Bombay HC condemns Action of Designated Committee of straight away issuing Form SVLDRS 3, directs to Issue Form SVLDRS 2 and Afford Personal Hearing [Read Order]
“Designated Committee was required to issue Form SVLDRS 2 indicating the amount”, observed the High Court of Bombay
Bombay High Court – Form SVLDRS 3 – Form SVLDRS 2 – Designated Committee – TAXSCAN
Bombay High Court – Form SVLDRS 3 – Form SVLDRS 2 – Designated Committee – TAXSCAN
The Bombay High Court recently quashed and set aside Form SVLDRS 3, issued without issuance of Form SVLDRS 2 while directing the designated committee to issue Form SVLDRS 2 and afford an opportunity of personal hearing to the petitioner.
The dispute arose from a Show Cause Notice issued by the service tax department, alleging a discrepancy of Rs. 19,80,37,410 in the income tax returns versus the value declared in service tax returns. This notice proposed a demand of Rs. 2,44,77,423, along with interest and penalties. The petitioner, represented by Shishir R. Mehta, challenged the tax demands imposed by various government bodies.
The petitioner contended that the declared turnover in Form ST-3 was not nil as alleged but amounted to Rs. 6,37,16,462 for April-September 2013 and Rs. 7,42,00,743 for October 2013-March 2014, with corresponding service tax payments made. Moreover, the petitioner had already deposited Rs. 1,70,46,567, which was not considered in the Show Cause Notice.
During the proceedings, the court noted that the Central Government had introduced the Sabka Vishwas ( Legacy Dispute Resolution ) Scheme in 2019 to resolve pending tax litigations. The petitioner had filed under this scheme, declaring the disputed amount of Rs. 2,44,77,423.
However, the Designated Committee had disallowed the pre-deposit already made by the petitioner, leading to a demand of Rs. 1,22,38,711.50 under the Sabka Vishwas Scheme. The court found this action to be in violation of the scheme's provisions, which mandate issuing Form SVLDRS 2 and granting a personal hearing if there is a dispute regarding the payable amount.
It was observed that, “In these circumstances, in our view, as per the provisions of the Section 127 of the Sabka Vishwas Scheme and Rule 6 of the Sabka Vishwas Rules, the Designated Committee was required to issue Form SVLDRS 2 indicating the amount which, according to the Designated Committee, was payable by the Petitioner and giving an opportunity of personal hearing to the Petitioner. If such a Form SVLDRS 2 had been issued by the Designated Committee then the Petitioner would have got an opportunity of personal hearing and of making written submissions by filing Form SVLDRS-2A.”
It was also noted that. “However, in the present case, without issuing Form SVLDRS 2, the Designated Committee has straight away issued Form SVLDRS 3, thereby depriving the Petitioner of an opportunity of a personal hearing. In our view, this action of the Designated Committee of straight away issuing Form SVLDRS 3, without issuing Form SVLDRS 2, is not only in violation of Section 127 of the Sabka Vishwas Scheme and Rule 6 of the Sabka Vishwas Rules but is also in total violation of the principles of natural justice.”
Consequently, the High Court Bench of Justices Firdosh P Pooniwalla and G S Kulkarni quashed the Form SVLDRS 3 issued by the Designated Committee and remanded the matter for reconsideration. The Committee was also directed to issue Form SVLDRS 2, grant a personal hearing to the petitioner, and pass a reasoned order within six weeks from the date of the order.
To Read the full text of the Order CLICK HERE
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