Can't Presume Pending Investigation For Disqualification Under 'Sabka Vishwas Scheme' When Proof Of Service Of Notice Not Available: Delhi HC

A division bench of Justices Prathiba M. Singh and Dharmesh Sharma observed that in the absence of proof of service of notice upon the trader, prior to his making an application for dispute resolution, it cannot be presumed that any investigation was pending against him.

Clause 125(1)(e) of the Scheme disqualifies persons who have been subjected to an enquiry or investigation prior to implementation of the Scheme.

Clause 125(1)(f) bars a person from making voluntary disclosure after being subjected to an enquiry or investigation or audit.

The Petitioner had made a voluntary disclosure of Rs.11,26,937 service tax liability.

The Court observed, “Since there is no proof on record that there was any investigation on the date when the Petitioner applied to avail the benefit under the Scheme and the fact that the orders disqualifying the Petitioner which have been passed are also completely unreasoned and one-line orders, this Court is of the opinion that the Petitioner is entitled to relief.”

Petitioner had first sought to avail the benefit of the Scheme on 30th December, 2019 and next, on 15th January, 2020 but both the applications were rejected.

The Department cited three show cause notices dated 9th October, 2019, 15th September, 2020 and 31st December, 2020 for short tax that were allegedly issued to the Petitioner, to contend that he is disqualified from the scheme.

However, the Court noted that none of those notices were attached to the email rejecting the Petitioner's application. It observed,

“Sr. Standing Counsel for the Department further submits that though there may be a dispatch register, the original would not be available and there is no proof available with the Department, as on date, of dispatch of the letter or service upon the Petitioner. When such is the position, the Petitioner's disqualification under the Scheme would not arise inasmuch as under Clauses 125(1)(e) and 125(1)(f) of the Scheme, unless and until there was a pending investigation, the Petitioner could not have been disqualified under the same.”

Nonetheless, since the Scheme is no longer operational, the Court directed the Department that the declaration of tax liability by the Petitioner be accepted. It also quashed the three show cause notices subject to payment of liability.

Appearance: Mr. Mohit Kumar Hasija, Adv for Petitioner; Mr. Premtosh K. Mishra (CGSC) with Mr. Manish Vashist & Ms. Sanya Kalsi, Advs. for UOI. Mr. Atul Tripathi, SSC, CBIC

Case title: Daljeet Singh Gill v. Union Of India & Ors.

Citation: 2025 LiveLaw (Del) 238

Case no.: W.P.(C) 4644/2021

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