Gujarat High Court Quashes Orders Rejecting Declaration Under SVLDRS Scheme, Directs Acceptance Of Declaration

The petitioner, a private limited company engaged in providing taxable service of installation of High-Security Registration Plates (HSRPs) on vehicles, had faced legal disputes relating to Central Excise & Service Tax. Taking cognizance of the challenges faced by taxpayers, the government had introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, aimed at resolving such legacy disputes pending before various courts and tribunals.

The petitioner, being registered with the service tax department and subsequently under the GST regime, encountered a summons in 2018 for non-payment of service tax on royalty and ocean freight services under the reverse charge mechanism. The company had admitted its tax liabilities, duly paid the total service tax dues, and requested the closure of the investigation.

Subsequently, when the SVLDRS came into effect, offering a window for declaring tax dues, the petitioner filed an application/declaration under the scheme on 03.12.2019, quantifying the tax dues at Rs. 92,12,344/- and claiming zero tax liability. However, the declaration was rejected by the authorities on the grounds that the quantification was not done before 30.06.2019.

Challenging this rejection, the petitioner moved the Gujarat High Court with a writ petition seeking the quashing of the rejection order and a direction to process the declaration on merits.

The court examined the provisions of Section 125(1)(e) and observed that the department's perception that there was no quantification before 30.06.2019 was misconceived. The court referred to a letter dated 21.05.2019 from the petitioner, which indicated that during the verification process, the petitioner had agreed to the points raised and quantified the amount.

The court noted that the statement made on behalf of the assessee on 03.06.2020 also supported the admission of quantification. Additionally, communications from the revenue authorities on 24.10.2019 and SVLDRS forms 1 and 2 indicated no discrepancy in the outstanding amounts between the department's perception and the petitioner's payments, which were communicated before 30.06.2019.

The court referred to a circular issued by the department on 27.08.2019, which clarified that "quantified" would include a written communication intimating duty demand or duty liability admitted during an inquiry. The court emphasized that the admission by the assessee on 21.05.2019 for the dues already paid and admitted was not disputed and was further confirmed by an order (OIO) on 20.06.2023, which quantified the outstanding tax dues.

Placing reliance on the Seventh Plane Networks Pvt. Ltd. vs. Union of India & Ors. [2020(8) TMI 343 (Del), the court held, “it can be culled out that the amount in question stood quantified before the cut-off date in accordance with the circulars of the department and thus the action on the part of the department making the petitioner ineligible to file declaration under the scheme is required to be quashed and set aside.”

“In view of the above, the impugned orders dated 05.05.2020 and 07.09.2020 are hereby quashed and set aside. The respondents are directed to accept the declaration filed by the petitioner on 03.12.2019 as per SVLRDS-1 and close the issue including the OIO dated 28.06.2023. Petition is accordingly allowed. Rule is made absolute accordingly,” the court concluded.

Case Title: M/s FTA HSRP Solutions Pvt. Ltd. vs Union Of India

Case Citation:

Case No. R/Special Civil Application No. 15906 Of 2020

Date: 27/07/2023

Appearance: Appearance: Mr Anand Nainawati(5970) For The Petitioner(S) No. 1 ; Mr Devang Vyas(2794) For The Respondent(S) No. 1 ; Mr Py Divyeshvar(2482) For The Respondent(S) No. 2

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