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2025 Supreme(Online)(Bom) 6173
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.S. Sonak, Advait M. Sethna, JJ
Evershine Enterprises – Appellant
Versus
Union of India Thr. Secretary Ministry of Finance – Respondent
Writ Petition No.3138 of 2022
For the Appellants/Petitioners: Mr. Bharat Raichandani, Bhagrati Sahu i/b. Prabhakar Shetty
For the Respondents: Mr. P.C. Cardozo, a/w Mamta Omle
The designated committee must verify all claims related to predeposits and recoveries before issuing demand notices under the legacy dispute resolution scheme.
Headnote:(A) Finance Act, 2019 - Section 124(2) - Legacy Dispute Resolution Scheme - Petitioner's challenge to SVLDRS-3 - Court held the designated committee failed to verify predeposits and recoveries claimed by the Petitioner - The scheme mandates verification of claims before issuing the demand notice. (Paras 12, 17, 26, 27)
(B) Statutory Interpretation - The importance of verifying claims under the scheme - The designated committee must examine documents and claim assertions for just determination of amounts due under SVLDRS-3. (Paras 25, 26)
Facts of the case:
The Petitioner contested a demand for service tax amounting to Rs.1,12,65,902/- as outlined in the SVLDRS-3 without due consideration of prior payments made,
Findings of Court:
The Court found that the oversight in verification warranted intervention in the issued SVLDRS-3, leading to the quashing of the amount demanded.
Issues: The primary issue was whether the owed amounts should be adjusted based on previous payments by the Petitioner before the issuance of SVLDRS-3.
Ratio Decidendi: The court stated that the verification of claims pursuant to Section 124(2) is essential, asserting that dismissing them without examination contravenes scheme mandates.
Result: The court quashed the impugned SVLDRS-3 and directed further verification by the designated committee.
| Table of Content |
|---|
| 1. initial hearing and escalation of the petition. (Para 1 , 2) |
| 2. challenge based on improper service tax computations. (Para 3 , 4 , 6) |
| 3. claims of predeposits and recoveries must be factored into demand calculations. (Para 5 , 11 , 12 , 22) |
| 4. verification of predeposits was necessary and not undertaken. (Para 15 , 17 , 26) |
| 5. decision of the court on proper verification processes. (Para 28 , 29) |
ORAL JUDGMENT (Per M.S. Sonak, J.):-
1. Heard learned counsel for the parties.
2. We issue Rule in this Petition and make the Rule returnable immediately at the request of and with the consent of the learned counsel for the parties.
3. The Petitioner seeks to quash the statement issued by the Respondents to form SVLDRS-3 dated 26 December 2019 (Exh.A) primarily on the ground that the amounts already recovered from the Petitioner or the amounts predeposited by the Petitioner were not adjusted in determining the amount which the Petitioner has been called upon to pay under SVLDRS-3.
4. On 13 June 2013, the Petitioner was served with a show-cause notice cum demand notice proposing to demand service tax of Rs.2,25,31,804/- for the period from 2008-2009 to 2011-2012. The Petitioner responded on 9 December 2013 in which he pointed out that the major portion of the demand had already been remitted before the issuance of the show- cause notice. After this, the Petitioner was issued another show-cause notice-cum-demand notice dated 28 March 2014, this time demanding service tax of Rs.17,04,400/- along with interest and penalty for the period 1 April 2012 to 31 March 2013.
5. On 27 March 2018, the 3rd Respondent made the Order-in-Original confirming the demands proposed in show- cause notices dated 13 June 2013 and 28 March 2014. The Petitioner contends that its submissions regarding the amounts already paid or predeposited amounts were not considered.
6. The Petitioner appealed the Order-in-Original dated 27 March 2018 on 4 July 2018. While the Appeal was pending, ‘The Sabka Vishwas’ (Legacy Dispute Resolution) Scheme, 2019 i.e. Chapter V of the Finance Act , 2019 entered forced vide notification dated 21 August 2019.
7. The Petitioner on 27 November 2019 applied under SVLDRS by pointing out that its Appeal was pending before the CESTAT.
8. On 9 December 2019, the Petitioner wrote to the Respondents about the details of service tax payment of Rs.1,89,28,966/- along with an affidavit of payment of service tax challans.
9. On 11 December 2019, the Petitioner was called upon to attend personal hearing on 16 December 2019. This intimation remarks that the amount of predeposits claimed by the Petitioner is not co-relatable with the records available in the office and therefore, the Petitioner, has to produce original copies of the challans at the time of hearing scheduled on 16 December 2019.
10. The Petitioner has placed on record communication of 16 December 2019 along with details of challans based upon which the Petitioner claims to have paid the amounts towards service tax for the relevant period.
11. On 26 December 2019, the Respondents issued impugned SVLDRS-3 (Exhibit-A) calling upon the Petitioner to pay 50% of the amount determined as due from the Petitioner i.e. Rs.1,12,65,902/-.
12. Mr. Raichandani, learned counsel for the Petitioner took us to the SVLDRS-3 and stressed upon Section 124(2) of the Finance Act in which this scheme is contained. Section 124(2) provides that the relief calculated under sub-section (1) shall be subject to the condition that any amount paid as predeposit at any stage of the appellate proceedings under the indirect tax enactment or as a deposit during inquiry, investigation or audit, shall be deducted while issuing the statement indicating the amount payable by the declarant. The proviso clarifies that if the amount of predeposit or deposit already paid by the declarant exceeds the amount payable by the declarant, as indicated in the statement issued by the designated committee, the declarant shall not be
