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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Sahai Endlaw, Sanjeev Narula, JJ.
Karan Singh - Appellant
Versus
Designated Committee Sabka Vishwas Legacy Dispute Resolution Scheme & Anr. - Respondents
W.P. (C) No. 2408 of 2021
Decided On : 22-02-2021
SVLDRS - Service Tax - Sections 120 to 134 of the Finance (No.2) Act, 2019 - The court discussed the concept of 'quantification' under SVLDRS, the definition of 'tax dues' and 'quantified', and the eligibility for tax relief under the scheme. The court emphasized that quantification of the amount had to be before 30th June, 2019, and clarified that the benefit of the scheme would be available only when the department quantifies the amount during investigation.
Fact of the Case:
The petitioner sought direction to issue discharge certificate under SVLDRS for settlement of service tax dues and relief for quashing the Demand-cum-Show Cause Notice. The petitioner claimed to have quantified the service tax payable for the period 2014-15 to June 2017 and applied for tax relief under SVLDRS, which was rejected by the authority.
Finding of the Court:
The court found that the petitioner's unilateral quantification by writing a letter/communication did not render the petitioner eligible under SVLDRS. The court emphasized that the benefit of the scheme would be available only when the department quantifies the amount during investigation.
Issues: The issues revolved around the eligibility of the petitioner for tax relief under SVLDRS, the concept of 'quantification' under the scheme, and the interpretation of relevant provisions and circulars.
Ratio Decidendi: The court emphasized that quantification of the amount had to be before 30th June, 2019, and clarified that the benefit of the scheme would be available only when the department quantifies the amount during investigation.
Final Decision: The court dismissed the petition and held that the petitioner was not eligible for tax relief under SVLDRS. The pending application was also disposed of.
JUDGMENT
Sanjeev Narula, J. - Allowed, subject to all just exceptions.
2. Application is disposed of.
3. The Petitioner, aggrieved with the rejection of its declaration under the amnesty scheme - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 [hereinafter referred to as 'SVLDRS'] for settlement of the service tax
W.P.(C) 2408/2021 & CM APPL. 7008/2021
dues, by way of the instant petition under Article 226 of the Constitution of India, seeks direction to the respondents to issue discharge certificate under SVLDRS. Besides, relief is also sought for quashing the Demand-cum-Show Cause Notice No. 61/2019-20 dated 20th March, 2020 issued by Respondent No. 2 in respect of the period in dispute [hereinafter referred to as 'SCN'].
4. Briefly stated, the petitioner, being proprietor of M/S. Syona Spa, is in the business of providing health club and fitness centre services. An investigation was initiated by the Anti-Evasion Group-4, Central Excise and Service Tax Department, in respect of service tax dues for the period of 2014-15 to June 2017. Vide letter dated 10.05.2019, summons were issued to the Petitioner. In reaction thereto, Petitioner deposited service tax of Rs. 20,08,334/- vide challans dated 10.05.2019 and 14.05.2019. Thereafter, by way of letters dated 21.05.2019 and 18.06.2019, the Petitioner sent its response to the summons, submitting, inter alia, month-wise receipts of service tax. Petitioner claims that vide the afore-noted communication dated 18.06.2019, it has quantified the service tax payable for the period 2014-15 to June 2017 as Rs. 20,08, 334/- for the period 2014-15 to June 2017.
5. On 01.08.2019, the Government notified the SVLDRS vide Sections 120 to Section 134 of the Finance (No.2) Act, 2019.
6. The Petitioner sought to take benefit of SVLDRS and filed online declaration, under FORM SVLDRS-1 [ARN LD0912190001228] on 09.12.2019. Therein, against "Quantified Amount details", the Petitioner declared that duty/tax of Rs. 20,08,334/- was quantified, as declared by it in its letter dated 18.06.2019. The said application/declaration under FORM SVLDRS-1 was rejected on the ground of ineligibility, with the remarks - "Demand has neither been quantified nor has been communicated to the assessee" and "Submit SVLDRS-4 of main noticee". In this backdrop, the present petition has been filed.
7. Mr. Sharma, counsel for the petitioner, submits that the decision of the authority is arbitrary and unreasonable as the petitioner's eligibility under SVLDRS has been wrongly assessed by ignoring the terms of the scheme. The Petitioner has applied for tax relief in accordance with the scheme, and in consonance with the prescribed SVLDRS Rules, 2019, which were issued vide Notification No. OS/2019 Central Excise-NT dated 21.08.2019. He also argues that Petitioner's eligibility to file the declaration under SVLDRS is clarified beyond doubt vide Paragraph 10(g) of the CBIC Circular No. 107114/2019- CX.8 dated 27.08.2019 wherein it has been stipulated that for eligibility under SVLDRS, the term "quantified" includes written communication by a letter intimating duty demand; or duty liability admitted by the person during enquiry, investigation etc. The petitioner had qualified the said amount in dispute by way of communication dated 18.06.2019, much before the 'relevant date' under SVLDRS i.e. 30.07.2019. This communication made the petitioner an eligible declarant under the scheme as the amount stood quantified on the 'relevant date'. Mr. Sharma also argues that the SCN inter alia captures the Petitioner's quantified service tax liability of Rs. 20,08,334/-. The SCN demands service tax of Rs. 20,09,277/- under forward charge and Rs. 12,922/- under reverse charge. The nominal difference of Rs. 943/- in forward charge service tax amount quantified by the Petitioner (Rs. 20,08,334/-) and forward charge service tax amount in the SCN (Rs. 20,09,277/-) is due to the reason that the SCN has calculated service tax at the rate of 14.5 percent
Taxpayers are ineligible for relief under the SVLDRS unless the duty amount has been quantified by the department, rather than the taxpayer unilaterally.
Eligibility for benefits under the Sabka Vikas Scheme requires official communication of tax dues quantification by the department; unilateral admissions do not suffice.
The main legal point established in the judgment is that the tax dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 can be considered quantified based on an admission of the liabil....
The admission and quantification of tax liability by the declarant before the cut-off date of 30.06.2019 makes them eligible to file a declaration under the Sabka Vishwas Scheme, 2019.
Eligibility for the benefits of the SVLDRS Scheme is confirmed when service tax liability is quantified and admitted prior to the cut-off date, regardless of ongoing investigations.
The main legal point established in the judgment is that the admission of tax dues by the petitioner and eligibility to avail benefits under the SVLDRS were in line with the legal provisions and obje....
Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 is contingent upon the quantification of duty demand on or before the 30th day of June, 2019, and the admission of tax lia....
Sub-Section (2) of Section 145 of 'the Act' speaks about withdrawal from duty in contravention of Section 29 of 'the Act'. Section 29 of 'the Act' provides that no Police Officer shall withdraw himse....
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