Case Note & Summary
The petitioner, Saksham Facility Services Private Limited, a company registered under the Companies Act, 1956, had service tax registration for providing security/detective agency services and later obtained GST registration. On 19.06.2019/20.06.2019, a summons was issued to the petitioner by the Senior Intelligence Officer, DGGI, Mumbai, for an inquiry regarding evasion of service tax under the Finance Act, 1994 read with Section 174 of the CGST Act, 2017. The petitioner responded on 27.06.2019, providing a year-wise break-up of service tax liability for the period 2015-16 to June 2017, admitting a total liability of Rs.2,47,32,456.00, out of which Rs.1,20,60,000.00 had already been paid. On the same day, the Director of the petitioner company, Shri Sanjay Shirke, gave a statement under Section 83 of the Finance Act, 1994 read with Section 14 of the Central Excise Act, 1944 and Sections 174 and 70 of the CGST Act, confirming the liability and stating that the remaining amount would be paid by end of July 2019. Meanwhile, the Central Government introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 under the Finance (No.2) Act, 2019, effective from 01.09.2019. The petitioner filed a declaration under the scheme on 24.11.2019. However, by order dated 01.03.2020, the respondents rejected the declaration on the ground that a summons had been issued to the petitioner prior to the declaration, thereby disqualifying the petitioner under Section 125(1)(e) of the Finance (No.2) Act, 2019. The petitioner challenged this rejection by way of a writ petition under Article 226 of the Constitution of India. The court examined the provisions of the scheme, particularly Section 125(1)(e), which excludes persons against whom a 'service of summons' has been made in connection with an inquiry. The court noted that the petitioner had voluntarily disclosed its liability and paid part of the amount before the summons was issued. The summons was issued after the voluntary disclosure, and the inquiry was based on the petitioner's own disclosure. The court held that the phrase 'service of summons' must be interpreted in the context of an inquiry initiated by the department. Since the petitioner voluntarily approached the department and disclosed the liability, the subsequent issuance of summons for recording a statement did not constitute 'service of summons' for the purpose of disqualification under the scheme. The court quashed the rejection order and directed the respondents to consider the petitioner's declaration afresh as a valid declaration and grant consequential relief in terms of the scheme.
Headnote
A) Tax Law - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Section 125(1)(e) of Finance (No.2) Act, 2019 - Voluntary Disclosure - The petitioner voluntarily disclosed service tax liability and paid part amount before issuance of summons. The summons was issued after the voluntary disclosure, and the inquiry was based on the petitioner's own disclosure. Held that the issuance of summons does not amount to 'service of summons' under Section 125(1)(e) as the inquiry was not initiated by the department but by the petitioner's voluntary act. The rejection of declaration was quashed. (Paras 2-12) B) Tax Law - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Section 125(1)(e) of Finance (No.2) Act, 2019 - Interpretation of 'Service of Summons' - The phrase 'service of summons' in Section 125(1)(e) must be read in the context of an inquiry or investigation initiated by the department. Where the taxpayer voluntarily approaches the department and discloses liability, the subsequent issuance of summons for recording statement does not constitute 'service of summons' for the purpose of disqualification under the scheme. (Paras 10-12)
Issue of Consideration
Whether the rejection of the petitioner's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on the ground that a summons had been issued to the petitioner prior to the declaration, thereby disqualifying the petitioner under Section 125(1)(e) of the Finance (No.2) Act, 2019, was valid.
Final Decision
The court allowed the writ petition, quashed the order dated 01.03.2020, and directed the respondents to consider the petitioner's declaration dated 24.11.2019 afresh as a valid declaration and grant consequential relief in terms of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
Law Points
- Sabka Vishwas (Legacy Dispute Resolution) Scheme
- 2019
- Section 125(1)(e) of Finance (No.2) Act
- Voluntary disclosure
- Summons
- Inquiry
- Enquiry
- Show cause notice
- Tax arrears
