Bombay High Court
Astrack Engineering India P. Ltd vs Union Of India And 3 Ors on 18 March, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-OS:5726-DB WP3320-21.DOC
Mohite
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
TRUSHA
TUSHAR
MOHITE WRIT PETITION NO. 3320 OF 2021
Digitally signed by
TRUSHA TUSHAR
MOHITE
Date: 2024.04.05
11:53:09 +0530
M/s.Astarck Engineering India P. Ltd.
503, Neptune Uptown, N.S.Road,
Mulund West,
Maharashtra - 400 080 ... Petitioner
Versus
1. Union of India
represented by the Secretary,
Department of Revenue,
Ministry of Finance,
North Block,
New Delhi - 110 001
2. The Ministry of Finance
The Secretary (Revenue)
Customs & Indirect Taxes,
North Block,
New Delhi - 110 001
3. The Hon'ble Commissioner,
Sab Ka Vishwas Designated Committee
16th Floor, Satara Plaza Sector - 11B,
Vashi, Navi Mumbai,
4. Deputy Commissioner,
Office of Commissioner CGST
& C.Ex. Division-IV, Navi Mumbai
Commissionerate
16th Floor, Satara Plaza, Palm Beach Road,
Sector - 19, D Vashi
Navi Mumbai 400 705 ...Respondents
Ms.Deepali Kamble for the Petitioner
Mr.Karan Adik a/w Ms.Sangeeta Yadav for the Respondents
_______________________
CORAM: G. S. KULKARNI &
FIRDOSH P. POONIWALLA, JJ.
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WP3320-21.DOC
DATED: 18th March, 2024
_______________________
JUDGMENT:(PER FIRDOSH P. POONIWALLA, J.)
1. Rule. Rule made returnable forthwith. By consent of the parties, heard finally.
2. This Petition has been filed under Article 226 of the Constitution of India. The Petitioner is engaged in providing works contract service and registered under the category of "Works Contract Services" as Service Provider under the provisions of the Finance Act, 1994.
3. During the period 2014 to June 2017, the Petitioner was regularly filing ST-3 Returns. However, due to financial crunch, the service tax liability could not be discharged by the Petitioner in that particular month. As and when the funds got released from the Service Receiver, the Petitioner immediately discharged the liability of service tax as detailed below.
Period involved Date of payment Service tax liability 1.4.2014 30.6.2017 16.11.2017 Rs.6,87,023/-
1.4.2014 30.6.2017 16.11.2017 Rs.48,742/-
1.4.2014 30.6.2017 31.3.2017 Rs.8,38,326/-
1.4.2014 30.6.2017 31.3.2017 Rs.7,42,997/-
Total Rs.23,17,088/-
4. It is the case of the Petitioner that it had discharged the service tax liability much before the cut off date and that there was no investigation / audit / enquiry pending against the Petitioner before the Respondents.
5. In the meantime, the Government of India introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 ("Sabka Vishwas Scheme") to bring an end to pending tax litigation under the erstwhile indirect tax regime.
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6. On 30th December 2019, the Petitioner applied online under the Sabka Vishwas Scheme and submitted online Form SVLDRS-1. In Form SVLDRS-1, the Petitioner declared Rs.23,17,088/- under voluntary disclosure.
7. On the said Form SVLDRS-1, the Respondents made the following remarks:
"Remarks:
Too many mistakes in the declaration which have been later clarified by the declarant vide his letter dated 24.01.2020. The category has been wrongly selected by the declarant as 'Litigation - SCN pending'. The subject SCN has been adjudicated and party has also filed an appeal against it which is pending before Comm(A), Kochi. Hence, the correct category for this declaration should be 'Litigation-Appeal pending'. However, tax dues have been correctly declared and tax waiver remains unchanged even if the category is changed. The actual tax dues pertaining to this case, covered under OIO No. 09/2018 ST dated 25.05.2018 is Rs. 10,08,116/-. Tax deposits already made as per the Jurisdictional Officer's verification report is Rs. 5,27,263/-. Since the amount of pre-deposit/deposit paid by the assessee exceeds the amount of tax payable after applying tax relief. Eligible for discharge under the scheme."
8. In paragraph 7 of the Affidavit in Reply dated 2nd July 2021 of Parveen Jindal, Deputy Commissioner of CGST and Central Excise Division IV, Navi Mumbai Commissionerate, filed on behalf of the Respondents, it is admitted by the Respondents that the said remark was a system generated error and that it had no connection with the case of the Petitioner.
9. On the said remark being issued, the Petitioner visited the office of the Respondents and pointed out that the said remark had no connection to the case of the Petitioner. The Respondents informed the Petitioner that the Petitioner would be issued Form SVLDRS-2 and would be given a personal hearing, at which time the Petitioner could put its say in writing.
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10. However, despite the same, on 22nd February 2020, Respondents issued Form SVLDRS-3 directing the Petitioner to make payment of Rs.23,17,088/-, which the Petitioner had already paid during the period 2014-2017.
11. The Petitioner brought this fact to the notice of the Respondents by visiting the office of the Respondents. Despite the same, Respondent No.3 issued a Show Cause Notice dated 30 th December 2020 to the Petitioner seeking recovery of service tax amounting to Rs.23,17,088/- along with interest and penalty. As stated hereinabove, the amount mentioned in the Show Cause Notice of Rs.23,17,088 had already been paid by the Petitioner.
12. In these circumstances, the Petitioner filed the present Writ Petition seeking the following final reliefs:
"a. That this Honourable court be pleased to issue writ of certiorari and or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the record pertaining to the Petitioner's case and after going into the validity and legality of the provision direct the Respondents to issuance SVLDRS -2.
b. That this Honourable court be pleased to issue a writ of mandamus or any other appropriate writ, order, or direction ordering and directing the respondent to issue Form SVLDRS- 2 and give the Petitioner and opportunity to present their case, if there is a dispute with respect to amount payable under the scheme.
c. That this Honourable court be please to issue writ of mandamus or any other appropriate writ, order or direction ordering or directing respondents to Set Aside and Quash the impugned Show Cause notice."
13. Heard the learned counsel for the parties and perused the documents on record.
14. Sub-sections (1) to (4) of Section 127 of the Sabka Vishwas Scheme are relevant and are set out hereunder.
Page 4 of 911March, 2024 ::: Uploaded on - 05/04/2024 ::: Downloaded on - 10/04/2024 16:38:25 ::: WP3320-21.DOC "127. (1) Where the amount estimated to be payable by the declarant, as estimated by the Designated Committee, equals the amount declared by the declarant, then, the Designated Committee shall issue in electronic Form, a statement, indicating the amount payable by the declarant, within a period of sixty days from the date of receipt of the said declaration.
(2) Where the amount estimated to be payable by the declarant, as estimated by the Designated Committee, exceeds the amount declared by the declarant, then, the Designated Committee shall issue in electronic Form, an estimate of the amount payable by the declarant within thirty days of the date of receipt of the declaration.
(3) After the issue of the estimate under sub-section (2), the Designated Committee shall give an opportunity of being heard to the declarant, if he so desires, before issuing the statement indicating the amount payable by the declarant:
Provided that on sufficient cause being shown by the declarant, only one adjournment may be granted by the Designated Committee.
(4) After hearing the declarant, a statement in electronic Form indicating the amount payable by the declarant, shall be issued within a period of sixty days from the date of receipt of the declaration."
15. Further, Rule 6 of the Sabka Vishwas (Legacy Dispute Resolution Scheme) Rules, 2019 (Sabka Vishwas Rules) is also relevant and is set out hereunder.
"6. Verification by Designated Committee and issue of estimate, etc. -
(1) The declaration made under section 125, except when it relates to a case of voluntary disclosure of an amount of duty, shall be verified by the Designated Committee based on the particulars furnished by the declarant as well as the records available with the Department.
(2) The statement under sub-sections (1) and (4) of section 127, as the case may be, shall be issued by the Designated Committee electronically, within a period of sixty days from the date of receipt of the declaration under sub-rule (1) of rule 3, in Form SVLDRS-3 setting forth therein the particulars of the amount payable :
Provided that no such statement shall be issued in a case where the amount payable, as determined by the Designated Page 5 of 9 11March, 2024 ::: Uploaded on - 05/04/2024 ::: Downloaded on - 10/04/2024 16:38:25 ::: WP3320-21.DOC Committee is nil and there is no appeal pending in a High Court or the Supreme Court.
(3) Where the amount estimated to be payable by the declarant exceeds the amount declared by the declarant, then, the Designated Committee shall issue electronically, within thirty days of the date of receipt of the declaration under sub-rule (1) of rule 3, in Form SVLDRS-2, an estimate of the amount payable by the declarant along with a notice of opportunity for personal hearing.
(4) If the declarant wants to indicate agreement or disagreement with the estimate referred to in sub-rule (3) or wants to make written submissions or waive personal hearing or seek an adjournment, he shall file electronically Form SVLDRS-2A indicating the same:
Provided that if no such agreement or disagreement is indicated till the date of personal hearing and the declarant does not appear before the Designated Committee for personal hearing, the committee shall decide the matter based on available records.
(5) On receipt of a request for an adjournment under sub-rule (4), electronically in Form SVLDRS-2B:
Provided if the declarant does not appear before the Designated Committee for personal hearing after adjournment, the committee shall decide the matter based on available records.
(6) Within thirty days of the date of issue of Form SVLDRS-3, the Designated Committee may modify its order only to correct an arithmetical error or clerical error, which is apparent on the face of record, on such error being pointed out by the declarant or suo motu by issuing electronically a revised Form SVLDRS-3."
16. Sub-section (2) of Section 127 of the Sabka Vishwas Scheme clearly provides that, where the amount estimated to be payable by the declarant, as estimated by the Designated Committee, exceeds the amount declared by the declarant, then the Designated Committee shall issue in electronic Form an estimate of the amount payable by the declarant within thirty days of the date of receipt of the declaration. Further, sub-section (3) of Rule 127 provides that, after the issue of this estimate, the Designated Committee shall give an opportunity of hearing to the declarant, if he so desires, before issuing the statement indicating the amount payable by the declarant.
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17. Further, sub-section (4) of Section 127 provides that, after hearing the declarant, a statement in electronic Form indicating the amount payable by the declarant, shall be issued.
18. Moreover, sub-rule (3) of Rule 6 also provides that where the amount estimated to be payable by the declarant exceeds the amount declared by the declarant, then the Designated Committee shall issue in Form SVLDRS 2 an estimate of the amount payable by the declarant along with the notice of opportunity for personal hearing. Further, sub-rule (4) of Rule 6 provides that if the declarant wants to indicate agreement or disagreement with the estimate referred to in sub-rule (3) or wants to make written submissions or waive personal hearing or seek an adjournment, he shall file Form SVLDRS-2A indicating the same. The proviso to sub-rule (4) provides that if no agreement or disagreement is indicated till the date of personal hearing and the declarant does not appear before the Designated Committee for personal hearing, the Committee shall decide the matter based on available records. The above provisions show that, on a conjoint reading of Section 127, with Rule 6, where the Designated Committee disagrees with the amount declared by the declarant, then it is required to issue Form SVLDRS 2, grant an opportunity of personal hearing to the declarant and then decide the matter.
19. In the present case, it is obvious that there is a dispute between the Petitioner and the Respondents in respect of service tax amount payable by the Petitioner. According to the Petitioner, it has paid the said amount of Rs.23,17,088/-. Whilst, according to the Respondents, the said amount had to be paid by the Petitioner as stated in Form SVLDRS-3 issued by the Respondents as well as in Show Cause Notice dated 30 th December, 2020 issued by Respondent No.3.
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20. In these circumstances, in our view, as per the provisions of Section 127 of the Sabka Vishwas Scheme and Rule 6 of the Sabka Vishwas Rules, the Designated Committee was required to issue Form SVLDRS-2 indicating the amount which, according to the Designated Committee, was payable by the Petitioner, and give an opportunity of personal hearing to the Petitioner. If such a Form SVLDRS-2 had been issued by the Designated Committee, then the Petitioner would have got an opportunity of personal hearing and of making written submissions by filing Form SVLDRS-2A. However, in the present case, without issuing Form SVLDRS-2, the Designated Committee has straight away issued SVLDRS-3, thereby depriving the Petitioner of an opportunity of personal hearing. In our view, this action of the Designated Committee, of straight away issuing Form SVLDRS-3 without issuing Form SVLDRS-2, is not only in violation of Section 127 of the Sabka Vishwas Scheme and Rule 6 of the Sabka Vishwas Rules but is also in total violation of the principles of natural justice.
21. In our view, for the aforesaid reasons, before issuing Form SVLDRS-2, Respondent No.3 could not have issued the said Show Cause Notice dated 30 th December 2020.
22. For all these reasons, we are of the view that Form SVLDRS-3 and Show Cause Notice dated 30th December 2020 are required to be quashed and set aside and the matter is required to be remanded to the Designated Committee for taking a fresh decision in the matter after giving an opportunity of personal hearing to the Petitioner.
23. For the aforesaid reasons, and in the light of the aforesaid discussion, we hereby pass the following orders:
a. Show Cause Notice dated 30th December 2020 is hereby quashed and set aside.Page 8 of 9
11March, 2024 ::: Uploaded on - 05/04/2024 ::: Downloaded on - 10/04/2024 16:38:25 ::: WP3320-21.DOC b. Form SVLDRS-3 is hereby quashed and set aside.
c. Matter is remanded back to the Designated Committee and it is directed to issue Form SVLDRS-2 to the Petitioner and, after giving an opportunity of personal hearing to the Petitioner, to pass a reasoned order within a period of six weeks from the date of intimation of this Order.
d. Rule is made absolute in the aforesaid terms.
e. Writ Petition is disposed of.
f. In the facts and circumstances of the case, there shall be no order
as to costs.
(FIRDOSH P. POONIWALLA, J.) (G. S. KULKARNI , J.)
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