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Bombay HC remands matter to Designated Committee to take a fresh decision as to refund of the amount paid and treating the SVLDRS declaration as ‘pending litigation category’

Bombay High court - Designated Committee - SVLDRS - pending litigation category - Taxscan

The Bombay High Court remanded the matter back to the Designated Committee to take a fresh decision as to refund of the amount paid and treating the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS)  declaration as ‘pending litigation category’.

The petitioner, Prathamesh Dream Properties Private Ltd. is a company which is engaged in the business of construction of warehouses and letting them out on rent to wholesalers and retailers. Most of the projects of the petitioner are concentrated in and around Bhiwandi area which is within Thane district in the State of Maharashtra.

In connection with service tax dues, petitioner was served with a show cause-cum-demand notice issued by the Commissioner of Service Tax, Mumbai raising certain demands for the period from 2008-09 to 2012-13. As per the show cause-cum-demand notice, an amount of Rs.3,60,03,185 was stated to be due and recoverable from the petitioner.

According to the petitioner it was eligible to submit an application (declaration) under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 under section 124(1)(a) of Finance (No.2) Act, 2019 since it was a case of pendency of appeal.

Accordingly, the petitioner submitted an application (declaration) under the said scheme under ‘pending litigation category’.

However, the Designated Committee issued notice in form SVLDRS-2 to the petitioner treating the petitioner as a declarant under ‘arrears category’ and not under ‘pending litigation category’.

The petitioner seeks a direction to the respondents authorities, to withdraw the form SVLDRS-3 and for a further direction to the respondents to refund the amount of Rs.47.91 lakhs collected from the petitioner.

The stand taken by the respondent authority is that since the appeal was not admitted and was ultimately not entertained on 09.12.2019, which was to the knowledge of the petitioner when it had filed the application (declaration) under the scheme on 23.12.2019, it could not be construed that the appeal of the petitioner was pending as on 30.06.2019, rather in such a scenario it would be a case under the ‘arrears category’.

The division bench of Justice Ujjal Bhuyan and Justice Abhay Ahuja that the appeal filed by the petitioner before the CESTAT against the order-in- original dated 18.09.2018 was pending as on 30.06.2019 and therefore, the application (declaration) of the petitioner should be treated as one under the ‘pending litigation category’ and not one under the ‘arrears category’.

The court clarified that to be eligible under the ‘arrears category’ in terms of section 121(c), no appeal should be filed by the declarant against the order-in-original before expiry of the limitation period for filing appeal or the order-in-appeal has attained finality or the declarant has admitted the tax liability but has not paid the same which is not the position in the present case as petitioner had filed appeal against the order-in-original before expiry of the limitation period.

The court remanded the matter back to the Designated Committee to take a fresh decision as to the consequential relief to be granted to the petitioner, including refund of the amount paid by the petitioner, treating the declaration of the petitioner as one under the ‘pending litigation category’ after affording reasonable opportunity of hearing to the petitioner within a period of 4 weeks.

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