The Gujarat High Court while accepting the application of the petitioner held that the department has wrongly rejected the quantification of the Service tax liability under SVLDR Scheme.
The petitioner, M/s Airlink Communications Pvt. Ltd. submitted the quantified amount on the online portal of the Scheme on December 31, 2019 expressing their willingness to avail the benefit under the Scheme.
It may be noted that subject to acceptance of the request under the Scheme, the petitioners would be liable to make the deposit of 50% of the quantified amount.
However, the application of the petitioners under the Scheme was not accepted for the reason as stated in the Form SVLDRS-1 that “the service tax liability was not quantified and communicated finally before June 30, 2019 i.e. cut off date for SVLDRS”.
The only question raised was whether the quantification of the petitioners’ liability as communicated vide letter dated December 27, 2019 should be deemed to be quantification relating back to the earlier quantification dated May 20, 2019 or not. If it relates back to the original quantification of May 20, 2019, then the petitioners would be covered and eligible under the Scheme for availing its benefit.
The Scheme came into existence only w.e.f. September 1, 2019 and its benefit was available till December 30, 2019 for the assessees to apply. During this period from September to December, 2019, the petitioners noticed the mistake committed by the Department and accordingly represented vide letter dated November 23, 2019.
The Department realized its mistake and ultimately corrected the demand raised from Rs.82,26,42,852/- and reduced it to Rs.4,99,03,524/-.
The petitioners may not have been in a position to deposit Rs.41 crore and odd (being 50% of the initial demand) to avail the benefit of the Scheme, but having received the communication of an amount which was almost 6% of the earlier demand raised, thought it proper and in their interest to apply under the Scheme. The petitioners applied within the time on 31.12.2019.
The division judge bench headed by the Chief Justice J.B.Pardiwala held that it was an apparent mistake made by the Department. The Department thus ought not to have rejected the application of the petitioners by alleging that the quantification had been made after the cut off date.
“The mistake committed by the Department was also an apparent mistake and a glaring mistake that they included the taxable services subsequent to the period of investigation and because of the said reason, a huge amount of liability had been raised. Depriving the petitioners for the fault of the Department, would be unfair and unreasonable,” the court said.
Therefore, the court held that the quantification communicated on December 27, 2019 to be a quantification substituting the figures in the communication dated May 20, 2019 thus the quantification being prior to June 30, 2019. The reason for rejecting the application of the petitioners under the Scheme deserves to be set aside.
Subscribe Taxscan Premium to view the Judgment
