Bombay High Court Directs Govt. To Constitute A Committee To Decide SVLDRS Declaration Filed On 30th December 2019

The Bombay High Court has directed to constitute a committee to decide the declaration that was filed by the petitioner on 30th December 2019 and, on or before 30th September 2024, dispose of the declaration in accordance with law.

The bench of Justice K.R. Shriram and Justice Jitendra Jain has observed that the amount payable has been quantified before 30th June 2019. The scheme has the twin objectives of liquidation of past disputes pertaining to central excise and service tax on the one hand and disclosure of unpaid taxes on the other hand. The primary focus, as succinctly put across by the Finance Minister in her budget speech, is to unload the baggage of pending litigations in respect of service tax and central excise from the pre-GST regime so that the business can move on.

On or about 5 April 2019, the petitioner received an email from the GST audit team stating that there was a service tax paid and payable mismatch for Financial Years 2014-2015 to 2017-2018 and directed the petitioner to produce documents. The petitioner requested to pay the difference immediately. The difference indicated was only Rs. 1.

The petitioner conducted an internal audit and found that the amount of Rs. 22,00,414/- was short paid. The petitioner decided to take advantage of the Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS) and filed a declaration in Form-1 under the voluntary disclosure category, declaring a sum of Rs. 16,04,367. The declaration was filed on 6th November 2019. This was accepted by the department, and the petitioner was called upon to make the payment within 30 days. Petitioner did not make the payment but instead filed another declaration dated 30th December 2019 under the category Investigation, Enquiry, or Audit, sub-category Investigation by Commissionerate, and declared the amount of Rs. 22,00,414 as the quantified amount.

The declaration was rejected by the department on the ground that, as per respondents' records, the tax dues had not been quantified before 30th June 2019 and hence, it is not covered under the investigation category.

The petitioner contended that by a letter, the petitioner informed the department that the service tax for Financial Year 2014-2015 up to 2017-2018 was short paid due to a calculation error and the amount totals to Rs. 22,00,414.

The petitioner stated that it was written by an officer to whom the letter was delivered. The written note states, “Please provide a copy of the full balance sheet, P & L A/c., ITR-ffiled ST-3, and other relevant documents within a week.”. The petitioner received an email dated 5th August 2019 from respondents calling upon the petitioner to pay the short payment of service tax amounting to Rs. 22,00,414 together with interest and penalty.

The department contended that petitioner had quantified the amount payable before the cutoff date of 30th June 2019 read with the email dated 5th August 2019. The Court should hold that petitioner's tax dues were quantified on or before 30th June 2019.

The court has quashed the show cause notice and the orders. Consequently, the appeal filed by the petitioner before the Central Excise Service Tax Appellate Tribunal (CESTAT) also stands disposed of.

Counsel For Petitioner: Muthukrishnan Iyyappan

Counsel For Respondent: Bhakti Date

Case Title: Eka Academy Private Limited Versus Union of India

Case No.: Writ Petition No.5049 Of 2021

Click Here To Read The Order