Sabka Vishwas Scheme - Enquiry Initiated After Deadline Will Not Bar Filing Of Voluntary Disclosure: Bombay High Court

In a judgment last month, a division bench of Justices RD Dhanuka and SM Modak, quashed the orders passed by the concerned authorities rejecting two declarations filed by the petitioner under the SVLDR scheme and directed them to reconsider the case afresh, "by treating the same as valid declarations under the 'voluntary disclosure' category and thereafter grant the admissible relief to the petitioner."

The court also directed the authorities to grant an opportunity of personal hearing to the petitioner by issuing seven days' clear notice before the date of proposed hearing and pass a reasoned order, in accordance with the law within a period of eight weeks from the date of receipt of the HC order.

The bench, however, clarified that under Section 129(2)(c) of the scheme, the authorities were empowered to take action against the petitioner, if within a period of one year of issuance of the discharge certificate against the petitioner, it was found that the material particulars furnished in the declaration filed by the petitioner were false.

The court was hearing a petition filed by Navi Mumbai based UCC Infrastructure Pvt. Ltd, which had on September 9, 2019, filed an Electronic Declaration form under SVLDRS-1 on the website of Central Board of Excise and Customs website under 'voluntary category'. The petitioner declared Rs 36,24,108 as the amount of tax dues for the period September 1, 2015 to June 30, 2017. However, this declaration was rejected on September 30, 2020 on the ground that the petitioner was not eligible to opt for the said Scheme as the investigation against the petitioner had been initiated before they opted for the said scheme.

The petitioner, on October 9, 2019, protested against the said September 30, 2020 order and pointed out why the declaration form submitted by the petitioner could not have been rejected. On December 9, 2019, the authorities yet again rejected the application citing the same reason.

Thereafter various representations were sent to the concerned authorities for considering the application and on December 30, 2019, the petitioner filed another Electronic Declaration form under SVLDRS-1 on the website under 'voluntary category' for the same period. This too was rejected on February 20, 2020.

Initiation of an enquiry, investigation or audit post June 30, 2019 (cut-off date) for SVLDRS would not act as a bar to the file a declaration under the 'voluntary disclosure' category.

Advocate Bharat Raichandani, appearing for the petitioner company, submitted that the investigation was started by the authorities by issuing summons only on August 30, 2019, which was much after the cut-off date for the SVLDR scheme of June 30, 2019 and therefore, the declaration form submitted by the petitioner could not have been rejected on the ground that the investigation was initiated against the petitioner. He added that the investigation initiated after the cut-off date would be of no consequence. He cited another judgment of Bombay High Court in the case of M/s. New India Civil Erectors Private Limited v/s. Union of India and Ors in Writ Petition (Lodging) No. 989 of 2020.

He also submitted that the petitioner had submitted a declaration under 'voluntary category' and had paid the tax due as payable.

Advocate Swapnil Bangur, representing the concerned tax authorities, submitted that even if the summons were issued after the cut-off date, power of the authorities to continue with the investigation was not taken away by section 129(2)(c) of the said scheme. He added that if the particulars furnished by the petitioner in the declaration were found to be false within a period of one year of issuance of discharge certificate, it shall be presumed as if declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted.

The bench, relying on the judgment in case of M/s. New India Civil Erectors Private Limited observed that the petitioner cannot be denied relief and the orders passed by the tax authorities needed to be set aside and the matter be remanded back for a fresh adjudication.

In that case, the court had also considered a Supreme Court judgment passed in the case of Tata Engineering and Locomotive Company Limited v/s. State of Bihar, (2000) 5 SCC 346, and held that if any enquiry or investigation or audit was initiated on or before June 30, 2019, such a person would not be eligible to make declaration under the voluntary disclosure category. The bench then said that a "logical corollary" would be that an enquiry or investigation or audit post June 30, 2019 would not act as a bar to the filing of declaration under the 'voluntary disclosure' category.

"In our view, the stand taken by the respondents is contrary to the principles of law laid down by this Court in case of M/s. New India Civil Erectors Private Limited (supra) and also contrary to the objectives, purposes and intent of the said scheme introduced by the Central Government. The respondents would have been justified to declare the petitioner ineligible to file declaration under 'voluntary disclosure' category, if enquiry or investigation or audit would have been initiated on or before 30th June, 2019," the bench of Justices Dhanuka and Modak ruled.