The Kerala High court in the light of the circular dated July 28, 2019, held that the Revised amount must be taken as the quantified amount to test the eligibility of the petitioner, Hi-Lite Project for availing the benefit of the Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR).
The petitioner-Company Hi-Lite Project is engaged in the construction of residential and commercial projects in Kerala. The petitioner is a registered assessee of service tax. From 2016-17 onwards, the petitioner could not file returns and pay service tax promptly within the stipulated time.
The petitioner states that nevertheless all transactions were duly recorded in their books of accounts. The petitioner belatedly filed returns for the period from April 2016 to June 2017.
The petitioner submits that after filing ST-3 returns, the second respondent initiated an investigation by issuing a letter. Further, summons were also served on the petitioner.
The petitioner appeared before the second respondent along with all requested statements and accounts. The second respondent made a detailed scrutiny. The petitioner categorically admitted that the outstanding service tax liability for the period up to June 2017 is around 300 lakhs out of which the petitioner had already paid 138 lakhs.
According to the petitioner, the returns filed by the petitioner were never disputed and the petitioner admitted the liability for the respective return period. In fact, there was a pending tax liability at the time of filing ST-3 return during the period of April 2016 to September 2016.
The central government launched Sabka Vikas (Legacy Dispute Resolution) Scheme 2019 (SVLDR Scheme). The Scheme is for settling tax arrears of the assessees. The Scheme provides for different types of tax reliefs. Various categories of declarants under the SVLDR scheme for the purpose of tax reliefs, are ‘litigation’, ‘arrears of tax’, ‘inquiry and investigation’, and ‘voluntary disclosure’.
In the case of voluntary disclosure, a person who has not filed any return nor paid any taxes can voluntarily disclose his tax liability to the department. “Arrears of tax’ category covers those cases where the return is filed, but tax is not paid. The Scheme provides for substantial tax relief including a 100% waiver of penalty and interest.
The petitioner therefore filed declarations under the Scheme. The respondent authority rejected the declarations stating that as per Section 125 (1)(e) of the Finance Act, 2019, a person who has been subjected to an inquiry or investigation or audit, and the amount of duty involved in the said inquiry or investigation or audit, is not quantified on or before June 30, 2019, is ineligible for making a declaration under the Scheme.
The single-judge bench of Justice N. Nagaresh noted that the petitioner had declared the service tax dues even before verification proceedings were initiated on September 7, 2017.
The Court in the light of the circular dated July 28, 2019 and quantification as defined under section 2(0) would include duty liability admitted by the person during the inquiry, investigation, or audit held that the amounts admitted by the petitioner and later on revised have to be taken as the quantified amount due from the petitioner for the purpose of testing the eligibility of the petitioner for availing the benefit of SVLDR Scheme under Section 125 of the Finance Act, 2019.Subscribe Taxscan AdFree to view the Judgment