hc310 IN THE HIGH COURT OF JUDICATURE AT BOMBAY

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO. 96 OF 2022

Nabeel Construction Pvt. Ltd.,

72/73 Cine Prime Mall, Cinemax,

Manakia, Beverly Park, Mira Road

(East), Thane – 401107 through

Jahiruddin Kazi, S/o Mr. Rafiq Kazi,

aged 35 years, Manager in the

Petitioner ’s company and a resident

of Ganesh Niketan Society No. 62, A-24,

Malwani, MHADA, Malad West,

Mumbai – 400 095. … Petitioner Versus

1. Union of India, through its

Secretary, Department of Revenue,

Ministry of Finance, Government of

India, North Block, New Delhi – 110001.

2. The Designated Committee – I (SVLDRS)

[Comprising of the Principal Commissioner

or Commissioner and Additional Commissioner

or Joint Commissioner], CGST & Central Excise,

Commissioner – Thane, Navprabhat Chambers,

Ranade Road, Dadar (West), Mumbai – 400028.

3. The Principal Additional Director General,

Directorate General of GST Intelligence,

Mumbai Zonal Unit, N.T.C. House, III Floor,

N.M. Road, Ballard Estate, Mumbai – 400001. … Respondents

******

Mr. Abhishek A. Rastogi a/w Mr. Pratyushprava Saha and Ms. Kanika Sharma i/by M/s. Khaitan & Co. for the Petitioner.

Mr. Pradeep S. Jetly, Senior Advocate a/w Mr. Jitendra B. Mishra for the Respondents.

******

CORAM: R. D. DHANUKA AND

S. M. MODAK, JJ.

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RESERVED ON : 10 JANUARY, 2022 PRONOUNCED ON : 21 JANUARY, 2022

JUDGMENT ( Per R.D. Dhanuka, J.) :-

. Rule. Mr. Jetly, learned senior counsel for the respondents waives service. By consent of parties, writ petition is heard finally.

2. By this petition filed under Article 226 of the Constitution of India,

the petitioner prays for a writ of certiorari for quashing and setting aside the

order of Designated Committee-I (comprised of respondent nos. 2 and 3)

communicated through email dated 14 February, 2020 whereby rejecting

the SVLDRS-1 Declaration dated 30 December, 2019 filed by the

petitioner. The petitioner also prays that the proviso to Rule 6(2) read with

Rule 6(3) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme

Rules, 2019 (for short ‘the said Scheme’) be read down and to accept the

Declaration filed by the petitioner as the valid Declaration under Section 125 of the said Scheme and for other reliefs.

Some of the relevant facts for the purpose of deciding this writ petition are as under :-

The petitioner is engaged in providing construction services of

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commercial or industrial buildings and civil structures, other than residential

complexes. It is the case of the petitioner that in the month of February

2019, an enquiry for investigation was narrated by the Directorate General

of GST Intelligence, Zonal Unit, Mumbai. During the course of the

investigation, the petitioner submitted copies of the documents for the

period 2013-14 (from October 2013 to March 2014), 2014-15, 2015-16 and

2016-17 (from April to June 2017), on demand, to the officers of the

respondent no.3. Mohd. Azhar Ali, Director of the petitioner tendered his

statement before the Senior Intelligence officer of the respondent no.3 on

28 February, 2019. It is the case of the petitioner that during the course of

the said statement, the Director of the petitioner declared and admitted the

total tax liability of Rs.1,28,88,541/-. A portion of the said amount was

subsequently confirmed as Rs.1,26,62,148/- in the show-cause notice dated

26 September, 2020. The petitioner paid an amount of Rs.30 lakhs prior to

the recording of the said statement dated 28 February, 2019 and Rs.60 lakhs after recording the said statement in two installments.

5. On 5 August, 2019, the Central Government launched the said

Scheme after its incorporation as the Chapter V of the Finance (No.2) Act,

2019. The said Scheme was brought into force w.e.f. 1 September, 2019.

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6. The Central Board of Indirect Taxes and Customs (for short ‘CBIC’)

issued a circular dated 27 August, 2019 explaining and qualifying the said

Scheme. The petitioner proposed to avail the benefits i.e. reliefs in tax dues,

interest and penalty etc and filed a Declaration dated 30 December, 2019

under the category – ‘Investigation or Enquiry’ and sub-category –

‘Investigation by DGGI’ for the duty type – ‘Service Tax’. It is the case of

the petitioner that when the petitioner filed the said Declaration dated 30

December, 2019, the enquiry or investigation was still in progress against

the petitioner and was pending against the petitioner. The amount was clearly included within the scope of ‘tax dues’.

7. In the said Declaration filed in Form SVLDRS-1 by the petitioner, an

amount of Rs.1,28,88,541/- was declared by the petitioner as tax dues which

was declared and admitted in the statement of Mohd. Azhar Ali, Director

recorded on 28 February, 2019. The petitioner showed a deposit of Rs.90

lakhs against the said tax dues of Rs.1,28,88,541/- and also showed the

‘amount payable’ as defined under the provisions of Clause (e) of Section

121 of the Scheme, 2019 i.e. tax dues less tax less tax relief (@ 50% of tax

dues), after adjusting the said deposit of Rs.90,00,000/- and declared as ‘0’

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zero. It is the case of the petitioner that as per the said Scheme, the

petitioner was required to pay an amount of Rs.64,44,270/- against which

the petitioner had already paid a sum of Rs.90 lakhs i.e. sum of

Rs.25,55,729/- in the excess of the final amount payable by the petitioner which amount is non-refundable under the said Scheme.

8. The petitioner made a representation before the respondent no.2 on

31 January, 2020 and gave a detailed explanation as to why the said

Declaration filed by the petitioner on 30 December, 2019 should be

accepted. The petitioner requested for an opportunity of personal hearing in

compliance with the principles of natural justice, if the respondent no.2 did

not agree to the said submissions made by the petitioner in the said representation before deciding the said issue.

9. The petitioner was communicated with the decision vide email dated

14 February, 2020 by the respondent no.2 thereby rejecting the said

Declaration filed by the petitioner dated 30 December, 2019 without

providing an opportunity of Personal hearing. The petitioner made another

representation on 16 March, 2020 to the respondent no.2 requesting to

provide an opportunity of personal hearing. The said request was however

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rejected by the respondent no.2 vide letter dated 10 August, 2020.

10. On 10 August, 2020, the respondent no.2 notified the rejection of the

said Declaration filed by the petitioner. On 26 September, 2020, the

respondent no.2 issued a show-cause notice-cum-demand notice to the

petitioner, demanding various amounts towards interest, penalty, service tax

and calling upon the petitioner to show-cause as to why the action proposed

in the said show-cause notice should not be taken against the petitioner. The

petitioner thus filed this writ petition inter-alia praying for various reliefs.

11. Mr. Abhishek A. Rastogi, learned counsel for the petitioner invited

our attention to the various documents annexed to the writ petition. It is

submitted that under Section 125 of the said Scheme, the petitioner was

eligible to make a Declaration. He relied upon Section 125(1)(e) of the said

Scheme and would submit that the amount of duty involved had been

already quantified in this case on or before 30 June, 2019. He invited our

attention to the definition of the term ‘quantified’ under Section 121(r) of

the said Scheme and submits that during the course of enquiry, the statement

of one of the Director was recorded by the respondent no.2. He submits that

in reply to the question no. 9 of the said statement, the said Director of the

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petitioner was asked whether he knew what is service tax liability upto 30

June, 2017 of the petitioner, he admitted that the total service tax liability

was Rs.1,28,88,541/-. The said witness also submitted a signed copy of the

worksheet quantifying the service tax liability till 30 June, 2017. He also

relied upon the answer to the question no. 10. When the said Director was

asked as to when he was going to pay the short paid service tax liability, he

replied that after visit of the Senior Intelligence Officer to the premises of

the petitioner, the petitioner had made a payment of Rs.30 lakhs and

submitted GAR-7 challan for the same. He further stated that the petitioner

would pay balance service tax amount before 31 March, 2019. He stated

that he had nothing more to say. He confirmed that the said statement was given voluntarily without any force or coercion.

12. Learned counsel for the petitioner invited our attention to the circular

dated 27 August, 2019 issued by the CBIC, New Delhi clarifying the said

Scheme. He relied upon Clause 10(g) of the said circular and submitted that

the tax dues were quantified in the investigation or enquiry on or before 30

June, 2019 and thus Section 121(r) defining the terms ‘quantified’ under the said Scheme was satisfied.

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13. Learned counsel for the petitioner invited our attention to ‘Frequently

Asked Questions (FAQs) issued by the Central Government under the said

Scheme and more particularly answer to question no. 53. He submits that

the said answer to said question no. 53 is contrary to the provisions of the

said Scheme including the clarifications already issued by circular dated 27

August, 2019. It is submitted that in any event, the modified amount of the

tax dues even according to the respondents was less than the amount

admitted and quantified by the petitioner during the course of recording the

statement by the Investigating Officer. Learned counsel for the petitioner placed reliance on the following judgments :-

The Judgment of this Court in case of Saksham Facility Services Pvt. Ltd. v/s. Union of India, 2021 (47) G.S.T.L. 228 (Bom.).

The Judgment of this Court in case of Viztar International Pvt. Ltd. v/s. Union of India, 2021 (47) G.S.T.L. 341 (Bom.) .

An unreported Judgment of this Court in case of M/s. G. R. Palle Electricals v/s. Union of India & Ors. in Writ Petition (Stamp) No. 3485 of 2020.

The Judgment of this Court in case of Metro Developers v/s. Union of India and Ors., 2021 SCC OnLine Bom 6061.

The Judgment of this Court in case of RS HR Team Solutions Private Limited and Anr. v/s. Union of India and Ors., 2021 SCC OnLine Bom 234.

The Judgment of this Court in case of Jai Sai Ram Mech &

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Tech India P. Ltd. v/s. Union of India, 2021 (47) G.S.T.L. 244 (Bom.).

The Judgment of this Court in case of Sabareesh Pallikere v/s. Jurisdictional Designated Committee, Thane, 2021 (48) G.S.T.L. 240 (Bom.).

The Judgment of this Court in case of Suyog Telematics Ltd. v/s. Union of India, 2021 (47) G.S.T.L. 346 (Bom.).

The Judgment of this Court in case of Eminence Container Lines and Anr. v/s. Union of India and Ors., 2021 (3) TMI 133.

The Judgment of this Court in case of JSW Steel Ltd. v/s.

Union of India and Ors., 2021 SCC OnLine 3584.

14. Learned counsel for the petitioner invited our attention to the

Judgment delivered by Division Bench of this Court on 21 October, 2021

in case of JSW Steel Limited v/s. Union of India and Ors. in Writ Petition

No. 970 of 2020 and would submit that even the said judgment would assist the case of the petitioner on this issue.

15. Learned counsel for the petitioner invited our attention to an

unreported judgment of this Court in case of Thought Blurb v/s. Union of

India and Ors. delivered by a Division Bench of this Court on 27 October,

2020 in Writ Petition No. 870 of 2020 and more particularly in paragraph 47

to 54 of the said judgment and submitted that the rejection of an application

summarily without rendering any opportunity of hearing to the Declarant

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was in violation of principles of natural justice. The rejection of application

(Declaration) will lead to various civil consequences for the Declarant as

they would have to face all the consequences of enquiry, investigation or

audit. It is submitted that this Court after considering the statement made

by the Hon’ble Finance Minister deduced from the statement of objects and

reasons, the respondent ought to have taken a liberal interpretation to the

scheme as its intent was to unload the objector from legacy dispute under

Central Excise and Service Tax and from allow the business to make a fresh beginning.

16. Mr. Jetly, learned senior counsel for the respondents on the other hand

invited our attention to the impugned order dated 14 February, 2020

rejecting the said Declaration form submitted by the petitioner. He relied

upon the communication dated 10 August, 2020 recording the reasons for

rejection of the said Declaration form submitted by the petitioner. He

submits that the petitioner was clearly informed that the investigation was

still going on and the respondents were yet to quantify the tax liability, thus

the amount admitted in the statement cannot be said to be final. He submits

that the Designated-I Committee had sought clarification from the DGGI,

Mumbai in which it was once again reported that the investigation was still

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going on and that they were yet to quantify the liability and hence the

amount admitted in the statement could not be said to be final. Learned

senior counsel placed reliance on Section 121 of the said Scheme and more

particularly the definition of ‘quantified’ defined under Section 121(r). He

relied upon Section 123 of the said Scheme which provides as to what the

‘tax dues’ means for the purpose of the said Scheme. He relied upon

Section 123(c) in support of the submission that where an enquiry or

investigation or audit is pending against the declarant, the amount of duty

payable under any of the indirect tax enactment which has been quantified

on or before 30 June, 2019 would be considered as ‘tax dues’. He submits

that in this case, the show-cause notice for recovery of service tax, interest

and penalty was issued much later than 30 June, 2019 i.e. on 26

September, 2020. The petitioner thus cannot be allowed to contend that the service tax dues were already quantified prior to 30 June, 2019.

17. Learned senior counsel placed reliance on Section 125(e) of the said

Scheme and would submit that only such persons who had submitted to

enquiry or investigation or audit and the amount of duty involved in the said

enquiry or investigation or audit had not been quantified on or before 30 June, 2019, it would not be eligible to make a Declaration.

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18. Learned senior counsel placed reliance on Section 127 of the said

Scheme and would submit that the statement of the Director recorded by the investigating officer would not amount to quantification of tax dues.

19. Learned senior counsel for the Revenue invited our attention to

paragraphs 52 to 55 of the judgment of this Court in case of Thought Blurb

(supra) and made an attempt to distinguish the said judgment on the ground

that the facts before this Court in the said judgment were totally different.

20. Learned senior counsel invited our attention to paragraph 11 of the

show-cause notice dated 26 September, 2020 issued by the respondents and

would submit that the said show-cause notice itself would clearly indicate

the tax dues, penalty and the interest quantified for the first time. The

petitioner was thus not at all eligible to apply under the said Scheme on the

premise that tax dues was already quantified in the statement made by the Director of the petitioner.

21. Mr. Rastogi, learned counsel for the petitioner in his rejoinder

arguments submits that no hearing was rendered to the petitioner by the

respondents before rejecting the Declaration form submitted by the

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petitioner or even pursuant to the representation made by the petitioner.

22. Learned counsel for the petitioner once again invited our attention to

Section 125 of the said Scheme and would submit that it is not necessary

that investigation should be concluded prior to 30 June, 2019. Even if the

investigation was pending on the said cut-off date, in view of the fact that

the tax liabilities already having been quantified, the petitioner was eligible to apply under the said Scheme.

23. Learned counsel for the petitioner invited our attention to the

averments made in paragraph 14 of the said affidavit-in-reply filed by the

respondents admitting that the amount in the Declaration form filed by the

petitioner and in the show-cause notice was different. The amount

quantified by the respondents in the show-cause notice showed the amount

lesser than the amount admitted and quantified by the petitioner. The Court

has to take liberal view in the matter under the said Scheme. The stand

taken by the respondents is totally against the object, purpose and the intent of the said Scheme.

24. It is submitted by the learned counsel for the petitioner that under

section 125(1) of the said scheme, the categories of persons who are eligible

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to make Declarations under the said scheme are provided. Under section

125 (1)(e) of the said scheme, the persons who have been subjected to an

enquiry or investigation or audit and the amount of duty involved in the said

enquiry of investigation or audit has not been quantified on or before the

30 June, 2019 are dealt with. Learned counsel for the petitioner

vehemently urged that the past dues, interest and penalty etc. were claimed

by the petitioner under the category – “Investigation or Enquiry” and sub-

category “Investigation by DGGI” for the duty type” service Tax which is

covered under the terms of section 123 (c) of the Finance Act (No.2), 2019

and this Declaration filed by the petitioner concerning the enquiry or

investigation was still in progress and therefore, pending against the

declarant. The amount is clearly included within the scope of “tax dues” as defined under section 123(c) of the said scheme.

25. It is submitted that the expression “tax dues” under section 123(c) of

the said scheme, amount to duty payable which has been quantified on or

before the 30 day of June, 2019. He submits that the stand taken by the

respondents in the letter dated 10 August, 2020 was an after thought and

shall not be accepted by this Court. The petitioner had already filed the

declaration on 30 December, 2019. He submits that the respondents cannot

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be allowed to urge that the tax dues must be deemed to be “quantified” only

after finalization of the audit, investigation and issuance of show cause

notice. Section 125 (1)(e) of the said scheme does not contemplate that the

investigation must be completed. Section 125(1)(e) deals with a situation

when a person has been subjected to an enquiry or investigation or audit. He

submits that the said provision does not provide that the tax liabilities should have been finally determined on or before 30 June, 2019.

26. Learned counsel placed reliance on paragraph 18 of the judgment of

this Court in case of Eminence Container Lines and Anr. vs. Union of

India & Ors. delivered on 25 February, 2021 in Writ Petition (Lodging)

No.4994 of 2020 in support of the submission that the eligibility under the

said scheme would not depend upon the quantification of the tax dues on

completion of the investigation by issuing show cause notice or the amount that may be determined upon adjudication.

27. Learned counsel for the petitioner submits that the day of issuance of

the show cause notice by the respondents cannot be considered as the date

of quantification. The quantification in the statement made on 28 February,

th th

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2021 and the declaration dated 30 December, 2019 under the said scheme

happened much before issuance of the show cause notice dated 26

September, 2020. He submits that since the amount reflected in the show

cause notice was lesser than the admitted amount in the statement made by

the director of the petitioner, the benefit under the said scheme cannot be denied to the extent, amount admitted in the statement.

28. It is submitted that the stand taken by the respondents in the affidavit

in reply and more particularly in paragraph 4 that the respondent no.3 had

conveyed to the respondent no.2 about the on going investigation and that

the investigation was pending vide letter dated 14 February, 2020 is

incorrect. The said information was conveyed on 10 August, 2020 and not

14 February, 2020. On 14 February, 2020, the application of the petitioner was already rejected by the respondents.

29. Learned counsel for the petitioner invited our attention to a judgment

delivered by a Division Bench of this Court in case of JSW Steel Limited

(supra) and distinguished the said judgment on the ground that the petitioner

before this Court in the said judgment did not admit the liability whereas

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the liability was declared, admitted and quantified by way of statement of

Mohd.Azhar Ali, who was a director of this petitioner recorded on 28

February, 2019. He submits that in the said judgment, the petitioner could

not establish that the tax dues were quantified. He submits that the said

judgment in case of JSW Steel Limited (supra) is thus distinguishable. It is

submitted that the judgment of this Court in case of JSW Steel Limited

(supra) acknowledged that an admission made in the statement before the

Investigating Officer could be considered as quantification of claim under

the scheme and that such admission shall not factually in the said judgment in case of JSW Steel Limited (supra).

30. In support of this submission, he relied upon paragraph 22 of the

judgment of this Court in case of M/s.G.R. Palle Electricals (supra) and

would submit that even this too is a judgment of identical facts in hand

holding that the statement made by the proprietor of the said petitioner

therein recorded by the investigating authority admitting the service tax

liability would be eligible to file Declaration under the said scheme. This

Court also considered question nos.3 and 45 of the “Frequently Asked Questions” in the said judgment.

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31. It is submitted by the learned counsel for the petitioner that after

adverting to the judgment of this Court in case of Thought Blurb (supra),

this Court in the said judgment in case of G.R. Palle Electricals has held

that a liberal view embedded with the principles of natural justice is called

for. The approach should be to assume that the scheme is successful. The

focus is to unload the baggage of pending litigations centering around the

service tax, excise duty, pre-GST regime and thereby allow the business to

move ahead but at the same time also to ensure that the administrative machinery can focus fully on the smooth implementation of GST.

32. Learned counsel for the petitioner placed reliance on the judgment of

this Court in case of Suyog Telematics Limited (supra) in support of the

submission that this Court in the said judgment had considered the stand

taken by the department in the affidavit in reply that the statement of the

petitioner was recorded before the service tax authorities wherein the

director of the petitioner had confessed that the service tax liability was

Rs.12,24,99,843/- and held the evidence as admissible quantification under

the said scheme which was prior to the cut off date. This Court accordingly

held that the decision of the respondents in declaring the petitioner as ineligible is unjustified.

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REASONS AND CONCLUSION :

33. It is not in dispute that pursuant to the summons issued on 15

November, 2019 investigation was initiated against the petitioner by DGGI

Mumbai. In pursuance to the said summons, statement of Mohd.Azhar Ali,

director was recorded on 28 February, 2019. A perusal of the said

statement of the said director recorded on 28 February, 2019 by the Senior

Intelligence Officer, DGGI, Mumbai, Zonal Unit clearly indicates that the

said director on behalf of the petitioner, had stated that it was his

responsibility to give true and correct statement. The said enquiry was

deemed to be a judicial proceeding within the meaning of section 193 and

228 of the Indian Penal Code, according to which using false and fabricated

statements in the proceedings with an intention is an offence punishable

under section 193 of the Indian Penal Code. He also admitted that he had

understood that his statement would be binding on him and the petitioner and the same could be used as evidence.

34. The said director of the petitioner in reply to question 9, ‘whether he

knew what was service tax liability upto 30 June, 2017 of the petitioner ’,

the director of the petitioner answered in affirmative and stated that he knew

that the total service tax liability was of Rs.1,28,88,541/-. He further

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admitted that though the petitioner had charged and collected the service

tax through their clients regularly, petitioner could not discharge the same to

the Government exchequer. He submitted the signed copy of the worksheet

quantifying the service tax liability till 30 June, 2018. He informed that the

profit and loss account figures were inclusive of service tax. In question

no.10, the said investigating officer asked ”when you are going to pay the

short paid service tax liability ?”. The said director of the petitioner stated

that after the visit of the said Senior Intelligence Officer to the premises of

the petitioner, the petitioner made a payment of Rs.30 lakhs and submitted

the GAR-7 challan for the same and stated that petitioner would pay the

balance service tax amount on or before 31 March, 2019. He lastly stated

that he had nothing more to add and that he confirmed the said statement

recorded by the Senior Intelligence Officer given by him voluntarily without any force or coercion.

35. A perusal of the said statement makes it clear that the said director of

the petitioner was specifically asked about the service tax liability of the

petitioner upto 30 June, 2017 and in reply to the said specific question, he

admitted the tax liability in the sum of Rs.1,28,88,541/- The said Senior

Intelligence Officer asked further question as to when the petitioner would

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pay the short paid service tax liability in continuity to reply to question no.9.

The said director informed that the petitioner had already made payment of

Rs.30 lakhs and was submitting GAR-7 challan for the same and would pay

the balance service tax amount on or before 31 March, 2019. It is not in

dispute that the petitioner thereafter paid further sum of Rs.60 lakhs after

recording the said statement on 28 February, 2019 vide challan dated 5

March, 2019 and 12 March, 2019, totalling to Rs.90 lakhs. The said

statement made by the director of the petitioner on behalf of the petitioner

was issued in terms of section 14 of the Central Excise Act read with section 83 of the Finance Act.

36. The respondents have not disputed the fact that the said statement was

made by the petitioner through its director during the course of investigation

carried out by the respondents against the petitioner. In the show cause –

cum – notice dated 26 September, 2020 i.e. much after rejection of the said

Declaration filed by the petitioner under the said scheme, it was also

recorded that the said Mohd.Azhar Ali (Director) of the petitioner was

called upon to appear before the Senior Intelligence Officer on 28

February, 2019 to tender the evidence by way of statement. The petitioner

had submitted the copies of the income tax returns of various periods and

st th

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also copies of service tax returns. In paragraph 3.3 of the show cause notice,

a reference was made to the statement made by the said director on 28

February, 2019. It is clearly stated in the show cause notice that the

petitioner had admitted the service tax liability of Rs.1,28,88,541/- for the

period from October, 2013 to June, 2017 and that their profit and loss account figures were inclusive of service tax.

37. A perusal of the affidavit in reply filed by the respondents in this writ

petition more particularly in paragraph 5 indicates that the respondents have

admitted that in the statement recorded on 28 February, 2019, the petitioner

had declared and admitted the service tax liability of Rs.1,28,88,541/- for

the period 1 October, 2013 to 30 June, 2017 and had also started making

payments of service tax voluntarily. The service tax liability admitted and

declared by the petitioner in the statement dated 28 February, 2019 was its

disclosure. The respondents however contended that the said statement was

not verified by the officer of the respondent no.3 due to pending scrutiny of

the documents and verification of correctness of the liability declared by

the petitioner. It is further contended that since the investigation was not

complete on or before 30 June, 2019, the petitioner was not eligible for the said scheme.

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38. It is not in dispute that even according to the said show cause notice

issued by the respondents, the amount of service tax quantified by the respondents was less than the amount admitted by the petitioner.

We shall now decide whether the impugned orders passed by the respondents are in violation of the principles of natural justice or not.

It is not in dispute that the impugned orders have been passed without

rendering any personal hearing to the petitioner. This Court in case of

Thought Blurb (supra), after dealing with the provisions of the said scheme

has held that summary rejection of the application under the said scheme

without rendering any opportunity of hearing to the declarant would be in

violation of the principles of natural justice. The rejection of the application

(Declaration) will lead to adverse civil consequences for the declarant as he

would have to face consequences of enquiry or investigation or audit. It is

held that it is axiomatic that when a person is visited by adverse civil

consequences, principles of natural justice like notice and hearing would

have to be complied with. Non-compliance to the principles of natural

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justice would impeach the decision making process, rendering the decision invalid in law.

41. In our view, the issue as to whether the tax liability of the petitioner,

was already quantified prior to the cut off date or not in the statement of the

director of the petitioner recorded by the investigating officer during the

course of enquiry or whether the quantify of tax dues determined by the

respondents in the show cause notice or not itself was an issue which

required personal hearing. If personal hearing would have been rendered to

the petitioner, it could have pointed out admission of the quantification of

tax dues of the petitioner during the course of recording statement of the

director by the investigating officer and not disputed by the respondents.

42. In our view, rejection of the Declaration under the said scheme filed

by the petitioner without rendering a personal hearing to the petitioner, leads

to adverse civil consequences for the petitioner as the petitioner would have

to face the consequences of enquiry or investigation or audit. The impugned

orders are in gross violation of the principles of law laid down by this Court

in the case of Thought Blurb (supra) would apply to the facts of this case.

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We do not propose to take a different view in the matter. Karnataka High

Court in case of M/s.Kiran Borewells (supra) has taken the same view as

taken by this Court in case of Thought Blurb (supra). We are in respectful

agreement with the view taken by the Karnataka High Court in case of M/s.Kiran Borewells (supra).

43. Similar view is taken by the Delhi High Court in case Seventh Plane

Networks Limited vs. Union of India (supra) relied upon by the learned

counsel for the petitioner. We are in respectful agreement with the view taken by the Delhi High Court in the said judgment.

44. We shall now decide the issue as to whether the petitioner was

eligible to make a Declaration under the said scheme and would fall under

one of the categories of the persons who are eligible to make such Declaration under section 125(1) of the said scheme or not ?

45. Section 125(1)(e) of the said scheme provides that a person who has

been subjected to an enquiry or investigation or audit and the amount of

duty involved in the said enquiry or investigation or audit has not been

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quantified on or before 30 June, 2019 is not eligible to make a Declaration

under the said scheme. In this case, the tax dues were quantified by the

petitioner in the statement of its director Mohd.Azhar Ali recorded by the

investigating officer on 28 February, 2019. The term “notified” used in

clause (e) of section 125(1) of the said scheme is defined under clause (r) which reads thus :

(r) “quantified”, with its cognate expression, means a

written communication of the amount of duty payable

under the indirect tax enactment.”

46. We have perused the circular dated 27 August, 2019 issued by the

CBIC clarifying the term “quantified” in paragraph 4(a) and 10 (g). In

paragraph 4(a), it is clarified by CBIC that for all the cases pending in

adjudication or appeal (at any forum), the relief is to the extent of 70% of

the duty involved, if it is Rs.50 lakhs or less and 50% if it is more than

Rs.50 lakhs. The same relief is available for cases under investigation and

audit where the duty involved is quantified and communicated to the party or admitted by him in a statement on or before 30 June, 2019.

47. In paragraph 10(g), it is further clarified cases under an enquiry,

investigation or audit where the duty demand has been quantified on or

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before the 30 June, 2019 are eligible under the scheme. Section 121(r)

defines “quantified” as a written communication of the amount of duty

payable under the indirect tax enactment. It is clarified that such written

communication will include a letter intimating duty demand, or duty

liability admitted by the person during enquiry, investigation or audit ; or audit report etc.

48. A perusal of question no.53 of the “Frequently Asked Questions”

issued by the Central Government of the said scheme clearly states that

even if the amount quantified under enquiry, investigation or audit before

30 June, 2019 gets modified subsequently due to any such assessee, he/she

shall be entitled to file a Declaration under the said SVLDR scheme. In our

view, conjoint reading of the term “quantified” used in section 125(1) read

with clause clause (e) of the said scheme and paragraph 4(a) and 10(g) of

the circular dated 27 August, 2019 issued by CBIC makes it clear that

even if the tax dues are admitted in the statement made by the assessee on or

before 30 June, 2019, it would satisfy the term “quantified” within the

meaning of clause (r) of section 121 of the said SVLDR scheme. The

respondents in this case have clearly admitted that the petitioner had

admitted the said tax dues in the statement made by the petitioner through

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its director on or before 30 June, 2019 before the investigating officer. The

circular issued by CBIC clarifying the term “quantified” is binding on the respondents.

49. A perusal of the Declaration form filed by the petitioner indicates that

the petitioner had claimed the relief in tax dues, interest and penalty under

the category (Investigation or Enquiry) and sub-category “Investigation by

DGGI” for duty type, “service tax” which is duly covered in terms of

section 123(c) of the Finance Act (No.2) 2019 and has been rightly

quantified as “tax dues”. In our view, there is no substance in the

submission made by the learned senior counsel for the respondents that the

petitioner was not eligible to file the said Declaration on 30 December,

2019 on the ground that the investigation was still going on and that the respondent no.3 was yet to quantify the final liability of tax.

50. A perusal of section 123(c) of the said Scheme also clearly indicates

that where an enquiry or investigation or audit is pending against the

declarant, the amount of duty payable under any of the indirect tax

enactment which has been quantified on or before 30 June, 2019 would fall

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within the term “tax dues” under the said section 123(c) of the said scheme.

In our view, the submission made by the learned senior counsel for the

respondent is contrary to plain meaning of term “quantified” read with

paragraph 4(a) and 10(g) of the circular dated 27 August, 2019 issued by

CBIC, clarifications in Frequently Asked Questions and more particularly

question no.53 and section 123(c) of the said scheme. For the purpose of

eligibility under section 125(1)(e) completion of investigation is not

necessary as a condition precedent for the purpose of eligibility under the

said scheme. None of the provisions under the said scheme contemplates

that the investigation should be completed and tax liability should have been finally determined.

51. This Court in case of Eminence Container Lines and Anr. (supra)

after adverting to the judgment of this Court in case of G.R. Palle

Electricals (supra) and in case of Saksham Facility Private Limited (supra),

in case of Sabareesh Pallikere (supra) and in case of Thought Blurb

(supra) has held that what is relevant under the scheme is an admission of

tax dues or duty liability by the declarant before the cut off date which need

not be of the exact figure upon determination by the authorities post 30

June, 2019. In that matter, this Court had considered the situation where the

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petitioner no.2 in his statement before the Senior Intelligence Officer on 12

June, 2019 had admitted the gross service tax liability of Rs.1,73,12,978/-.

The petitioner no.2 however while admitting the said amount did not

include the service tax on Ocean Freight on which the petitioner claimed exemption.

52. This Court held that when there is provision of granting personal

hearing in a case where the declarant disputes the estimated amount, it

would be in complete defiance of logic and contrary to the very object of

the scheme to reject a Declaration on the ground of being ineligible without

giving a chance to the declarant to explain as to why its Declaration should

be accepted and relief under the scheme be granted. This Court held that

when an authority relies upon a document, copy of the same should be

made available to the aggrieved party so that the aggrieved party can

respond to such document and effectively makes its defence. Non-

furnishing of report dated 20 February, 2020 to the persons was held to be

in violation of the principles of natural justice vitiating the impugned

decision taken. The principles laid down by this Court in the said judgment

of Eminence Container Lines and Anr. (supra) squarely apply to the facts of this case.

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53. This Court in case of Sabareesh Pallikere (supra) held that all that

would be required for being eligible under the said scheme is a written

communication which will mean a written communication of the amount of

duty payable including a letter intimating the duty demand or duty liability

admitted by the person concerned during enquiry, investigation or audit or

audit report etc. Under the said scheme, quantification need not be on

completion of investigation by issuing show cause notice or the amount

that could be determined upon adjudication. In that case also, the assessee

had admitted the total service tax liability in the first statement recorded

before the Intelligence Officer. This Court accordingly after considering the

said statement and on interpretation of section 121 (r) of the Finance Act

(No.2) of 2019 and answer to the questions 3 and 45 of “Frequently Asked

Questions”, held that a view can legitimately be taken that the requirement

under the scheme is admission of the tax liability by the declarant during enquiry, investigation or audit report.

54. It is held that it is not necessary that the figures on such admission

should have Mathematical precision or should be exactly the same as the

subsequent quantification by the authorities in the form of show cause

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notice etc. post 30 June, 2019. The object of the scheme is to encourage

persons to go for settlement who had bonafidely declared outstanding tax

dues prior to the cut off date of 30 June, 2019. It is held that the fact that

there could be discrepancy of figure but the tax dues admitted by the person

concerned prior to 30 June, 2019 and subsequently quantified by the

departmental authorities, would not be material to determine the eligibility

to file Declaration in terms of the scheme under the category of enquiry,

investigation or audit. What is relevant is admission of tax dues or due

liability by the declarant before the cut off date. In our view, the petitioner

has fulfilled the said requirement and therefore, was eligible to make a

Declaration in terms of the scheme under the said category. Rejection of a

Declaration filed by the petitioner on the ground of being not eligible is

thus perverse and not justified. The facts before this Court are identical to

the facts before this Court in case of Sabareesh Pallikere (supra). We are

bound by the principles laid down in the said judgment. We do not propose to take a different view in the matter.

55. This Court in case of Sabareesh Pallikere (supra) and Viztar

International Private Limited ( (supra) has held that for eligibility under the

said SVLDRS, the quantification need not be on completion of investigation

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as claimed by the petitioner therein. This Court in case of Sai Ram Mech &

Tech India Private Limited (supra) considered identical facts where the

petitioner had made a statement before the Superintendent (Prev.) CGST

and Central Excise, Palghar Commissionerate under sections 70 and 174 of

the Central Goods and Services Tax Act, 2017 read with section 14 of the

Central Excise Act, 1944 and section 83 of the Finance Act, 1994. In that

matter, the director of the assessee was put a question by the Superintendent

as to what was service tax liability of the petitioner for the period under the

provisions and when the petitioner was going to discharge such liability. In

response to that question, the director stated that though he did not have

exact figure of liabilities at that point of time but he admitted that the net

service tax liability for the period under consideration would be Rs.40 to

Rs.45 lakhs subject to verification of books of account which liability he undertook to pay as per the time line given in his answer.

56. This Court noticed in the said judgment that upon conclusion of

investigation, Commissionerate of CGST and Central Excise, Palghar had

issued show cause notice cum demand notice to the petitioner on 26 June,

2020 wherein a reference was made to the said statement of the director of

the assessee therein recorded on 9 April, 2019 admitting the net service tax

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liability for the period under consideration approximately at Rs.40 to Rs.45

lakhs. This Court noticed that the admission of the petitioner of net service

tax liability of Rs.40 to Rs.45 lakhs broadly corresponds to the figure

disclosed by the petitioner in the Declaration i.e. Rs.43,67,500. This Court

accordingly was pleased to set aside the order passed by the authority and

remanded the matter back to the authority to consider Declaration of the

petitioner therein afresh as a valid Declaration in terms of the scheme under

the category investigation, enquiry and audit and thereafter grant

consequential relief to the petitioner therein after granting an opportunity of

hearing to the petitioner and to pass speaking order with due communication to the petitioner.

57. In our view, the facts in this case are better than the facts before this

Court, in case of Sai Ram Mech & Tech India Private Limited (supra). In

this case in the statement of the director of the petitioner, he had declared

the tax dues in response to specific question of investigating officer,

quantified total service tax liability of Rs. 1,28,88,541/- and had also

produced signed copy of the worksheet quantifying service tax liability till

30 June, 2017. In the said statement, the said director had further stated

that the profit and loss account figures of the petitioner were inclusive of the

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service tax. The principles of law laid down in case of Sai Ram Mech &

Tech India Private Limited (supra) applies to the facts of this case. We do not propose to take a different view in the matter.

58. Similar view has been taken by this Court in case of Suyog

Telematics Limited (supra) wherein this Court had considered the statement

made by the director of the petitioner during the course of investigation

admitting the service tax liability and confirmation of the said statement

having been made by the petitioner in the affidavit in reply filed by the

authority and held the petitioner therein eligible to apply under the said scheme.

59. This Court in case of Thought Blurb (supra) has considered the

objects and reasons and the purpose of introducing the said Sabka Vikas

(Legacy Dispute Resolution Scheme, 2019) framed by the Government of

India. The Government took cognizance of the fact that GST had completed

two years. An area that concerns was that there were huge pending

litigations from pre-GST regime. More than 3.75 lakhs crores were blocked

in litigations in service tax and excise. There was need to unload this

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baggage and allow the business to move on and accordingly proposed a

Legacy Dispute Resolution scheme that would allow quick closure of those

litigations. The Finance Minister urged that the trade and business to avail this opportunity and be free from Legacy litigations.

60. A perusal of the statement of objects and reasons of the said scheme

indicates that the scheme was a one time measure for liquidation of past

disputes of Central Excise and service tax as well as ensure the disclosure

of unpaid taxes by a person eligible to make a Declaration. It provides that

eligible persons shall declare the tax due and pay the same in accordance

with the provisions of the scheme. It further provides for certain immunities

including penalty, interest or any other proceedings under the Central Excise

Act, 1944 or Chapter V of the Finance Act, 1944 to those persons who pay the declared tax dues.

61. Central Board Indirect Tax and Customs accordingly issued circular

dated 27 August, 2019 to implement the objects and purposes of closing

litigations from pre-GST regime quickly and to grant benefit to the

business of availing of the said opportunity. Central Board of Indirect Tax

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and Customs conveyed to all the department heads of the scheme that an

endeavour to be taken to unload the baggage relating to the legacy taxes viz.

Central excise and service tax that have been subsumed under GST and

allow business to make a new beginning and focus on GST. It was

emphasized that all the officers and staff of CBIC to make this scheme a

grand success. The dispute resolution and amnesty are the two components

of the scheme. The dispute resolution component is aimed at liquidating the

legacy cases locked up in litigation at various level whereas the amnesty

component gives an opportunity to those who have failed to correctly discharge their tax liability to pay the tax dues.

62. It was further stated in the said circular that the said scheme had the

potential to liquidate the huge outstanding litigation and free the taxpayers

from the burden of litigation and investigation under the legacy taxes. The

administrative machinery of the Government will also be able to fully focus

on helping the taxpayers in the smooth implementation of GST. The

importance of making this scheme a grand success cannot be overstated.

The authorities are instructed to familiarize themselves with the scheme and actively ensure its smooth implementation.

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63. The provisions of the said scheme have been interpreted by this

Court in case of Capgemini Technology Services Limited vs. Union of

India MANU/MH1428/2020 and observed that the scheme had the twin

objectives of liquidation of past disputes pertaining to the subsumed taxes

on the one hand and disclosure of unpaid taxes on the other hand. The

concerned authorities should keep in mind the broad picture while dealing with a claim under the scheme.

64. This Court in the judgment in the case of Thought Blurb (supra)

accordingly reiterated the principles laid down by this Court in case of

Capgemini Technology Services Limited (supra) and also followed the

principles laid down by the Delhi High Court in case of Vaishali Sharma

vs. Union of India, MANU/DE1529/2020 and held that a liberal

interpretation has to be given to the scheme as its intent is to unload the

baggage relating to legacy disputes under central excise and service tax and to allow the business to make a fresh beginning.

65. In our view, the view taken by the respondents is not only contrary to

various principles of law laid down by this Court in catena of decisions

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referred to aforesaid but also contrary to the objects and reasons and the

intent of the Central Government in introducing the said scheme for the

benefit of the assessee and to bring them out of litigation forever pending

under pre-GST regime. The view taken by the respondents thus deserves to be quashed and set aside with the order of remand.

66. We pass the following order –

a). The impugned order passed by the Designated Committee-I

communicated through email dated 14 February, 2020 thereby rejecting

SVLDRS-I Declaration dated 30 December, 2019 filed by the petitioner is

quashed and set aside. The matter is remanded back to the Designated

Committee to consider the said Declaration dated 30 December, 2019 filed

by the petitioner in terms of the scheme as valid Declaration under the

category “investigation, enquiry and audit” and grant consequential reliefs

to the petitioner after providing due opportunity of hearing to the petitioner

before finally deciding the issue. The Designated Committee-I shall pass a

speaking order with due intimation to the petitioner within a period of six weeks from the date of receipt of a copy of this order.

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b). In view of the impugned order passed by the Designated Committee

having been quashed and set aside with the order of remand, the

respondents shall not take any further steps pursuant to the show cause

notice dated 26 September, 2019. The show cause notice does not survive.

The order that would be passed by the Designated Committee-I shall be

communicated to the petitioner within one week from the date of passing the order.

Writ petition is allowed in aforesaid terms.

Rule is made absolute accordingly.

No order as to costs. Parties to act on the authenticated copy of this order.

[S. M. MODAK, J.] [R. D. DHANUKA, J.]

Digitally signed

by BIPIN

BIPIN

DHARMENDER PRITHIANI

DHARMENDER PRITHIANI Date:

2022.01.21 12:45:36 +0530

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY