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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.D. DHANUKA, N.R. BORKAR, JJ.
Munish Rajkumar Mahajan Proprietor of KDS Security Services and Others – Appellants
Versus
Union of India and Others – Respondents
Writ Petition No.465 of 2022
Decided on : 11-02-2022
Mandamus - Tax Dispute - Finance Act, 1994, SVLDR Scheme - Section 124(c)(i) - Section 73(2) - Section 73(1) - Section 68(1) - Section 66 - Section 66B - Section 77 - Section 70(1) - Rule 6 - Rule 7 - Form SVLDRS-1 - Form SVLDRS-2 - Form SVLDRS-2A - Form SVLDRS-3 - Section 121(c) - Section 123 - Section 124(1)(c) - Section 125(1)(e) - Rule 3(2)(a) - Rule 3(2)(b) - Jyoti Plastic Works Pvt. Ltd. vs. Union of India & Ors., 2020 SCC Online Bom 2276 - Morde Foods Pvt. Ltd. & Anr. vs. Union of India and Others, 2021 SCC Online Bom 320 - Thought Blurb vs. Union of India & Ors., 2020-TIOL-1813-HC-MUM-ST
Fact of the Case:
The petitioner sought a writ of mandamus to direct the Designated Committee under SVLDR Scheme to consider the tax dues as Rs.39,47,420/- and compute an amount of Rs.15,78,968/- as the estimated/determined amount payable. The petitioner was engaged in providing security and detective agency services and was holding necessary registration under Service Tax law and now under GST law. The respondents alleged non-payment of differential Service Tax by the petitioner and issued a Show Cause-cum-Demand Notice. The Assistant Commissioner passed an Assessment Order confirming the demand of Service Tax and imposing penalties. The petitioner opted for resolution of the dispute under the SVLDR Scheme. The Designated Committee issued an Estimate under Section 127 in Form SVLDRS-2, but the petitioner disagreed and submitted written submissions. Due to the Covid-19 pandemic, the time limit for payment of tax dues under the scheme was extended. The petitioner filed a writ petition challenging the re-classification of the case from 'Arrears' to 'Litigation' under the SVLDR Scheme.
Finding of the Court:
The Court held that the petitioner rightly filed the declaration form under the 'arrears' category and was not required to file the form under the 'litigation' category. The assessment order had already determined the tax liability, and the petitioner had not filed any appeal against it. The Court quashed the impugned order and allowed the writ petition, granting the petitioner two weeks to make payment of the amount of Rs.15,78,968/-.
Issues: The main issue was whether the petitioner could have filed a declaration under the SVLDR Scheme under the category of 'arrears' on the basis of the liability determined by the respondent no.2 in the Assessment Order or the petitioner ought to have filed the said declaration under the SVLDR Scheme under the category 'litigation' on the basis of the Show Cause Notice.
Ratio Decidendi: The Court held that the petitioner rightly filed the declaration form under the 'arrears' category as the assessment order had already determined the tax liability, and the petitioner had not filed any appeal against it. The Court applied the principles laid down in Jyoti Plastic Works Pvt. Ltd. vs. Union of India & Ors. and Morde Foods Pvt. Ltd. & Anr. vs. Union of India and Others to support its decision.
Final Decision: The writ petition was allowed, and the petitioner was granted two weeks to make payment of the amount of Rs.15,78,968/-. The respondents were directed to issue a discharge certificate within thirty days from the date of the petitioner paying the amount. The rule was made absolute in the aforesaid terms, and there was no order as to costs.
JUDGMENT :
R.D.Dhanuka, J.
Rule. Mr.Mishra, learned counsel for the respondents waives service. By consent of parties, petition is heard finally.
2. By this petition filed under Article 226 of the Constitution of India, the petitioner seeks a writ of mandamus, directing the Designated Committee under SVLDR Scheme to consider the tax dues as Rs.39,47,420/- i.e. the amount of demand confirmed, in the Order-in- Original dated 23rd December 2019 and declared in the SVLDRS-1 and compute an amount of Rs.15,78,968/- as the estimated/determined amount payable i.e. by applying 40% under Section 124(c)(i) of the Finance (No.2) Act, 2019 on the said dues of Rs.39,47,420/-. Some of the relevant facts for the purpose of deciding this petition are as under :-
3. The petitioner is engaged in providing security and detective agency services and was holding necessary registration under Service Tax law and now under GST law. The petitioner was paying appropriate service tax on the said services of security and detective agency provided by them.
4. It is the case of the respondents that during the verification of the data received from third party, it was observed that there was an apparent mismatch in the payment of Service Tax and the turnover of the assessee. As per third party data, Income Tax Department viz. ITR/ TDS data (Tax deducted at Source in Form-26AS), it was observed that the petitioner had shown income as per ITR/TDS for the period of 2013- 14 as under:-
| Year | Differential (Max-ST3) | Service Tax payable on Differential (Max-ST3) |
| 2013-14 | 3,36,32,851/- | 41,57,020/- |
5. According to the respondents, there was a non-payment of the differential Service Tax by the petitioner on variation of taxable value as per the information in third party data received from the Income Tax Department, in comparison to the taxable amount as per ST-3 returns filed for the corresponding period.
6. The office of Deputy/Assistant Commissioner, Central GST Division-III, Kolhapur issued a Show Cause-cum-Demand Notice to the petitioner for the assessment year 2013-14 on the basis of the income tax return filed by the petitioner for the assessment year 2013-14. It was mentioned in the show cause notice that the petitioner had short- paid or not-paid Service Tax of Rs.41,57,020/- on Max Differential ST-3 value of Rs.3,36,32,851/-. It was alleged that the petitioner had contravened Section 68(1) of the Finance Act, 1994 read with Section 66/Section 66B read with Rule 6 of the Rules as applicable during the relevant period and Sections 77, 70(1) read with Rules 7(1), 7(2), 7(3) of the Rules made thereunder.
7. The petitioner was called upon to show cause as to why the Service Tax of Rs.41,57,020/- inclusive of cesses which was not paid on taxable services provided by them during the period from April 2013 to March 2014, should not be demanded and recovered from them under the provisions of proviso to Section 73(1) of the Act.
8. On 15th November 2019, the petitioner had provided the details of amounts as reflected in the Service Tax returns as well as shown under the Income Tax returns received for providing security and detective agency services for the entire period from 2013-14 to 2017-18 (upto June 2017). The petitioner agreed to pay Service Tax of Rs.39,47,420/- on the amount received in cases where the security services were provided by the petitioner other than body corporates.
9. On 23rd December 2019, the Assistant Commissioner of Central GST, Division-III, Kolhapur passed an Assessment Order after the issuance of show cause notice dated 24th April 2019 issued by him and confirmed the demand of Service Tax of Rs.39,47,420/- against the petitioner under the provisions of Section 73(2) of the Finance Act, 1994 read along with the proviso to the provisions of Section 73(1) of the Finance Act, 1994 and ordered to recover a sum of Rs.39,47,420/-. Th
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