Declarant making a voluntary disclosure is ineligible to apply for Sabka Vishwas scheme

Declarant making a voluntary disclosure is ineligible to apply for Sabka Vishwas scheme

Introduced in 2019, it provided settlement of legacy disputes on service tax payments

The Bombay High Court has held that the declarant making a voluntary disclosure is 'ineligible' to apply for the Sabka Vishwas (Legacy Dispute) Resolution Scheme (SVLDR), 2019 under the Finance Act, 2019.

A two-member bench comprising Justice Nitin Jamdar and Justice Abhay Ahuja observed that the scheme was clear that the declarant making a voluntary disclosure was ineligible if it was subjected to an audit as of 30 June 2019. Since it was proved that the petitioner was subjected to an audit before that period, he was excluded from the scheme.

The petitioner, Mindset Estate Pvt. Ltd. is a private limited company. It entered into a leave and license agreement with another entity for premises constructed by the petitioner.

Certain proceedings took place between the petitioner and the lessee. The petitioner was issued a letter by the respondent authorities intimating the conduct of the audit for service tax for the period 2012-2013 to 2016–2017.

Under the Finance Act, the SVDLR Scheme, introduced in 2019, provided settlement of legacy disputes on service tax payments.

As per the SVLDR-1 Form, the petitioner submitted a declaration, which was rejected by the December 2019 impugned communication. The company challenged the rejection to avail of the benefit under the scheme.

However, the respondent rightfully rejected the declaration on the ground that the petitioner was subjected to an audit on the relevant date. Therefore, it fell in the class of declarants who were ineligible to make a declaration on the scheme under the Finance Act.

The title of the September 2017 communication was 'Intimation for conducting a service tax audit.' It stated that the internal audit group was deputed to conduct the audit of the petitioner under the Service Tax Rules, 1994 and the petitioner was called upon to submit certain documents.

Under the Finance Act, Section 121 (g) defines 'audit' to mean any scrutiny, verification, or checks carried out under indirect tax enactment (other than an enquiry or investigation) will commence when a written intimation from the central excise officer regarding conducting of audit is received. The audit would commence after a written intimation was received.

The petitioner received the written intimations in September and November 2017. Therefore, the petitioner came under Section 125 (1)(e) ambit.

It was submitted that the September 2017 notice referred to the audit in terms of the Service Tax Rules. It had a particular procedure stipulating that the audit be conducted speedily. The petition was, therefore, dismissed.