Case Note & Summary
The petitioner, M/s. Code Engineers Private Limited, a company engaged in providing erection, commissioning and installation services, was registered under the Finance Act, 1994 for service tax. The service tax department initiated an investigation on 03.10.2011 for alleged non-payment of service tax dues for the period 01.04.2006 to 31.03.2011. During the investigation, the petitioner made a deposit of Rs.1,30,00,000 under protest. A show cause-cum-demand notice dated 20.04.2012 was issued demanding Rs.3,76,12,232 along with interest and penalty. The petitioner contested the notice and also pointed out additional payments of Rs.1,07,00,000 made through its client. The matter was adjudicated and an order was passed on 31.03.2016 confirming the demand and appropriating the pre-deposit. The petitioner filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which was pending. Meanwhile, the Government introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to settle legacy disputes. The petitioner filed a declaration under the Scheme on 31.12.2019, disclosing the pre-deposit of Rs.1,30,00,000. However, the respondent issued an order dated 25.02.2020 rejecting the declaration on the ground that the pre-deposit was not reflected in the electronic ledger. The petitioner challenged this rejection by way of a writ petition under Article 226 of the Constitution of India. The Court examined the Scheme and found that the rejection was not in accordance with the Scheme's provisions. The Court noted that the pre-deposit was a fact and the Scheme did not require electronic ledger reflection for eligibility. The Court held that the respondent ought to have considered the pre-deposit and allowed the declaration. The Court directed the respondent to reconsider the declaration by allowing the pre-deposit made and to pass a fresh order within four weeks. The writ petition was allowed.
Headnote
A) Service Tax - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Rejection of Declaration - Pre-deposit Adjustment - The petitioner made a pre-deposit of Rs.1,30,00,000 under protest during investigation, which was not reflected in the electronic ledger due to system limitations. The respondent rejected the declaration under the Scheme on the ground that the pre-deposit was not shown in the electronic ledger. The Court held that the rejection was unjustified as the pre-deposit was a fact and the Scheme did not require electronic ledger reflection for eligibility. The Court directed the respondent to reconsider the declaration by allowing the pre-deposit made. (Paras 2-15)
Issue of Consideration
Whether the respondent was justified in rejecting the petitioner's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on the ground that the pre-deposit made by the petitioner was not reflected in the electronic ledger, and whether the petitioner is entitled to a direction for reconsideration of its declaration by allowing the pre-deposit made.
Final Decision
The writ petition is allowed. The order dated 25.02.2020 is quashed and set aside. The respondent is directed to reconsider the petitioner's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by allowing the pre-deposit made by the petitioner and to pass a fresh order within four weeks from the date of receipt of this order.
Law Points
- Sabka Vishwas (Legacy Dispute Resolution) Scheme
- 2019
- Section 125 of Finance Act
- 1994
- Article 226 of Constitution of India
- Pre-deposit adjustment
- Reconsideration of declaration
