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2023 Supreme(Del) 5564
IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
B. L. Goel And Co. - Appellant
Versus
Additional Director General of Gst Intelligence, Gurugram Zonal Unit & Anr. - Respondents
W.P.(C) 6196 of 2020 & CM APPL. 22196 of 2020
Decided On : 25-09-2023
Mr. Rajesh Jain, Mr. Virag Tiwari & Mr. Ramashish, Advocates, for the Petitioner.
Mr. Harpreet Singh, Mr. Jatin Kumar Gaur & Mr. Akshay Saxena, Advocates, for the Respondent.
IMPORTANT POINT
The Sabka Vishwas Scheme and the Supreme Court's interpretation of the value of free supply items and the status of NOIDA as a body corporate were central to the court's decision.
Headnote:
Service Tax - Liability for Works Contracts - Finance Act, 1994 - Section 73 - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Section 124 - Section 129 - The Supreme Court's interpretation of the value of free supply items and the status of NOIDA as a body corporate influenced the court's decision.
Fact of the Case:
The petitioner challenged a show cause notice calling for payment of service tax on works contracts executed during 2014-15 to 2017-18. The petitioner availed the Sabka Vishwas Scheme, paid 50% of the proposed tax demand, and obtained a Discharge Certificate. The petitioner argued that no further proceedings could be initiated due to the Scheme.
Finding of the Court:
The court found that the impugned show cause notice was not sustainable and set it aside. The court also concluded that the petitioner was not liable for the tax on free of cost material and that NOIDA was a body corporate, contrary to the Revenue's claims.
Issues: The issues revolved around the petitioner's liability for service tax, the applicability of the Sabka Vishwas Scheme, and the correctness of the impugned show cause notice.
Ratio Decidendi: The court relied on the Sabka Vishwas Scheme and the Supreme Court's interpretation of the value of free supply items and the status of NOIDA as a body corporate to conclude that the impugned show cause notice was not sustainable.
Final Decision: The impugned show cause notice was set aside, and the petitioner was found not liable for the tax on free of cost material and NOIDA was recognized as a body corporate.
JUDGMENT
Vibhu Bakhru, J. (Oral) - The petitioner has filed the present petition impugning a show cause notice dated 10.07.2020 (hereafter `the impugned show cause notice') calling upon the petitioner to show cause, within a period of thirty days as to why the service tax amounting to Rs.2,67,26,113/- should not be demanded and recovered from the petitioner by invoking the extended period of limitation under Section 73 of the Finance Act, 1994 (hereafter `the Finance Act').
2. The controversy in the present petition relates to the petitioner's liability for payment of the service tax on works contracts executed during the period of 2014-15 to 2017-18.
3. The petitioner is engaged in the business of construction of residential complexes, schools, government buildings, parking facilities etc. on works contract basis. Undisputedly, the said activities fall within the definition of `works contract' under Section 65B (54) of the Finance Act.
4. A show cause notice dated 23.04.2019, was issued to the petitioner in respect of its liability to pay service tax for the aforesaid period. This show cause notice dated 23.04.2019 was premised on the information received from the Gurugram Zonal Unit of the Directorate General of GST Intelligence (DGGI) and the investigation carried on by the authorities pursuant, thereto. The Revenue Authorities had received information to the effect that the petitioner had constructed several commercial and residential projects, and had paid the service tax on the `works contract' by availing the benefit of Notification No.24/2012-S.T. and Notification No.30/2012-S.T. According to the Revenue Authorities, the petitioner had wrongly declared part of its taxable income as exempted from service tax, and had not paid the service tax correctly. Based on the said information, investigations were conducted and statements of the authorised signatory of the petitioner was recorded. The Revenue Authorities also collected the running account bills and payment vouchers issued by the petitioner to its customers as well as the copy of the financial accounts of the petitioner for the relevant years-financial years 2013-14 to 2017-18.
5. The show cause notice dated 23.04.2019 mentioned that the petitioner had executed works for nine entities including M/s Charms India Pvt. Ltd. and New Okhla Industrial Development Authority (NOIDA). Summons were issued to the said entities and some of them submitted copies of their running account bills and ledger accounts in respect of the works executed by the petitioner. Based on the investigation conducted, the Revenue Authorities concluded that the petitioner had short paid the service tax for the relevant period. After adjusting the negative values of the services, the revenue authorities proposed to raise an aggregate demand of Rs.5,34,58,093/- (Rs.1,92,01,985/- plus Rs.3,42,56,108/-).
6. While the proceedings relating to the show cause notice dated 23.04.2019 were pending, the Finance (No.2) Act, 2019 was enacted. Chapter V of the Finance Act introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereafter `the Scheme'). In terms of the Scheme, assessees were granted an opportunity to make a declaration and avail the reliefs as provided under Section 124 of Chapter-V of the Finance (No. 2) Act, 2019.
7. Section 124 of Finance (No. 2) Act, 2019 is set out below:
"124. (1) Subject to the conditions specified in sub-section (2), the relief available to a declarant under this Scheme shall be calculated as follows:
(a) where the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice which is pending as on the 30th day of June, 2019, and if the amount of duty is,-
(i) rupees fifty lakhs or less, then, seventy percent of the tax dues;
(ii) more than rupees fifty lakhs, then, fifty percent of the tax dues;
(b) where the tax dues are relatable to a show cause notice for late fee or penalty only, and the amount of duty in the said notice has been
