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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
UJJAL BHUYAN, ABHAY AHUJA, JJ.
M/s. Code Engineers Private Limited – Petitioner
Versus
Union of India and Others – Respondents
Writ Petition (ST) No. 5293 of 2020
Decided On : 28-01-2021
Service Tax - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Finance Act, 1994 - Central Excise Act, 1944 - Companies Act, 1956 - [SERVICE TAX] - [LEGACY DISPUTE RESOLUTION] - [Finance Act, 1994, Central Excise Act, 1944] - The court discussed the petitioner's claim for quashing an order and seeking reconsideration of a declaration under the Sabka Vishwas Scheme. The court highlighted the purport and object of the scheme, emphasizing the need to unload pending litigations and allow businesses to move forward. The court analyzed the relevant provisions of the Act and the Rules, emphasizing the duty of the designated committee to verify the correctness of the declaration and the broad picture in mind. The court found that the verification carried out by the designated committee was incomplete and remanded the matter back for a fresh decision.
Fact of the Case:
The petitioner, a private limited company, sought to quash an order and reconsider its declaration under the Sabka Vishwas Scheme, claiming non-acceptance of two payments made as pre-deposit. The service tax department had initiated an investigation against the petitioner for alleged non-payment of service tax dues. The petitioner made deposits under protest and contested the show cause-cum-demand notice. The central government introduced the Sabka Vishwas Scheme to resolve pending litigations, and the petitioner filed a declaration under the scheme. However, the designated committee disallowed a portion of the pre-deposit made by the petitioner, resulting in a quantified amount payable by the petitioner.
Finding of the Court:
The court found that the verification carried out by the designated committee was incomplete and prejudicial to the petitioner. The court emphasized the purport and object of the scheme, highlighting the need to unload pending litigations and allow businesses to move forward. The court analyzed the relevant provisions of the Act and the Rules, emphasizing the duty of the designated committee to verify the correctness of the declaration and the broad picture in mind. The court set aside the impugned order and remanded the matter back to the designated committee for a fresh decision.
Issues: The issues revolved around the non-acceptance of two payments made by the petitioner as pre-deposit under the Sabka Vishwas Scheme, leading to a quantified amount payable by the petitioner. The petitioner contended that the designated committee's verification was incomplete and prejudicial.
Ratio Decidendi: The court emphasized the duty of the designated committee to verify the correctness of the declaration under the Sabka Vishwas Scheme, keeping the broad picture in mind and ensuring a liberal view embedded with the principles of natural justice. The court found that the verification carried out by the designated committee was incomplete and prejudicial to the petitioner, leading to the remand of the matter for a fresh decision.
Final Decision: The court allowed the writ petition to the extent indicated, setting aside the impugned order and remanding the matter back to the designated committee for a fresh decision. The designated committee was directed to pass a speaking order in accordance with the law within a specified period.
JUDGMENT :
UJJAL BHUYAN, J.
1. Heard Mr. Bharat Raichandani, learned counsel for the petitioner and Mr. Walve, learned counsel for the respondents.
2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks quashing of order dated 25.02.2020 issued by respondent No.3 and further seeks a direction to the said respondent to reconsider its declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by allowing pre-deposit made by the petitioner to the extent of Rs.1,02,55,913.00.
3. Case of the petitioner is that it is a private limited company incorporated under the Companies Act, 1956 having its office at Belapur in the State of Maharashtra. Petitioner is engaged in the business of providing ‘erection, commissioning and installation’ services to its customers. Being a service provider, it was registered as such under the Finance Act, 1994.
4. It is stated that petitioner was filing service tax returns regularly and was paying service tax wherever applicable.
5. Service tax department initiated investigation against the petitioner on 03.10.2011 on the ground of alleged non-payment of service tax dues for the period covering 01.04.2006 to 31.03.2011. In the course of investigation, statement of Shri. Abiraj Rajan, Managing Director of the petitioner was recorded on 03.10.2011 and 13.02.2012 under section 83 of the Finance Act, 1994 read with section 14 of the Central Excise Act, 1944.
6. During the course of investigation, petitioner made a deposit of Rs.1,30,00,000.00 under protest.
7. On the basis of the investigation carried out, show cause-cum-demand notice dated 20.04.2012 was issued to the petitioner from the office of Commissioner of Service Tax, Mumbai-II. It was stated therein that service tax dues amounting to Rs.3,76,12,232.00 for the period 01.04.2006 to 31.03.2011 was outstanding against the petitioner along with interest and penalty. In the said show cause-cum-demand notice, Commissioner proposed to appropriate service tax of Rs.1,30,00,000.00 paid by the petitioner before issuance of the show cause-cum-demand notice.
8. Petitioner contested the show cause-cum-demand notice. That apart, it pointed out that in addition to payment of Rs.1,30,00,000.00, it had also made payment of Rs.1,07,00,000.00 through its client M/s. Walchandnagar Industries Limited vide challans dated 04.06.2012 and 09.06.2012. As per the first challan, an amount of Rs.65,00,000.00 was paid and as per the second challan, an amount of Rs.42,00,000.00 was paid. By subsequent letters dated 13.10.2012 and 16.10.2012, it was clarified by the petitioner that out of the total amount of Rs.1,07,00,000.00, an amount of Rs.46,44,094.00 covered by the first challan pertained to the year 01.04.2010 to 31.03.2011 which was part of the investigation period 01.04.2006 to 31.03.2011. The balance amount pertained to the year 01.04.2011 to 31.03.2012 which was beyond the period of investigation.
9. Petitioner has stated that it had made additional payment of Rs.56,11,819.00 towards the service tax demand for the period from 01.04.2006 to 31.03.2011. Thus, against the outstanding service tax demand of Rs.3,76,12,232.00, petitioner had made payment of the following amounts:-
10. According to the petitioner, without appreciating the above, Commissioner of Central Goods and Services Tax (CGST) and Central Excise, Belapur passed the order-in-original dated 27.09.2018 confirming the demand of service tax of Rs.3,76,12,232.00 and appropriated the amount of Rs.1,30,00,000.00 as payment towards the service tax dues. However, the two payments of Rs.46,44,094.00 and Rs.56,11,819.00, totalling Rs.1,02,55,913.00, were not included as payments made by the petitioner. It may be mentioned that on and from 1st July, 2017, the goods and services tax (GST) regime came into force replacing the earlier indirect tax enactments including service tax under the Finance Act, 1994
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