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ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.986 OF 2021
Mpower Facility Services Pvt.Ltd. ) a Company incorporated under the Companies Act,)
1956 and having its Registered/Corporate Officer ) at Fatma Villa, Behind Atlanta Arcade, )
Church Road, Marol, Andheri (East), )
Mumbai - 400 059 ) .. Petitioner
Revenue, Ministry of Finance, having his office ) at 128-A, North Block, New Delhi-110001. )
2. The Designated Committee ) under SVLDR Scheme, Mumbai )
Commissionerate, 9th
Floor, Lotus Info Centre, )
Station Road, Parel (East), Mumbai 400 012. )
3. The Principal Commissioner, )
CGST & Central Excise, )
Mumbai East Commissionerate, )
9th
Floor, Lotus Info Centre, Station Road, )
Parel (East), Mumbai 400 012. )
4. The Joint Director, Directorate General of )
GST Intelligence, )
S.T.C. House, 3rd
Floor, 15, N.M. Road, )
Ballard Estate, Mumbai 400 001. ) .. Respondents
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Mr.Sachin Chitnis a/w Mr.Kiran Chavan i/by M/s.CENEX Services for the petitioner.
Mr.Ram Ochani for the respondents.
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ORAL JUDGMENT
2. By this petition filed under Article 226 of the Constitution of India, the petitioner seeks a writ of mandamus to restore and reconsider SVLDRS declaration filed by the petitioner on merits and to issue necessary discharge certificate and for other reliefs.
3. It is the case of the petitioner that on 13th March 2019, the office of Directorate General of GST Intelligence issued summons to the petitioner under the provisions of Section 83 of Finance Act, 1994 and Sections 70 and 174 of the Central Goods and Services Act, 2017 with a direction to remain present in-person and to tender evidence/ produce documents. On 25th March 2019, the statement of one of the Directors was recorded when he admitted service tax liability of Rs.72.37 lakhs for the period October 2015 to June 2017. The Central Government thereafter introduced Subka Vishwas (Legacy Dispute Resolution) Scheme in Finance (No.2) Act, 2019 (for short “the said SVLDR Scheme) for settling old cases of service tax and central excise.
4. On 1st November 2019, the petitioner filed the SVLDRS-1 declaration declaring tax dues of 72.37 lakhs as admitted by their Director under the “inquiry/investigation/audit” category. On 11th November 2019, the petitioner informed the office of the DGGI that they had already opted for SVLDRS based on the tax liability admitted by their Director before the DGGI Officer. On 23rd December 2019, the Designated Committee issued a Form SVLDRS-2 based on SVLDRS-1 declaration made by the petitioner. On 30th December 2019, the Designated Committee afforded personal hearing to the petitioner when they once again agreed to the tax liability of Rs.72.37 lakhs as admitted by their Director before the DGGI and furthermore requested to issue SVLDRS-3 which would then enable them to make payment of the tax dues. On 10th February 2020, the petitioner admitted their tax dues of Rs.72.37 lakhs in Form SVLDRS-2A also.
5. On 12th February 2020, the Designated Committee passed the impugned order rejecting the SVLDRS-1 declaration submitted by the petitioner holding that they obtained some verification report dated 17th December 2019 from the DGGI. The tax dues were not quantified finally on or before 30th June 2019. On 2nd March 2020, the petitioner reiterated that the tax dues were admitted by them before the DGGI and thus requested the Principal Commissioner to seek verification report from DGGI to confirm the same. On 30th December 2020, the DGGI issued a show cause notice to the petitioner proposing to recover the specified amount of service. The petitioner requested for a copy of the report dated 17th December 2019 of DGGI on 22nd January 2021.
6. It is the case of the petitioner that the said report before DGGI has not been served upon the petitioner till date. Since the petitioner apprehended the coercive action from the respondents, the petitioner filed this writ petition for various reliefs.
7. Mr.Chitnis, learned counsel for the petitioner invited our attention to SVLDRS-1 declaration submitted by the petitioner and also to Form SVLDRS-2 and SVLDRS-2A. He invited our attention to the statement of Shri M.B. Shaikh, one of the Directors of the petitioner recorded on 25th March 2019 before the Senior Intelligence Officer and more particularly to the reply to the question no.10 accepting tax liability of Rs.72.37 lakhs for the period October 2015 to June 2017 and GST liability for the period July 2018 to February 2019 i.e. Rs.80.48 lakhs. The petitioner undertook to pay the service tax as well as the GST liability at the earliest along with interest at applicable rates. The said statement was made under Section 14 of the Central Excise Act, 1994 read with Section 83 of Chapter V of the Finance Act, 1994 and Sections 70 & 174 of Central Goods and Service Tax Act, 2017. He made a statement that the said statement was a true and correct statement.
8. Learned counsel for the petitioner submits that even in Form SVLDRS-2, the tax liability admitted by the Director of the petitioner while making a statement was quantified at Rs.72,37,208/-, however, with remark “it is observed that the duty has not been quantified before 30th June 2019 and further investigation is under progress. Please explain.” He submitted that the petitioner was granted personal hearing and thereafter was issued Form SVLDRS-2A. The petitioner was asked to confirm whether the petitioner agreed with the Estimate in SVLDRS-2. The petitioner answered the said question in affirmative as on 12th February 2020. He submits that the amount of tax dues admitted by the Director of the petitioner was admitted all throughout and not disputed by the respondents even after granting personal hearing. It is submitted that only for the first time, a show cause notice was issued by the respondents subsequently demanding higher amount.
9. Learned counsel for the petitioner invited our attention to the definition of ‘tax dues’ under Section 123(c), definition of ‘quantified’ under Section 121(r) of the Finance (No.2) Act, 2019 and would submit that the petitioner had already admitted the tax dues and had satisfied the definitions of ‘tax dues’ and ‘quantified’ within the meaning of section 123(c) and Section 121(r) respectively. He also invited our attention to question no.3 in the Central Excise Circulars and Trade Notices dated 1st December 2019 issued by the respondents and also to the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
10. Learned counsel for the petitioner placed reliance on the recent judgment of this Court delivered by this bench on 21st January 2022 in case of Nabeel Construction Pvt. Ltd Vs. Union of India & Ors. reported in 2022-TIOL-97-HC-MUM-ST. He submits that in the identical facts, after considering several judgments of this Court and various provisions of the said Scheme, this Court has accepted the admission of tax dues in the statement made by one of the Directors therein as the tax dues for the purpose of availing benefits under the said scheme.
11. Mr.Ochani, learned counsel for the respondents, on the other hand, invited our attention to the averments made in some of the paragraphs of the affidavit-in-reply dated 12th July 2021 filed by Mr.Milind Gawai, Principal Commissioner of CGST and Central Excise, Mumbai. He submits that in the statement of the petitioner made through its Director, so far as the financial year 2015-16 was concerned, the petitioner had admitted the liability only for the 2nd half of the financial year i.e. from October 2015 to March 2016 and not for the 1st half i.e. April 2015 to September 2015. He submits that the petitioner was not eligible to apply under the said scheme as the tax dues were not fully quantified as on 30th June 2019. It is submitted by the learned counsel for the respondents that the investigation initiated by the respondents vide notice dated 30th December 2020 is still going on.
REASONS AND CONCLUSION:-
12. It is not in dispute that the investigation was initiated by the respondents vide issuance of summons dated 13th March 2019. The statement of one of the Directors was recorded by the Senior Intelligence Officer on 25th March 2019. Various questions were asked to the Director of the petitioner by Shri Anil Kumar Thakur, Senior Intelligence Officer, DGGI, MZU, Mumbai. In response to question no.10 i.e. “On being shown 26AS statements for Financial Years 2015-16, 2016-17, 2017-18, can you confirm the exact liability of service tax/GST?”, the Director of the petitioner deposed that “I accept that the unpaid service tax liability of the period October 2015 to June 2017 is Rs.72.37 lakhs and GST liability for the period July 2018 to February 2019 is Rs.80.48 lakhs. At present, we are facing a financial crunch and trying to arrange the fund and undertake to pay the service tax as well as GST liability at the earliest along with interest at applicable rates.”
13. The said statement was made by the Director of the petitioner under Section 14 of the Central Excise Act, 1994 read with Section 83 of Chapter V of the Finance Act, 1994 and Sections 70 & 174 of Central Goods and Service Tax Act, 2017. The petitioner through its Director deposed that the said statement was a true and correct statement.
14. The petitioner thereafter, filed SVLDRS-1 declaration declaring tax dues of 72.37 lakhs as admitted in the statement made by the Director. The said statement was filed on 1st November 2019. The petitioner once again admitted the service tax liability of Rs.72.37 lakhs. He informed that the petitioner had already paid an amount of Rs.10 lakhs. In Form SVLDRS-2 dated 23rd December 2019, the amount of tax dues were quantified at Rs.72,37,208/- however with remark “it is observed that the duty has not been quantified before 30th June 2019 and further investigation is under progress. Please explain.” The petitioner was admittedly granted personal hearing. After granting personal hearing, Form SVLDRS-2A was issued on 10th February 2020. The petitioner was asked to confirm whether the petitioner agreed with the Estimate mentioned in SVLDRS-2. The petitioner in the said Form confirmed the amount of tax dues estimate in SVLDRS-2. It is thus clear that there was no dispute about the admitted tax dues made by the petitioner not only in the statement recorded by the Investigating Officer but also subsequently in the correspondence as also in Form SVLDRS-1 and also as quantified in Form SVLDRS-2.
15. A perusal of the record indicates that in the subsequent order dated 12th February 2020, as per respondents, the quantification was not final by 30th June 2019. Report of DGGI, Mumbai confirmed the facts according to the respondents. It is nowhere alleged in the said impugned order that the petitioner had admitted only part of the liability. In our view, the said order dated 12th February 2020 is contrary to Form SVLDRS-2 and SVLDRS-2A.
16. The respondents for the first time in the affidavit-in-reply and more particularly in paragraph 4.3.[1] have taken a stand that the petitioner had admitted liability only for the 2nd half of the financial year i.e. from October 2015 to March 2016 and not for the 1st half i.e. April 2015 to September 2015. In our view, this reasons not forming part of the impugned order cannot be supplanted in the affidavit-inreply. No such reasons are required to be thus taken into consideration by this Court at this stage.
17. A perusal of the Show Cause cum Demand Notice dated 30th December 2020 issued by the office of DGGI indicates that the statement made by the Joint Director of the petitioner in paragraph 3.[3] is referred. It is clearly admitted that the petitioner had accepted their unpaid/short paid Service Tax liability of Rs.72.37 lakhs. We are thus not inclined to accept the submission made by Mr.Ochani, learned counsel for the respondents that the petitioner had not admitted the complete tax dues in the said statement of the Director of the petitioner recorded by the Investigating Officer.
18. If according to the respondents, tax dues would have been higher than the amount admitted in the statement as claimed in the affidavit-in-reply, the petitioner would have been confronted with the higher amount of tax dues in Form SVLDRS-2 and SVLDRS-2A.
19. In our view, the reliance placed by the learned counsel for the petitioner on Central Excise Circulars and Trade Notices issued by the respondents referred to aforesaid would support the case of the petitioner. This Court in case of Nabeel Construction Pvt. Ltd.(supra) after considering identical facts and after adverting to a catena of decisions of this Court dealing with identical issues and after construing various provisions of the said Scheme, 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 30th June, 2019. It is held that 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.
20. This Court 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 notice etc. post 30th 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 30th June, 2019. It is held that the fact that there could be a discrepancy of figure but only when the tax dues admitted by the person concerned prior to 30th 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.
21. In our view, the principles of law laid down by this Court in case of Nabeel Construction Pvt. Ltd.(supra) would apply to the facts of this case. We do not propose to take a different view in the matter. In our view, the impugned order passed by the respondents is contrary to the principles of law laid down by this Court in a catena of decisions and also contrary to the objectives, reasons and intent of the said Scheme introduced by the Central Government to liquidate the huge outstanding litigation and free the taxpayers from the burden of litigation and investigation under the legacy taxes.
22. We accordingly pass the following order:-
(i) The impugned order dated 12th February 2020 rejecting SVLDRS-1
(ii) The petitioner is held eligible to file the said SVLDRS-1
(iii) The respondents shall pass a fresh order granting relief to the petitioner under the said Scheme on the basis that the petitioner is eligible to avail the benefits under the said Scheme;
(iv) The petitioner is directed to deposit balance amount within eight weeks from today with the respondents;
(v) Upon payment of balance amount, the respondents shall issue discharge certificate in favour of the petitioner within one week from the date of such payment;
23. Writ petition is allowed in aforesaid terms. Rule is made absolute. No order as to costs. Parties to act on the authenticated copy of this order. S.M. MODAK, J. R.D. DHANUKA, J.