitioner was ineligible to be 'totally absurd and without application of mind.' The Court relied upon a Division Bench judgment in Saksham Facility Services Pvt. Ltd. v. Union of India, which had held that personal hearing is necessary before rejecting a declaration under the SVS Scheme. Consequently, the Court concluded that the impugned orders were in gross violation of the principles of natural justice. The High Court quashed the rejection orders, restored the petitioner's applications under the Scheme, and directed the Designated Committee to consider them afresh on their merits after granting a personal hearing with 72 hours' notice, without being influenced by the earlier orders. The petition was allowed accordingly.
Headnote
A) Service Tax - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Rejection of Declaration - Natural Justice - The Designated Committee rejected the petitioner's SVLDRS-1 declarations for the periods 2015-2018 on the ground that the petitioner was not eligible, without granting a personal hearing. The High Court held that the question of eligibility itself required a personal hearing, and rejecting the declaration without such hearing violated the principles of natural justice. Held, the impugned rejection orders are quashed, and the applications are restored to file for fresh consideration after granting personal hearing with 72 hours notice. (Paras 11-16).
Issue of Consideration
Whether the Designated Committee's rejection of the petitioner's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 without granting a personal hearing violated the principles of natural justice, and whether the petitioner was entitled to an opportunity of hearing before rejection.
Final Decision
The High Court quashed the impugned rejection orders, restored the applications, and directed Respondent No.5 to consider the applications on merits after granting a personal hearing with 72 hours notice, without being influenced by previous observations. The petition was allowed in terms of the order.
Law Points
- Legal points not extracted
- Personal hearing is necessary before rejecting a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme
- 2019 on the ground of ineligibility
- the question of eligibility itself requires a hearing
- violation of natural justice renders the order void.
