The admission of tax liability by the declarant before the cut-off date is crucial for eligibility under the Sabka Vishwas Scheme. Written communication of the amount of duty payable and the opportunity of hearing to the declarant are essential principles in the decision-making process.

JUDGMENT

Ujjal Bhuyan, J. - Heard Mr. Jas Sanghavi, learned counsel for the petitioners and Mr. Sham Walve along with Mr. Ram Ochani, learned counsel for the respondents.

2. By filing this petition under Article 226 of the Constitution of India, petitioners seek quashing of orders dated 12.02.2020 and 08.06.2020 rejecting the declarations of the petitioners dated 27.11.2019 and 10.01.2020 respectively under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (briefly "the scheme" hereinafter) and further seeks a direction to the respondents to reconsider the said declarations in terms of the scheme and grant the consequential reliefs. Further prayer made is for a direction to the respondents not to proceed with the show cause notice dated 30.12.2020 issued by respondent No.6.

3. Petitioner No.1 is a company incorporated under the Companies Act, 1956 and is engaged in the business of providing manpower recruitment and payroll processing services. Petitioner No.2 is a director of petitioner No.1. Being a service provider, petitioner No.1 got itself registered as a service provider under the Finance Act, 1994.

4. It is stated that because of severe financial crisis and other difficulties, petitioners could not discharge their erstwhile service tax liability and the subsequent goods and services tax (GST) liability to the tune of Rs.11.1 crores approximately till February, 2018. In this connection, two summons were issued to the petitioners both dated 30.03.2018. Responding to the summons, petitioner No.2 appeared before the Superintendent in the office of the Directorate General of Goods and Services Tax Intelligence (DGGSTI), Zonal Unit, Mumbai on 30.03.2018. On that date his statement was recorded under section 14 of the Central Excise Act, 1944 read with section 174 of the Central Goods and Services Tax Act, 2017 ( briefly "the CGST Act" hereinafter) as well as under section 70 of the said Act. Question No.5 put to petitioner No.2 was as to what was the service tax and GST liability of petitioner No.1 as on February, 2018. In his reply petitioner No.2 stated that till February, 2018 service tax liability would be Rs.6 crore approximately and GST liability would be Rs. 5.1 crore approximately, total amounting to Rs. 11.10 crores. He admitted that despite charging and collecting service tax from the clients, the same was not deposited into the government exchequer.

5. Following the above statement, several communications were exchanged between the petitioners and the Directorate General of GST Intelligence including one dated 31.08.2018 whereby the Senior Intelligence Officer referred to the statement of petitioner No.2 dated 30.03.2018 and the admission that petitioner No.1 had service tax and GST liability of Rs.11.10 crores.

6. In the meanwhile, Central Government introduced the scheme under the Finance (No.2) Act, 2019. Subsequently rules were also framed.

7. To avail the benefit under the scheme, petitioners submitted declaration in the prescribed form on 27.11.2019 under the category of "investigation, enquiry or audit" with sub-categorization of "investigation by DGGI". However, in this declaration the amount of service tax liability was shown at a lower figure of Rs. 5,16,24,145.00 with deposit of Rs. 2,97,91,340.00.

8. Petitioner was granted a personal hearing by the designated committee i.e. respondent No.4 on 30.12.2019 since a view was taken that the amount of service tax liability was not quantified before 30.06.2019 which is the cut off date under the scheme and therefore petitioners were not eligible under the said scheme. In the personal hearing, petitioners explained the discrepancy in the figure of service tax liability. It was stated that the statement dated 30.03.2018 covered the entire period of two service tax returns i.e. for the period from October 2016 to March 2017 and from April 2017 to June 2017 which worked out to Rs. 6,13,91,021.00. However, service tax liability for the month of October, 2016 amount