Case Note & Summary
The petitioner, Fork Media Private Limited, a company engaged in digital advertising solutions and registered under the Finance Act, 1994, faced an enquiry for alleged non-payment of service tax from April 2016 to June 2017. The total outstanding service tax liability was quantified at Rs.8,00,78,066.00 prior to 30.06.2019. The petitioner had paid Rs.4,39,74,069.00 using input credit of Rs.3,27,81,954.00 and cash payment of Rs.1,11,92,105.00. Subsequently, the central government introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 under the Finance (No.2) Act, 2019 to settle legacy disputes under central excise and service tax. The petitioner filed a declaration under the Scheme. The designated committee (respondent No.4) passed an order dated 05.05.2020 granting tax relief of Rs.4,00,39,033.00 and directing payment of Rs.2,89,14,033.00, but did not accept the CENVAT credit of Rs.3,28,49,069.00 as pre-deposit. The petitioner contended that if the CENVAT credit had been treated as pre-deposit, the amount payable would have been nil. The petitioner sought quashing of the order and a direction to afford an opportunity of hearing. The court noted that the designated committee had not given any opportunity of hearing to the petitioner before passing the impugned order, which violated principles of natural justice. The court also observed that the CENVAT credit should have been considered as pre-deposit. The court allowed the petition, quashed the impugned order, and directed the designated committee to pass a fresh order after giving the petitioner an opportunity of hearing, treating the CENVAT credit as pre-deposit.
Headnote
A) Service Tax - Sabka Vishwas Scheme - Pre-deposit - CENVAT Credit - Finance (No.2) Act, 2019, Sections 124-133 - The petitioner had made a pre-deposit of CENVAT credit of Rs.3,28,49,069.00 which was not accepted by the designated committee as pre-deposit, thereby depriving the petitioner of the benefit of that amount while determining tax relief. The court held that the designated committee ought to have considered the CENVAT credit as pre-deposit and should have afforded an opportunity of hearing before passing the impugned order. (Paras 2-3, 12-13) B) Natural Justice - Opportunity of Hearing - Sabka Vishwas Scheme - The impugned order was passed without giving any opportunity of hearing to the petitioner. The court held that the principles of natural justice require that before passing an order adverse to the declarant, the designated committee must provide an opportunity of hearing. (Para 12) C) Constitutional Law - Writ Jurisdiction - Article 226 - The High Court can interfere with an order passed by the designated committee under the Sabka Vishwas Scheme if it is violative of principles of natural justice or suffers from legal infirmity. (Para 13)
Issue of Consideration
Whether CENVAT credit of Rs.3,28,49,069.00 made by the petitioner should be treated as pre-deposit for the purpose of computing tax relief and amount payable under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
Final Decision
The court allowed the writ petition, quashed the impugned order dated 05.05.2020, and directed the designated committee to pass a fresh order after giving the petitioner an opportunity of hearing, treating the CENVAT credit of Rs.3,28,49,069.00 as pre-deposit.
Law Points
- Interpretation of 'pre-deposit' under Sabka Vishwas (Legacy Dispute Resolution) Scheme
- 2019
- CENVAT credit as pre-deposit
- Natural justice
- Opportunity of hearing
