In W.P. No. 5097 of 2022-BOM HC- Under Sabka Vishwas (Legacy Dispute Resolution) Scheme, once Form SVLDRS-2 had been issued and hearing was fixed after follow up, Authorities coulnot renege on same: Bombay HC
Justices Nitin Jamdar & Abhay Ahuja [27-01-2023]

Read Order: K. RAHEJA PRIVATE LIMITED V. UNION OF INDIA AND ORS

LE Correspondent

Mumbai, January 30, 2023: The SVLDR Scheme is a legislation introduced for liquidation of legacy disputes on the one hand and recovery of unpaid taxes to the government on the other, the Bombay HC has observed.

While dealing with the present petition instituted to assail communication dated Nil March, 2020 issued by the third respondent -Deputy Commissioner CGST & Central Excise, Mumbai, rejecting declaration in FormSVLDRS-1 dated 20 December 2019 filed by the Petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme), the Bombay High Court stated that the Respondent cannot contend that the portal was not updated. 

“Once SVLDRS-2 has been issued and there has also been a follow up from the Respondents with respect to the said Form as well as the hearing that was fixed at the appointed date and time, the Respondent-Authorities cannot renege on the same”, the Division bench of Justice Nitin Jamdar and Justice Abhay Ahuja said.

 Petitioner was a company incorporated under the Companies Act, 1956 and was inter alia engaged in the business of real estate and related activities. Petitioner was stated to be registered under the Service Tax Rules, 1994 and upon coming into force of the CGST Act with effect from 1 July 2017, Petitioner was  stated to have registered under the CGST Act as well.

It was the case of the petitioner that it had constructed a Public Parking Lot (PPL) on a plot of land situated in Mumbai. The Municipal Corporation of Greater Mumbai (MCGM) approved the proposal of grant of incentive FSI over and above the normal FSI to the Petitioner against the construction of the said PPL on the said plot.

Through  letter dated  March 23,  2018 to DGGSTI, Petitioner was  stated to have provided details of Cenvat credit availed by it along with copies of documents stating that they had ascertained that the total cenvat credit claimed for construction of PPL was Rs. 2,74,82,221/- and that they had reversed the same along with interest amounting to Rs. 1,86,14,476/- and requested the Superintendent, DGGSTI to close the proceedings.

 In the meanwhile, the SVLDR Scheme and Rules were announced to resolve pending disputes, which came into effect from 1 September 2019.

 In pursuance of the same, it was  the case of the Petitioner that since the Scheme was given vide publicity, pursuant to paragraph no. 4(a) of Circular  dated  August  27, 2019, the Petitioner filed an application  in Form SVLDRS1 under the category, Investigation, Enquiry or Audit and subcategory Investigation by DGGI for the duty type Service Tax.

The Designated Committee determined the estimated amount to be payable by Petitioner as zero and issued FormSVLDRS-2 dated 16 January 2020.

 Petitioner was also intimated that personal hearing was fixed on 22 January 2020 in case Petitioner does not agree with the estimated amount and Petitioner was further called upon to submit Form SVLDRS-2A in case any other date and time of personal hearing was desired.

Subsequently, the Respondent Deputy Director General of GSTI, informed the Petitioner that during investigation it was noticed that Petitioner had availed all Input Tax Credit (ITC) of Excise duty of Rs. 1,27,984/- and Value Added Tax (VAT) of Rs. 14,93,853/- in TRANS-1. Petitioner was further called upon to submit details of reversal of inadmissible ITC, payment of appropriate interest and penalty.

Through communication dated February 17, 2022, the fourth Respondent- Additional Commissioner of CGST and Central Excise informed Petitioner that Form SVLDRS-1 filed by Petitioner had been rejected. 

It was the Petitioner’s case that Petitioner never received the said communication of rejection of the declaration on March 20, 2020 either from the fourth  Respondent  or from the Designated Committed, prior to the fourth  Respondent’s letter dated 17 February 2022.

 Aggrieved by the aforesaid, Petitioner  preferred this Writ Petition submitting that rejection of the declaration filed by Petitioner under Section 125(2) of the Finance Act, 2019 was  ex facie, arbitrary, unreasonable and contrary to the scheme and in breach of principles of natural justice and liable to be set aside on the grounds mentioned in the petition.

After considering the rival contentions of the parties, the Court noted, “for being eligible under the SVLDR Scheme, a written communication of the amount of duty liability admitted by the person concerned during enquiry, investigation or audit would be a quantification on or before 30 June 2019, which need not be determined upon completion of investigation by issuance of Show Cause Notice or upon adjudication”. 

The Designated Committee instead of issuing Form 3 and followed with Form 4 to Petitioner, issued a Show Cause Notice dated 21 June 2021. 

“The SVLDR Scheme is a legislation introduced for liquidation of legacy disputes on the one hand and recovery of unpaid taxes to the government on the other”. 

 The Respondent cannot contend that the portal was not updated. Once SVLDRS-2 has been issued and there has also been a follow up from the Respondents with respect to the said Form as well as the hearing that was fixed at the appointed date and time, the Respondent-Authorities cannot renege on the same, the Court stated. 

In light of the observations stated above, the communication dated nil March, 2020 as well as the Show Cause Notice dated June 21, 2021 cannot be sustained and was  hereby quashed and set aside.

The petition was accordingly allowed.