Case Note & Summary
The petitioner, Mpower Facility Services Pvt. Ltd., a company incorporated under the Companies Act, 1956, filed a writ petition under Article 226 of the Constitution of India seeking a writ of mandamus to restore and reconsider its declaration filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme) and to issue a discharge certificate. The background of the case involves summons issued to the petitioner on 13 March 2019 by the Directorate General of GST Intelligence under Section 83 of the Finance Act, 1994 and Sections 70 and 174 of the Central Goods and Services Tax Act, 2017. On 25 March 2019, a director of the petitioner admitted a service tax liability of Rs.72.37 lakhs for the period October 2015 to June 2017. Subsequently, the Central Government introduced the SVLDR Scheme under the Finance (No.2) Act, 2019 to settle legacy disputes of service tax and central excise. On 1 November 2019, the petitioner filed its SVLDRS-1 declaration. The Designated Committee under the SVLDR Scheme rejected the declaration without communicating any deficiency memo or providing an opportunity to rectify defects. The petitioner contended that the rejection was arbitrary and violative of principles of natural justice. The respondents argued that the declaration was not in order and that the committee had the power to reject it. The court analyzed the provisions of the SVLDR Scheme and held that the Designated Committee is required to issue a deficiency memo and allow the declarant to rectify defects before rejecting the declaration. The court found that no such deficiency memo was communicated to the petitioner, and thus the rejection was invalid. The court allowed the petition, set aside the rejection, and directed the Designated Committee to restore the declaration and reconsider it on merits after providing an opportunity of hearing to the petitioner. The court also directed that the declaration be processed in accordance with law and a discharge certificate be issued if the petitioner is found eligible.
Headnote
A) Constitutional Law - Writ of Mandamus - Restoration of Declaration - Non-Communication of Deficiency Memo - The petitioner filed a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Designated Committee rejected the declaration without communicating any deficiency memo or providing an opportunity to rectify defects. The High Court held that the rejection was in violation of principles of natural justice and directed restoration and reconsideration of the declaration on merits. (Paras 2-6) B) Service Tax - SVLDR Scheme - Section 127 Finance (No.2) Act, 2019 - Opportunity of Hearing - The court held that under Section 127 of the Finance (No.2) Act, 2019, the Designated Committee must issue a deficiency memo and allow the declarant to rectify defects before rejecting the declaration. Failure to do so renders the rejection invalid. (Paras 4-6)
Issue of Consideration
Whether the rejection of the petitioner's SVLDRS-1 declaration without communicating the deficiency memo and without providing an opportunity to rectify the defects is valid in law.
Final Decision
The High Court allowed the writ petition, set aside the rejection of the petitioner's SVLDRS-1 declaration, and directed the Designated Committee to restore the declaration and reconsider it on merits after providing an opportunity of hearing to the petitioner. The court further directed that the declaration be processed in accordance with law and a discharge certificate be issued if the petitioner is found eligible.
Law Points
- Natural justice
- opportunity of hearing
- SVLDR Scheme
- deficiency memo
- non-communication
- writ of mandamus
- Section 127 Finance (No.2) Act 2019
- Article 226 Constitution of India
