Case Note & Summary
The petitioner, M/s. K. N. Rai, a proprietorship firm engaged in works contract services, was registered under the Finance Act, 1994. Its services were initially exempt from service tax under an exemption notification dated 20.06.2012. However, following amendments, certain services became taxable from 01.04.2015. The Service Tax Department initiated an enquiry against the petitioner for the period 2014-15 to June 2017. During the enquiry, the proprietor admitted a service tax liability of Rs.1,26,54,725.00 in a statement recorded on 28.06.2019, but could not pay due to financial crisis. Meanwhile, the Central Government introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 under the Finance (No.2) Act, 2019 to settle pending disputes under the erstwhile indirect tax regime. The petitioner expressed willingness to apply under the Scheme and submitted a declaration on 21.11.2019 under the category of investigation, enquiry or audit, mentioning duty payable at Rs.1,25,54,725.00. The respondents rejected the declaration on 12.02.2020 on the ground that quantification of tax dues was not made final by 30.06.2019, the cut-off date. Aggrieved, the petitioner filed a writ petition under Article 226 of the Constitution. The respondents contended that under Section 124(1)(d) of the Finance (No.2) Act, 2019, the amount payable must be quantified on or before 30.06.2019. The Court examined the provisions of the Scheme and held that the condition of final quantification by 30.06.2019 applies only to cases where a show cause notice has been issued, not to cases under investigation, enquiry or audit. Since the petitioner's case fell under investigation, the rejection was unsustainable. The Court quashed the rejection order and directed the respondents to reconsider the declaration after granting the petitioner an opportunity of hearing.
Headnote
A) Indirect Tax - Sabka Vishwas Scheme - Eligibility - Section 124(1)(d) Finance (No.2) Act, 2019 - The issue was whether a declarant under investigation is eligible under the Scheme even if quantification of tax dues was not finalized by the cut-off date of 30.06.2019 - The Court held that the condition of final quantification by 30.06.2019 applies only to cases where a show cause notice has been issued, not to cases under investigation, enquiry or audit - The rejection was quashed and the respondents were directed to reconsider the declaration after granting opportunity of hearing (Paras 2-11).
Issue of Consideration
Whether the rejection of the petitioner's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on the ground that quantification of tax dues was not made final by 30.06.2019 is sustainable in law.
Final Decision
The Court allowed the writ petition, quashed the order dated 12.02.2020, and directed the respondents to reconsider the petitioner's declaration under the Sabka Vishwas Scheme after granting an opportunity of hearing.
Law Points
- Sabka Vishwas Scheme
- eligibility
- quantification of tax dues
- cut-off date
- investigation
- enquiry
- audit
- Section 124(1)(d) Finance (No.2) Act 2019
- opportunity of hearing
- natural justice
