Bombay High Court
Viztar International Pvt. Ltd vs Union Of India And Ors on 5 February, 2021
Bench: Ujjal Bhuyan, Milind N. Jadhav
13_26.os.wpst.96703.20.doc
S.S.Kilaje
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION (ST) NO. 96703 OF 2020
Viztar International Private Limited .. Petitioner
Versus
Union of India & Ors. .. Respondents
...................
Mr. Bharat Raichandani a/w. Rishabh Jain i/by UBR Legal for the
Petitioner.
Mr. Pradeep S. Jetly, Senior Advocate a/w. Mr. Ram Ochani for
Respondents. ...................
CORAM : UJJAL BHUYAN &
MILIND N. JADHAV, JJ.
DATE : FEBRUARY 05, 2021.
P. C. :
Heard Mr. Raichandani, learned counsel for the petitioner; and
Mr. Jetly, learned senior counsel alongwith Mr. Ochani, learned
counsel for the respondents.
2. By filing this petition under article 226 of the Constitution of
India, petitioner seeks quashing of order dated 27.02.2020 passed by
the designated committee i.e. respondent No.5 rejecting the
declaration of the petitioner dated 13.12.2019 filed under the Sabka
Vishwas (Legacy Dispute Resolution) Scheme, 2019 (briefly 'the
scheme' hereafter) and further seeks a direction to the said respondent
to reconsider the declaration of the petitioner and thereafter grant the
relief(s) in terms of the scheme.
1 of 11
13_26.os.wpst.96703.20.doc
3. Case of the petitioner is that it is a private limited company
engaged in the business of providing event management services to its
customers. Being a service provider, it was registered as such under
the provisions of Chapter V of the Finance Act, 1994.
4. Service tax department initiated investigation against the
petitioner for the period 01.04.2013 to 30.06.2017 alleging short
payment of service tax. It is stated that during the course of
investigation, Shri. Nipun Radhu, authorised representative of the
petitioner, made a statement on 26.11.2018 under section 83 of
Chapter -V of the Finance Act, 1994 read with section 14 of the Central
Excise Act, 1944 and the provisions of the Central Goods and Services
Tax Act, 2017 (CGST Act, 2017) before the Senior Intelligence Officer,
Directorate General of GST Intelligence (DGGI), Mumbai. In response
to question No.5 pertaining to service tax liability for the period under
consideration, he stated that service tax liability for the period 2013-
14 to 2015-16 had been discharged, however, interest for late
payment for the financial year 2015-16 was yet to be paid. That apart,
he quantified the service tax liability for the financial year 2016-17 at
Rs.1,61,01,194.00 and for the period 2017 to June-2018 at Rs.
14,60,823.00. He explained that due to non-availability of funds,
petitioner could not discharge the liability in time but assured that
those would be paid before 28.02.2019.
2 of 11
13_26.os.wpst.96703.20.doc
5. Similar statement of Shri. Nipun Radhu was recorded on
13.03.2019, where also he admitted service tax liability of Rs.
1,61,01,194.00 for the financial year 2016-17 and an amount of
Rs.14,60,823.00 for the year 2017-18 (upto June 2017).
6. When the scheme was introduced through the Finance (No.2)
Act, 2019, petitioner submitted declaration on 30.12.2019 under the
category of "investigation, enquiry or audit" with sub categorisation
"under investigation by DGGI" declaring service tax dues for the period
under consideration at Rs. 91,63,254.00. However, by an order dated
27.02.2020 respondent No.5 rejected the said declaration on the
ground of ineligibility with the remark that DGGI had informed that
the quantification was not done prior to 30.06.2009.
7. Being aggrieved, present writ petition has been filed seeking the
relief(s) as indicated above.
8. Respondents have filed their reply affidavit. Stand taken in the
affidavit is that since investigation was carried out by DGGI against the
petitioner letter dated 05.02.2020 was issued to the DGGI to confirm
as to whether the duty quantified by the petitioner vide the statement
dated 26.11.2018 was final and also to confirm the payment made
and whether show cause notice if any was issued in the matter.
3 of 11
13_26.os.wpst.96703.20.doc
DGGI issued letter dated 19.12.2020 informing that quantification was
not finalized by DGGI before 30.06.2019, further stating that
petitioner had not paid the differential service tax. Since quantification
of dues was not done prior to the cut off date i.e 30.06.2019,
petitioner was not eligible to file declaration under the investigation,
enquiry or audit category and therefore the designated committee
rightly rejected its declaration. Prior to such rejection, petitioner was
informed about its ineligibility on 21.02.2020 whereafter personal
hearing was granted to the petitioner by the designated committee on
26.02.2020.
9. Petitioner has filed rejoinder affidavit to the reply affidavit filed
by the respondents.
10. Mr. Raichandani, learned counsel for the petitioner submits that
issue raised in this writ petition has already been answered by this
Court in a series of judgments, some of which have been annexed to
the rejoinder affidavit of the petitioner. He, therefore, submits that
following the said decisions, Court may interfere with the rejection of
the petitioner's declaration and direct the designated committee to
consider the declaration of the petitioner as a valid declaration and
thereafter grant the necessary relief(s).
4 of 11
13_26.os.wpst.96703.20.doc
11. On the other hand, Mr. Jetly, learned senior counsel for the
respondents has extensively referred to the reply affidavit and submits
that there has to be quantification of the dues of the petitioner by the
proper authority either in the form of a show cause notice or through
adjudication. Mere acknowledgment of any amount stated to be due
and payable by the petitioner cannot be construed to be quantification
of dues. He, therefore, supports the impugned decision of the
designated committee.
12. Submissions made by learned counsel for the parties have
received the due consideration of the Court.
13. Question as to whether eligibility of a declarant for making a
declaration in terms of the scheme under the category of
'investigation, enquiry or audit' or maintainability of such a
declaration on the ground that the amount of tax dues was not
quantified on or before 30.06.2019 is no longer res integra.
14. In Thought Blurb Vs. Union of India , 2020 (10) TMI 1135, this
Court faced with a similar issue had referred to the relevant provisions
of the Finance (No.2) Act, 2019 as well as to the circular dated
27.08.2019 of the Central Board of Indirect Taxes and Customs
(briefly 'the Board' hereinafter) whereafter it was held as under:-
5 of 11
13_26.os.wpst.96703.20.doc
"47. Reverting back to the circular dated 27 th August,
2019 of the Board, it is seen that certain clarifications
were issued on various issues in the context of the scheme
and the rules made thereunder. As per paragraph 10(g) of
the said circular, the following issue was clarified in the
context of the various provisions of the Finance (No.2) Act
2019 and the Rules made thereunder :-
'(g) Cases under an enquiry, investigation
or audit where the duty demand has been
quantified on or before the 30 th day of June,
2019 are eligible under the scheme. Section
2(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. Thus as per the above clarification, written
communication in terms of section 121(r) will include a
letter intimating duty demand or duty liability admitted
by the person during enquiry, investigation or audit etc.
This has been also explained in the form of frequently
asked questions (FAQs) prepared by the department on
24th December, 2019.
49. Reverting back to the facts of the present case, we
find that on the one hand there is a letter of respondent
No.3 to the petitioner quantifying the service tax liability
for the period 1 st April, 2016 to 31 st March, 2017 at
Rs.47,44,937.00 which quantification is before the cut off
date of 30th June, 2019 and on the other hand for the
second period i.e. from 1st April, 2017 to 30th June, 2017
there is a letter dated 18 th June, 2019 of the petitioner
addressed to respondent No.3 admitting service tax
liability for an amount of Rs.10,74,011.00 which again is
before the cut off date of 30 th June, 2019. Thus,
petitioner's tax dues were quantified on or before 30 th
June, 2019.
50. In that view of the matter, we have no hesitation to
hold that petitioner was eligible to file the application
(declaration) as per the scheme under the category of
enquiry or investigation or audit whose tax dues stood
quantified on or before 30th June, 2019."
15. Subsequently in M/s. G. R. Palle Electricals Vs. Union of India ,
2020-TIOL-2031-HC-MUM-ST, this Court held as follows:-
6 of 11
13_26.os.wpst.96703.20.doc
"27. We have already noticed that proprietor of the
petitioner in his statement recorded on 11.01.2018 by the
investigating authority admitted the service tax liability of
Rs.60 lakhs (approximately) to be outstanding for the
period from 2015-2016 to June, 2017. This was
corroborated by the departmental authority in the letter
dated 24.01.2018 which we have already noted and
discussed. Therefore, present is a case where there is
acknowledgment by the petitioner of the duty liability as
well as by the department in its communication to the
petitioner. Thus, it can be said that in the case of the
petitioner the amount of duty involved had been
quantified on or before 30.06.2019. In such
circumstances, rejection of the application (declaration) of
the petitioner on the ground of being ineligible with the
remark that investigation was still going on and the duty
amount was pending for quantification would not be
justified.
28. This position has also been explained by the
department itself in the form of frequently asked
questions (FAQs). Question Nos.3 and 45 and the answers
provided thereto are relevant and those are reproduced
hereunder :-
"Q3. If an enquiry or investigation or audit has started
but the tax dues have not been quantified whether the
person is eligible to opt for the Scheme?
Ans. No. If an audit, enquiry or investigation has
started, and the amount of duty/duty payable has not
been quantified on or before 30 th June, 2019, the person
shall not be eligible to opt for the Scheme under the
enquiry or investigation or audit category. 'Quantified'
means a written communication of the amount of duty
payable under the indirect tax enactment [Section
121(r)]. 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. [Para 10(g) of Circular No 1071/4/2019-CX
dated 27th August, 2019].
* * *
Q45. With respect to cases under enquiry, investigation
or audit what is meant by 'written communication'
quantifying demand ?
Ans. Written communication will include a letter
intimating duty/tax demand or duty/tax liability admitted
by the person during enquiry, investigation or audit or
audit report etc."
7 of 11
13_26.os.wpst.96703.20.doc
16. Finally in Saksham Facility Private Limited Vs. Union of India,
2020-TIOL-2108-HC-MUM-ST, where a similar issue had cropped up ,
this Court reiterated the above position and held as under:-
"22.3. Clause (g) of paragraph 10 makes it abundantly
clear that cases under an enquiry, investigation or audit
where the duty demand had been quantified on or before
30.06.2019 would be eligible under the scheme. The
word "quantified" has been defined under the scheme as a
written communication of the amount of duty payable
under the indirect tax enactment. In such circumstances,
Board clarified that such written communication would
include a letter intimating duty demand or duty liability
admitted by the person during enquiry, investigation or
audit etc.
23. Reverting back to the facts of the present case we
find that there is clear admission / acknowledgment by
the petitioner about the service tax liability. The
acknowledgment is dated 27.06.2019 i.e., before
30.06.2019 both in the form of letter by the petitioner as
well as statement of its Director, Shri. Sanjay R. Shirke. In
fact, on a pointed query by the Senior Intelligence Officer
as to whether petitioner accepted and admitted the
revised service tax liability of Rs.2,47,32,456.00, the
Director in his statement had clearly admitted and
accepted the said amount as the service tax liability for
the period from 2015-16 upto June, 2017 with further
clarification that an amount of Rs.1,20,60,000.00 was
already paid.
* * * * *
26. Following the above it is evident that the word
'quantified' under the scheme would mean a written
communication of the amount of duty payable which will
include a letter intimating duty demand or duty liability
admitted by the person concerned during enquiry,
investigation or audit or audit report and not necessarily
the amount crystalized following adjudication. Thus,
petitioner was eligible to file the declaration in terms of
the scheme under the category of enquiry or investigation
or audit as its service tax dues stood quantified before
30.06.2019."
17. From the above it is evident that all that would be
required for being eligible in terms of the scheme under the above
8 of 11
13_26.os.wpst.96703.20.doc
category is a written communication which will mean a written
communication of the amount of duty payable including a letter
intimating duty demand or duty liability admitted by the person
concerned during inquiry, investigation or audit. For eligibility under
the scheme, the quantification need not be on completion of
investigation by issuing show-cause notice or the amount that may be
determined upon adjudication.
18. Reverting back to the facts of the present case, we find that in
the course of the investigation, statement of Shri. Nipun Radhu,
authorized representative of the petitioner was recorded on
26.11.2018 by the Senior Intelligence Officer in the office of DGGI.
The statement was recorded under section 83 of Chapter V of the
Finance Act, 1994 read with section 14 of the Central Excise Act, 1944
as well as under the provisions of the CGST Act, 2017. In the course of
his statement, the authorized representative acknowledged that
service tax liability of the petitioner for the year 2016-17 was to the
tune of Rs.1,61,01,194.00 and for the year 2017-18 (upto June,
2018), the service tax liability was to the extent of Rs.14,60,823.00.
This admission was reiterated by Shri. Nipun Radhu in his subsequent
statement recorded on 13.03.2019. Both the statements were made
prior to the cut-off date of 30.06.2019. Therefore, petitioner was
clearly eligible to file a declaration in terms of the scheme under the
9 of 11
13_26.os.wpst.96703.20.doc
category of investigation, enquiry or audit.
19. There is one more aspect which we would like to advert. While
rejecting the declaration of the petitioner as being ineligible, the
designated committee had sought for the views of the DGGI by letter
dated 05.02.2020. DGGI responded on 19.12.2020 stating that
quantification of tax dues was not finalized prior to 30.06.2019. On
that basis petitioner was held to be ineligible and its declaration was
rejected. Though petitioner was granted a personal hearing by the
designated committee on 26.02.2020, there is nothing on record to
show that the above information or letter of DGGI was furnished to the
petitioner. It is a well settled principle of natural justice that if an
authority relies upon a document which is adverse to the person
concerned and results in an adverse decision, copy of such a document
is required to be furnished to the person concerned so that he can put
up an effective defence. Devoid of the same, any personal hearing
granted would be an empty formality.
20. In that view of the matter, rejection of the declaration of the
petitioner dated 13.12.2019 by the designated committee on
27.02.2020 is not justified. Accordingly, we set aside the order dated
27.02.2020 and remand the matter back to respondent No.5 to
consider the declaration of the petitioner afresh in terms of the
10 of 11
13_26.os.wpst.96703.20.doc
scheme as a valid declaration under the category of 'investigation,
enquiry or audit' and grant the consequential relief(s) to the
petitioner. While doing so the respondents shall provide an
opportunity of hearing to the petitioner and thereafter pass a speaking
order with due communication to the petitioner. The above exercise
shall be carried out within a period of eight weeks from the date of
receipt of a copy of this order.
21. Writ petition is accordingly allowed to the extent indicated
above. However, there shall be no order as to costs.
[ MILIND N. JADHAV, J. ] [ UJJAL BHUYAN, J. ]
Digitally
signed by
Ravindra Ravindra M.
Amberkar
M. Date:
Amberkar 2021.02.10
10:29:59
+0530
11 of 11
