Case Note & Summary
The petitioner, M. Ramzan & Co., a firm engaged in providing works contract services and holding registration under Service Tax Law, was issued a show cause notice dated 20.04.2012 by the Revenue proposing recovery of service tax amounting to Rs. 3,78,88,322/- along with interest and penalties. During the ensuing adjudication proceedings before the adjudicating authority, the petitioner deposited various amounts on different dates aggregating to Rs. 32,12,000/- towards the service tax demanded under the show cause notice. The petitioner then filed a declaration under the Kar Vivad Samadhan Scheme, 1998 (KVSS) seeking settlement of the disputed tax. The Designated Committee, comprising the Commissioner and Joint Commissioner, rejected the petitioner's application on the ground that the tax was not 'determined' as per Section 87(b) of the Finance Act, 1998, since no adjudication order had been passed at the time of the declaration. The petitioner challenged this rejection by way of a writ petition under Article 226 of the Constitution of India before the Bombay High Court. The High Court examined the provisions of the KVSS, 1998, particularly Sections 87(b) and 88, which define 'tax arrear' as the amount of tax payable under any direct tax enactment or indirect tax enactment which has been determined on or before the 31st day of March, 1998, but remains unpaid. The court noted that the show cause notice dated 20.04.2012 was issued after the cut-off date, but the petitioner had deposited 7.5% of the disputed tax before the adjudication order, which is a condition for settlement under the scheme. The court held that the pre-deposit of 7.5% of the disputed tax before the adjudication order satisfies the requirement of 'tax arrear' under Section 87(b) read with Section 88, and the petitioner is entitled to the benefit of the scheme. The court directed the Designated Committee to process the petitioner's application and issue a certificate under Section 90 of the Finance Act, 1998, within four weeks. The writ petition was allowed with no order as to costs.
Headnote
A) Kar Vivad Samadhan Scheme, 1998 - Settlement of Disputed Tax - Section 87 to 98 of Finance Act, 1998 - The petitioner, engaged in works contract services, was issued a show cause notice dated 20.04.2012 demanding service tax of Rs. 3,78,88,322/-. During adjudication, the petitioner deposited Rs. 32,12,000/- (7.5% of the disputed tax) on various dates. The petitioner sought to settle the dispute under KVSS, 1998. The Designated Committee rejected the application on the ground that the tax was not 'determined' as per Section 87(b) of the Finance Act, 1998. The High Court held that the pre-deposit of 7.5% of the disputed tax before the adjudication order satisfies the requirement of 'tax arrear' under Section 87(b) read with Section 88, and the petitioner is entitled to the benefit of the scheme. The court directed the Designated Committee to process the application and issue a certificate under Section 90 of the Finance Act, 1998. (Paras 1-14)
Issue of Consideration
Whether the petitioner is entitled to the benefit of the Kar Vivad Samadhan Scheme, 1998, in respect of service tax demands raised by a show cause notice dated 20.04.2012, given that the petitioner had deposited 7.5% of the disputed tax before the adjudication order was passed.
Final Decision
The High Court allowed the writ petition and directed the Designated Committee to process the petitioner's declaration under the Kar Vivad Samadhan Scheme, 1998 and issue a certificate under Section 90 of the Finance Act, 1998 within four weeks. No order as to costs.
Law Points
- Kar Vivad Samadhan Scheme
- 1998
- Section 87
- Section 88
- Section 89
- Section 90
- Section 91
- Section 92
- Section 93
- Section 94
- Section 95
- Section 96
- Section 97
- Section 98
- Finance Act
- Service Tax
- Works Contract
- Show Cause Notice
- Pre-Deposit
- Settlement
- Designated Committee
- Writ Jurisdiction
- Article 226
