Case Note & Summary
The petitioners, a partnership firm engaged in Haj and Umrah tours, challenged the rejection of their declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The firm had been issued a show cause cum demand notice on 5 April 2019 for non‑payment of service tax amounting to Rs. 19,21,465 for the period 2013–14 to 2017‑18 (up to June 2017). Personal hearing was granted on 9 May 2019, and the adjudicating authority confirmed the demand by order‑in‑original dated 9 August 2019, also imposing interest and penalty. No appeal was filed against that order. In the meantime, the Central Government introduced the Sabka Vishwas Scheme effective from 1 September 2019 to resolve legacy disputes. The petitioners filed a declaration in Form SVLDRS‑1 on 8 January 2020 under the ‘amount in arrears’ sub‑category, since no appeal had been preferred. On 14 February 2020, the Designated Committee rejected the declaration citing Section 125(1)(c) of Chapter V of the Finance (No.2) Act, 2019, which disqualifies persons whose final hearing had taken place on or before 30 June 2019. The petitioners contended that the disqualification under Section 125(1)(c) applies only when a show cause notice is pending, not when the amount has already crystallized into arrears due to non‑filing of appeal, and that the rejection was passed in breach of natural justice as no notice or hearing was afforded. The revenue defended the rejection, arguing that the final hearing date of 9 May 2019 squarely barred the declaration. The court examined the definitions in Sections 121(c), 123(e), 124(1)(c) and 125, and noted the procedural scheme under Section 127, which requires the Designated Committee to issue a statement and, in case of discrepancy, grant a hearing before final determination. The court held that the rejection was arbitrary, violative of natural justice, and directed the respondents to reconsider the declaration in accordance with law.
Headnote
A) Indirect Taxation - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Eligibility under Section 125(1)(c) of Finance (No.2) Act, 2019 - Dispute pertained to rejection of declaration filed under the scheme for service tax arrears covering 2013–14 to 2017–18 - Show cause notice was issued on 5 April 2019, personal hearing held on 9 May 2019, and adjudication order confirming demand of Rs.19,21,465 passed on 9 August 2019 - Declaration filed on 8 January 2020 under the ‘amount in arrears’ category was rejected on 14 February 2020 on the ground that final hearing had taken place before 30 June 2019 - Court examined the interplay of sections 121(c), 123(e), 124(1)(c) and 125 and noted that denial without notice violated natural justice - Held that the rejection order was not in accordance with the prescribed procedure and required reconsideration (Paras 2-22). B) Constitutional Law - Principles of Natural Justice - Violation of Audi Alteram Partem - Constitution of India, Article 226 - Designated Committee rejected the declaration without issuing any notice or granting hearing to the declarant - Court found that even if the declarant’s amount estimate differed, the Committee was bound to follow Section 127(3) which mandates an opportunity of hearing before issuance of a final statement - Held that the impugned rejection suffered from non-observance of procedural fairness and could not be sustained (Paras 20-22).
Issue of Consideration
Whether the rejection of the petitioner’s declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on the ground that final hearing had taken place on 9 May 2019 i.e. before 30 June 2019, thus rendering the petitioner ineligible under Section 125(1)(c) of Chapter V of the Finance (No.2) Act, 2019, was legally valid, particularly when no appeal had been filed against the adjudication order and the tax dues had become arrears
Final Decision
The court held that the rejection was arbitrary and violative of natural justice, and directed the Designated Committee to reconsider the declaration in accordance with law. (Based on the incomplete judgment text, the final operative direction is not fully captured; the court emphasized the need for compliance with Section 127 and procedural fairness.)
Law Points
- Legal points not extracted
- Interpretation of Section 125(1)(c) of Finance (No.2) Act
- 2019
- Eligibility for declaration under Sabka Vishwas Scheme
- Final hearing date as disqualification
- Amount in arrears when no appeal filed
- Principles of natural justice in rejection of declaration
