Case Note & Summary
The petitioner, M/s. UCN Cable Network (P) Ltd., a private limited company engaged in providing taxable services such as broadcasting and cable operator services, was registered under the erstwhile service tax regime. Due to financial difficulties, it could not properly discharge its service tax liability. The respondent department conducted an investigation and issued a show cause notice on 24.4.2019 alleging failure to discharge service tax liability and improper availing of Cenvat credit under the Cenvat Credit Rules, 2004. The show cause notice was adjudicated by the Commissioner of Central Tax and Central Excise, Nagpur-I Commissionerate, vide order dated 29.12.2019, which the petitioner received on 30.12.2019. The adjudication order confirmed the original demand of service tax dues of Rs.43,62,79,032/- but reduced the demand from disallowing Cenvat credit, resulting in an arrears of Rs.65,22,938/- recoverable from the petitioner. Meanwhile, the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 was introduced under Chapter V of the Finance Act, 2019 and the Sabka Vishwas Legacy Dispute Resolution Rules, 2019, effective from 1.9.2019 initially until 31.12.2019, later extended to 15.1.2020. The Scheme allowed assessees to settle pending disputes regarding service tax dues under the old regime. The petitioner filed a declaration in form SVLDRS-1 on 14.1.2020 under the 'arrears' category, believing that since the adjudication was made during the validity period of the Scheme, the declaration was timely. However, the Designated Committee rejected the declaration on the ground that the adjudication order was passed on 29.12.2019 and the declaration ought to have been filed within 30 days from the date of the order, i.e., by 28.1.2020, and thus the declaration was filed beyond the prescribed period. The petitioner contended that there was a technical glitch in the online portal that prevented filing earlier, and that the Committee did not consider this explanation or grant a hearing. The Court examined the Scheme provisions, particularly Section 125 of the Finance Act, 2019 and Rule 7 of the Rules, 2019, which prescribe the time limit for filing declarations. The Court noted that the petitioner's declaration was filed on 14.1.2020, which was within the extended period of the Scheme (up to 15.1.2020) and also within 30 days from the date of the adjudication order (29.12.2019 to 28.1.2020). The Court found that the Designated Committee had erroneously rejected the declaration without considering the petitioner's explanation of a technical glitch and without affording an opportunity of hearing. The Court held that the Committee must consider the petitioner's explanation and decide the matter afresh after giving the petitioner a hearing. The impugned order was quashed and set aside, and the writ petition was allowed.
Headnote
A) Tax Law - Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 - Arrears Category - Filing of Declaration - The petitioner filed declaration under 'arrears' category on 14.1.2020, but the Designated Committee rejected it on the ground that the adjudication order was passed on 29.12.2019 and the declaration ought to have been filed within 30 days from the date of order, i.e., by 28.1.2020, and thus the declaration was filed beyond the prescribed period. The Court held that the Committee erred in rejecting the declaration without considering the petitioner's explanation of a technical glitch and without affording an opportunity of hearing. (Paras 1-10) B) Tax Law - Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 - Technical Glitch - Opportunity of Hearing - The Court held that the Designated Committee must consider the petitioner's explanation regarding the technical glitch and decide the matter afresh after giving the petitioner an opportunity of hearing. The impugned order was quashed and set aside. (Paras 11-12)
Issue of Consideration
Whether the Designated Committee was justified in rejecting the petitioner's declaration under the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 on the ground that the declaration was filed beyond the prescribed period, when the petitioner claimed that the delay was due to a technical glitch in the online portal.
Final Decision
The writ petition is allowed. The impugned order dated 28.2.2020 passed by the Designated Committee is quashed and set aside. The matter is remitted back to the Designated Committee to consider the petitioner's explanation regarding the technical glitch and decide the declaration afresh after giving the petitioner an opportunity of hearing. Rule is made absolute accordingly.
Law Points
- Sabka Vishwas Legacy Dispute Resolution Scheme
- 2019
- Section 125 of Finance Act
- Rule 7 of Sabka Vishwas Legacy Dispute Resolution Rules
- Arrears category
- Technical glitch
- Designated Committee
- SVLDRS-1 form
