Service Tax Demand cannot be Reopened After Issuance of SVLDRS Discharge Certificate: Gauhati HC [Read Order]
The High Court held that once a Discharge Certificate is issued under the SVLDRS after payment of the determined amount, the service tax demand for the same period cannot be reopened
In a recent ruling, the Gauhati High Court held that once a Discharge Certificate is issued under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) after payment of the determined amount, the service tax demand for the same period cannot be reopened by the department.
Gautam Banerjee, proprietor of Kooltech Systems (Assam), filed a writ petition challenging the order-in-original passed by the Assistant Commissioner, GST and Central Excise. He also challenged the appellate order passed by the Commissioner (Appeals) which had dismissed his appeal.
A demand-cum-show cause notice was issued under provisions of the Finance Act, 1994, alleging that services worth Rs. 23,47,386 were assessed and a demand of Rs. 2,90,137 including cess was raised.
The petitioner submitted a reply on 27 December 2019 accepting the demand and also requested to avail the benefit of SVLDRS, 2019. The petitioner filed SVLDRS-1, which was acknowledged on 31 December 2019. After considering the declaration, the Designated Committee issued SVLDRS-3 and determined the payable amount as Rs. 1,16,054.80. The petitioner paid this amount and a Discharge Certificate (SVLDRS-4) was issued on 04 February 2020.
Later the Assistant Commissioner passed an ex-parte order on 16 February 2022 confirming the earlier demand with penalty, stating that the petitioner did not respond to the show cause notice. The petitioner filed an appeal but the appellate authority rejected it saying that the scheme was not applicable because the show cause notice was issued after 30 June 2019, which was the cut-off date under the scheme.
The petitioner’s counsel argued that the authorities themselves processed the SVLDRS declaration, determined the payable amount, accepted the payment and issued a Discharge Certificate. It was argued that once the discharge certificate was issued the matter was settled and the department cannot reopen the demand again. The counsel also pointed out that the adjudication order did not even refer to the discharge certificate.
The department argued that the scheme applied only to cases where show cause notice was issued before 30 June 2019. Since the notice in this case was issued later, the petitioner was not eligible under the scheme. The department also said that a CBIC communication mentioning that such cases may be considered only used the word “desirable” and did not create any legal right.
Justice Sanjay Kumar Medhi observed that it was not disputed that the petitioner’s declaration under the scheme was accepted, the payable amount was determined and the petitioner paid the amount. The court also observed that after payment a Discharge Certificate was issued on 04 February 2020.
The court explained that once such discharge certificate is issued the dispute reaches a final stage. The court pointed out that the order did not even consider this important fact. Because this aspect was ignored, the order could not stand in law.
The Gauhati High Court set aside the order-in-original and the appellate order. The writ petition was allowed.
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