GST officer should give an opportunity of Personal Hearing Before Passing an Order of Service Tax: Bombay HC

Petition filed under Article 226 of the Constitution of India, seeking a writ of certiorari for quashing and setting aside the rejection Order dated 30th December 2019, rejecting Form SVLDRS-1 and also seeks writ of mandamus directing the Respondents to accept the application Form SVLDRS-1 filed by the Petitioner and to issue discharge certificate.  

Facts 

• Assistant Commissioner of CGST had quantified the amount of service tax payable by the Petitioner for the year 2013-2014 amounting to Rs.30,80,020/- by a letter dated 24th January 2019. 
• On  13th February 2019, via letter, the Respondent quantified the amount of service tax payable amounting to Rs.50,74,259.4/-. 
• The  Petitioner quantified the amount for the financial year 1st April 2015 to 31st March 2016 and 1st April 2016 to 30th June 2017. The Central Government introduced Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (“SVS Scheme 2019”).
• On 30th December 2019 the Petitioner filed the electronic declarations in Form No. SVLDRS-1 for the period of 2015-2016, 2016-2017 and 2017-2018 (upto June 2017). The Petitioner declared various amounts as amount of tax due for the said period.
• The application was rejected on the ground “Nil return filed online, Investigation under process / data provided in application does not match with record”
•  Respondent issued a show cause notice on 1st December 2020 for the period 2013-2014 (October – March) to 2017-2018 (upto June 2017) proposing to demand service tax of Rs.87,79,971/- along with interest under Section 75 and penalty under Section 70, 77(1) (d), 77(2) and 78 of the Finance Act, 1994. On 1st December 2020 the Petitioner requested the Designated Committee to grant an opportunity to the Petitioner to prove their eligibility under SVS 2019 and also to allow them to rectify declaration filed under the said Scheme. There was no response to the said request made by the Petitioner. The Petitioner thus filed this Petition.

Findings 

According to the Petitioner before passing such Order rejecting the application made by the Petitioner on the ground of ineligibility. If the Petitioner would have been given an opportunity, the Petitioner would have pointed out the quantification of tax liability during the course of the hearing. Personal hearing was necessary in this situation to be heard to the Petitioner before passing such an Order rejecting the application made by the Petitioner on the ground of ineligibility. If the Petitioner would have been given an opportunity, the Petitioner would have pointed out the quantification of tax liability during the course of the hearing. In our view, personal hearing was necessary in this situation. 

Judgment 

Bombay HC stated that  the impugned Orders passed by the Respondents are in gross violation of the principles of natural justice and are liable to be quashed and set-aside.  Both the applications filed by the Petitioner in Form SVLDRS 1 are restored to file. Dispute Resolution Committee is directed to consider those two applications on its own merits in accordance with law after granting personal hearing to the Petitioner and pass a fresh Order without being influenced by the observations made and the conclusions drawn in the impugned Orders.

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