Service Tax Liability admitted Before Cut-off Date amounts to “quantified” under Sabka Vishwas (Legacy Dispute Resolution) Scheme- Allahabad High Court
In a recent judgment, the Hon’ble Allahabad High Court has held that when Service Tax Liability was communicated and admitted by the assessee before cut-off date, it was to be treated as “quantified” under Sabka Vishwas (Legacy Dispute Resolution) Scheme, even though final audit report was issued after cut off date
ABCAUS Case Law Citation:
ABCAUS 3955 (2024) (04) HC
Important Case Laws relied upon:
UCO Bank Ltd. vs. CIT (1999) 4 SCC 599
Paper Products Ltd. Vs. Commissioner of Central Excise (1999) 7 SCC 84,
In The instant case, a writ petition was filed against the order passed by the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 introduced by Finance Act, 2019 (‘the Scheme’).
Under the said scheme, if the tax dues with regard to the matter under enquiry, investigation or audit was not quantified on or before 30.06.2019, the applicants were ineligible to proceed under the scheme.
A direction was sought to require the Designated Committee to review its decision. Effectively prayer pressed was for issuance of Discharge Certificate after allowing the petitioner opportunity to pay up the requisite amount under the Scheme.
The petitioner was a Works Contractor. It was subjected to audit proceedings by the Central Excise Department for the financial year 2014-15. Discrepancies were noted by the audit party indicating short payment of service tax.
The petitioner agreed with the view of the audit party and deposited service tax. The petitioner further agreed to deposit interest and penalty. Similar admissions of the petitioner (to discharge the service tax liability in terms of the audit objection) were recorded prior to the cut-off date under the Scheme, i.e. 30.06.2019.
The above facts were clearly mentioned in communication issued by the Deputy Commissioner. Though the said communication was issued much later than the cut-off date 30.06.2019 but it contained details of admission made by the petitioner recorded before the audit party prior to the cut-off date 30.06.2019.
Later the Petition made a declaration in Form SVLDRS-1 under the Scheme within the prescribed time. However, the department rejected the said declaration without granting any personal hearing namely on the basis of final audit report signed on 15.7.2019 stating that the amount payable was not quantified before 30.06.2019.
It was the submission of the Petitioner that in the said declaration Form there was a column to fill final Audit Report number in cases relating to audit, hence the final audit report number with date as 15.07.2019 was filled in the declaration though the fact remains that the amount payable by the petitioner as per audit was already quantified by the auditors prior to 30.06.2019 while concluding the audit of the petitioner on May 2019 and communicated to the petitioner on mobile in order to enable him to deposit the said amount. The amount was quantified before 30th June 2019 and the Audit Final Report was signed on 15.07.2019.
The stand of the Department was that the demand of duty by the audit party was prima facie calculated but not quantified. Section 121 (r) of the Finance Act, 2019 envisages that “quantified, with its cognate expression, means a written communication of the amount of duty payable under the indirect tax”. In the instant case, no communication from the Department side to the petitioner had been made on or before 30.06.2019. The tax liability was communicated to the petitioner on 15.07.2019 vide Final Audit Report. The date relevant for ascertaining the eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 introduced vide Section 120 of the Finance Act, 2019. Board’s Circular No. 1073/02/2019. CX dated 29.10.2019 vide para 2 (i) also stipulates that cases, where Final Audit Report (FAR) has been issued on or before 30th June, 2019, are eligible for relief under SVLDRS as the tax demand has been quantified.
The Hon’ble High Court observed that it was not disputed by the revenue that the amount with respect to which the petitioner had filed its declaration under Section 125 of the Scheme, was admitted to the petitioner before the audit party well before the cut-off date 30.06.2019. Thus, the revenue failed to refute or dispute the contentions of the petitioner made in that regard, rather in face of the record that fact stood established.
The Hon’ble High Court observed that under section 125(1)(e) assesses who had been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit had not been quantified on or before the 30th day of June, 2019 were ineligible for making a declaration under the scheme.
Further, under section 125(1)(r) the word “quantified” had been defined to mean a written communication of the amount of duty payable under the indirect tax enactment.
On the strength of the above statutory provisions, the declaration made by the petitioner was rejected by the impugned order. It was the case of the Revenue that there was no written communication issued to the petitioner with respect to quantify the disputed amount on or before the cut-off date 30.06.2019.
The Hon’ble High Court observed that the CBIC vide Circular No. 1071/4/2019-CX.8, dated 27.8.2019 included within the scope of “quantified” amount as mentioned under Section 125 (1) read with Section 121 (r), any amount that may have been admitted by the declarant before the audit party before the cut-off date 30.06.2019.
The Hon’ble High Court observed that section 133 of the Scheme empowers the CBIC (the highest administrative authority under the Scheme) to issue such orders, instructions and directions to the authorities, as it may deem fit, for the proper administration of this Scheme, and such authorities, and all other persons employed in the execution of this Scheme shall observe and follow such orders, instructions and directions.
The Hon’ble High Court further observed that in view of the judgment of the Hon’ble Supreme Court, it is no longer res integra that a Circular issued by CBIC, here under Section 133 (1) of the Scheme would bind the Revenue Authorities insofar as it is beneficial to the assessee/declarant.
The Hon’ble High Court held that the declaration made by the petitioner was with respect to amount quantified prior to 30.06.2019. Therefore, the petitioner’s declaration was maintainable and it may not have been rejected for reason of show cause notice issued after the cut-off date, i.e. 15.7.2019.
Accordingly, the writ petition was allowed. The impugned order passed by the Designated Committee was set aside and the matter is remitted to the Designated Committee to pass an appropriate order treating the petitioner’s declaration to be in accordance with law.
Download Full Judgment ABCAUS 3955 (2024) (04) HC Click Here >>
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