Bombay High Court directs the Designated Committee to consider declaration under Sabka Vishwas Scheme

Bombay High Court directs the Designated Committee to consider declaration under Sabka Vishwas Scheme

The Bombay High Court (HC) remanded back the matter to the Designated Committee for considering afresh declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS scheme) and for granting adequate relief

M/s. K. N. Rai (petitioner) – a proprietorship firm engaged in providing construction services to various governments, local authorities etc. under the category of works contract services mentioned that the said services provided by the firm were exempted from service tax in view of Exemption Notification dated 20 June 2012, as amended from time to time.

It was further mentioned by the petitioner that an inquiry was conducted by the Service Tax Department from 2014-15 to June 2017. That the said inquiry was conducted on the basis that services provided by the petitioner were taxable and these were not exempted under the said notification.

The petitioner further submitted that under subsequent amendments brought to the said notification there were certain services were exempted from being taxed from 1 April 2015.

It was contended by the petitioner that it did not pay taxes for the services provided which became taxable later on after withdrawal of exemption. The Central Government of India introduced SVLDRS scheme through the Finance (No.2) Act 2019 for bringing an end to the pending litigations of central excise and service tax under the indirect tax regime by providing benefits to the declarants subject to eligibility.

The petitioner further stated that they had shown their willingness to the tax department for applying under the SVLDRS scheme and had admitted the tax liability of Rs.1,26,54,725 due for 2014-15 to 2017-18 as quantified in the statement of the proprietor dated 28 June 2019.

The petitioner stated that they had submitted a declaration regarding the SVLDRS scheme under the category of investigation, inquiry, or audit by Directorate General of GST Intelligence(DGGI). Under the said declaration the petitioner mentioned the duty payable tax liability at Rs.1,25,54,725. That the said amount was rejected by the DGGI and also rejected the declaration of the petitioner on the basis that quantification of the tax dues was not made final by 30 June 2019 that was the cut-off date.

A writ petition was filed by the petitioner before the HC and the matter was listed before the division bench of Justice Ujjal Bhuyan and Justice Abhay Ahuja.

The HC took the reference of the order given in the case of Saksham Facility Services Pvt. Ltd. v. Union of India, 2020-TIOL-2108-HC-MUM-ST, wherein a similar issue was dealt with and the HC held that tax authorities were not justified in rejecting the declaration of the petitioner under the SVLDRS scheme on mere basis of quantification of tax dues was not made final till 30 June 2019.

The HC remanded back the said matter to the tax authorities for reconsideration of the declaration of the petitioner. It also directed the authorities for giving due opportunity of being heard to the petitioner and to grant the consequential relief. The HC directed that the above exercise shall be carried out within a period of six weeks.