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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
UJJAL BHUYAN, A. VENKATESHWARA REDDY, JJ.
M/s. Violet Event Marketing India Private Limited – Petitioner
Versus
Union of India and Others – Respondents
Writ Petition No. 26035 of 2019
Decided On : 12-04-2022
Constitution of India - Article 226 - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Declaration of the petitioner as a valid declaration under the category of voluntary disclosure - Business of providing event management services to its clients. It had obtained service tax registration under the Finance Act, 1994 since its incorporation in the year 2009.
Finding of the Court:
It would be in complete defiance of logic and contrary to the very object of the scheme to outrightly reject a declaration on the ground of ineligibility without affording an opportunity to the declarant to explain as to why his declaration should be accepted and relief under the scheme should be extended to him. Rejection of a declaration will lead to adverse civil consequences for the declarant as he would have to face the consequences of enquiry or investigation under the relevant indirect tax enactment. It is axiomatic that when a person is visited by adverse civil consequences, principles of natural justice like notice and hearing would have to be complied with. Therefore, summary rejection of a declaration without affording any opportunity of hearing to the declarant would be in violation of the principles of natural justice.
Result: Writ Petition allowed.
ORDER :
1. Heard Dr. M.V.K. Moorthy, learned counsel for the petitioner; Mr. B. Mukherjee, learned counsel appearing on behalf of Mr. N. Rajeshwar Rao, learned Assistant Solicitor General of India for respondent No. 1 and Mr. B. Narasimha Sarma, learned counsel for respondent Nos. 3 and 4.
2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks quashing of intimation dated 27.09.2019 of the third respondent and further seeks a direction to the respondents to consider the declaration of the petitioner as a valid declaration under the category of ‘voluntary disclosure’ in terms of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
3. Case of the petitioner is that it is engaged in the business of providing event management services to its clients. It had obtained service tax registration under the Finance Act, 1994 since its incorporation in the year 2009. It is stated that since its inception, petitioner was filing service tax returns and paying the due service tax.
4. However, because of financial problems, petitioner could not pay service tax for the period from April, 2016 to June, 2017. The total amount of service tax dues to be paid by the petitioner for the aforesaid period is Rs. 1,72,93,758.00.
5. While presenting the budget for the year 2019-2020, Government of India, Ministry of Finance introduced a scheme called Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Subsequently, Central Government also notified the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 to operationalize the scheme from 01.09.2019 to 31.12.2019.
6. It is stated that Sabka Vishwas (Legacy Dispute Resolution) Scheme has facility for voluntary disclosure of tax dues. In such a case, the declarant has to pay the full tax declared but is not required to pay interest and penalty, besides being provided immunity from prosecution.
7. Petitioner filed declaration in the prescribed format online on 13.09.2019 under the category of ‘voluntary disclosure’ declaring service tax dues of Rs. 1,72,93,758.00 for the period from April, 2016 to June, 2017. As per the procedure laid down the designated committee i.e. respondent No. 4 chaired by respondent No. 3 considered the declaration filed by the petitioner. However, vide the intimation dated 27.09.2019, declaration filed by the petitioner was rejected.
8. It is stated that petitioner was not subjected to enquiry/investigation till announcement of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on 05.07.2019. Petitioner was issued a letter on 23.07.2019 by the Superintendent (Anti-evasion) for verification of payment of service tax for the financial year 2014-15. It was not an investigation; certainly not for the period from April, 2016 to June, 2017. Subsequently, summons dated 11.09.2019 were issued to the petitioner for an enquiry for non-payment of service tax which was served upon the petitioner on 16.09.2019.
9. According to the petitioner, the letter dated 23.07.2019 and summons dated 11.09.2019 were issued only to deny the benefit of voluntary disclosure under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Contending that petitioner is eligible under the aforesaid scheme, not falling within the exclusion category, intimation dated 27.09.2019 of the third respondent has been assailed in the present writ proceeding on various grounds.
10. Respondent Nos. 3 and 4 have filed counter affidavit. It is stated that Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was introduced by the Finance (No. 2) Act, 2019 fixing 01.09.2019 as the effective date of commencement of the aforesaid scheme. Thereafter, Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 came to be framed laying down the procedure for implementation of the aforesaid scheme. It is stated that Central Board of Indirect Taxes and Customs i.e. respondent No. 2 had issued circulars dated 27.08.2019, 25.09.2019 and 29.10.2019 providing clarifications on various
Non-compliance to the principles of natural justice by the designated committee while rejecting a declaration would impeach the decision making process rendering the decision invalid in law.
A liberal interpretation has to be given to the scheme as its intent is to unload the baggage relating to legacy disputes under central excise and service tax and to allow the business to make a fres....
Exercising discretion in a just, fair, and reasonable manner, complying with the principles of natural justice, is essential, especially when adverse civil consequences are involved.
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....
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 opportun....
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.
The main legal point established in the judgment is that the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, does not have the jurisdiction to deny the benefit ....
The admission of duty liability before the cut-off date constituted quantification under the Sabka Vishwas Scheme, making the declaration valid.
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