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One Should Be Relieved From Litigation Charges: In Bombay High Court

Taxpayers should be alleviated from the Litigation charges in accordance with the New Scheme imposed by the central government to resolve a massive backlog of unresolved cases. R.D. DHANUKA AND S.M. MODAK JJ pronounced this Judgment on 27.01.2022 in MPOWER FACILITY SERVICES PVT.LTD. V. THE UNION OF INDIA.

In the instance of the petitioner, the Directorate General of GST Intelligence issued summons to the petitioner under Section 83 of the Finance Act, 1994, and Sections 70 and 174 of the Central Goods and Services Act, 2017, with instructions to appear in person and submit evidence/documents. One of the Directors made a declaration that he acknowledged owing Rs.72.37 lakhs in service tax from October 2015 to June 2017. Following that, the Central Government launched the Subka Vishwas (Legacy Dispute Resolution) Scheme in the Finance (No.2) Act, 2019 (for short, “the said SVLDR Scheme”) to resolve old service tax and central excise disputes.

One of the Directors declared that he confessed to owing Rs.72.37 lakhs in service tax between October 2015 and June 2017. Following that, the Central Government launched the Subka Vishwas (Legacy Dispute Resolution) Scheme under the Finance (No.2) Act, 2019 (for short, “the said SVLDR Scheme”) to resolve old service tax and central excise issues.

The petitioner’s SVLDRS-1 statement was rejected by the Designated Committee, who stated that they acquired some verification report. The tax dues were not finally quantified on or before 30th June 2019. The petitioner said they had confessed their tax debts to the DGGI and sought that the Principal Commissioner get a verification report from the DGGI to substantiate this. The petitioner claims that the abovementioned report filed with the DGGI has not been served on him yet. The petitioner filed this writ petition for numerous reliefs after becoming aware of the respondents’ coercive actions.

Mr.Chitnis, the petitioner’s skilled counsel, drew the Judge’s attention to the petitioner’s SVLDRS-1 declaration, as well as Forms SVLDRS-2 and SVLDRS-2A. He pulled the Judge’s attention to Shri M.B. Shaikh, one of the petitioner’s Directors, who testified before the Senior Intelligence Officer, and in particular to his response to question no.10, in which he accepted a tax liability of Rs.72.37 lakhs for the period October 2015 to June 2017, as well as a GST liability of Rs.80.48 lakhs for the period July 2018 to February 2019. Section 14 of the Central Excise Act, 1994, read with Section 83 of Chapter V of the Finance Act, 1994, and Sections 70 and 174 of the Central Goods and Service Tax Act, 2017, were used to make the assertion. He stated that the remark he made was true and correct.

On the other hand, Mr.Ochani, learned counsel for the respondents, drew our attention to the allegations made in several of the paragraphs of Mr.Milind Gawai, Principal Commissioner of CGST and Central Excise, Mumbai’s affidavit-in-reply. He claims that the petitioner recognized culpability only for the second half of the financial year, i.e., from October 2015 to March 2016, in its statement submitted via its Director for the financial year 2015-16, and not for the first half, i.e., from April 2015 to September 2015. He claims that the petitioner could not register for the plan since his tax liabilities were not entirely estimated on 30th June 2019. The experienced counsel for the respondents contends that the inquiry launched by the respondents via a notification dated 30th December 2020 is still ongoing.

A review of the records reveals that, according to respondents, the quantification was not complete by 30th June 2019. According to the responses, a report from the DGGI in Mumbai validated the facts. The aforementioned assailed decision makes no mention of the petitioner admitting merely a portion of the liability. In the opinion of the Learned Judge, the order mentioned above of 12th February 2020 violates Form SVLDRS-2 and SVLDRS-2A.

The statement provided by the petitioner’s Joint Director in paragraph 3.3 is referenced, according to the Show Cause cum Demand Notice issued by the DGGI office on 30th December 2020. It is unmistakable that the petitioner acknowledged a Service Tax liability of Rs.72.37 lakhs unpaid or underpaid. As a result, we are not inclined to believe Mr.Ochani, learned counsel for the respondents, who claims that the petitioner did not confess the whole amount of tax payable in the abovementioned statement of the petitioner’s Director recorded by the Investigating Officer.

This Court decided that the statistics on such admissions do not need to be mathematically precise or identical to the authorities’ later quantification in the form of show-cause notices and other documents after 30th June 2019.

The principles of law given out by this Court in the matter of Nabeel Construction Pvt. Ltd. would, in the Judge’s opinion, apply to the facts of this case. We have no intention of taking a different stance on the subject. The respondents’ order, in the Court’s opinion, is contrary to the principles of law established by this Court in a series of decisions, as well as the objectives, reasons, and intent of the said Scheme, which the Central Government introduced to resolve massive outstanding litigation and relieve taxpayers of the burden of litigation and investigation related to legacy taxes. Hence it is said that the said Writ Petition is allowed by this Court.

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Reviewed by Rangasree

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