GST Dept is empowered to take action within 1 year under Sec 129(2)(c) of the SVLRDS: Bombay HC

GST Dept is empowered to take action under Section 129(2)(c) of the SVLRDS, within a period of one year of issuance of the discharge certificate: Bombay HC

Issue

Petition filed under Article 226 of the Constitution of India, the petitioner has prayed for a writ of certiorari for quashing and setting aside the impugned orders dated 9th December, 2020 and 20th February, 2020 annexed at Exhibits ‘A1’ and ‘A2’ respectively.

Facts

• On 5th July, 2019, the Central Government proposed Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 in the budget for 2019-20 with an aim to assist taxpayers in clearing the baggage of disputes under erstwhile laws (service tax and central excise) which are subsumed in the Goods and Services Tax (GST). 
• On 4th September, 2019, the respondents issued summons to the petitioner for giving oral evidence or to submit relevant documents.
• On 9th September, 2019, the petitioner filed Electronic Declaration Form under SVLRDS-1 on CBEC website under ‘voluntary category’ and declared Rs.36,24,108/- as the amount of tax dues for the period 1st September, 2015 to 30th June, 2017. 
• However, Joint Commissioner CGST passed an order to the petitioner rejecting the said declaration on the ground that the petitioner was not eligible to opt for the said Scheme as the investigation against the petitioner had been initiated before they opted for the said Scheme. 
• On 9th October, 2019, the petitioner protested against the said order dated 30th September, 2020, which was rejected by the respondent on  9th December, 2019, on the ground that the investigation was initiated against the petitioner and thus the petitioner was not eligible to file declaration under ‘voluntary category’.
• The petitioner thus filed this writ petition for various reliefs.

Findings

 Hon’ble Supreme Court in case of Tata Engineering and Locomotive Company Limited v/s. State of Bihar, (2000) 5 SCC 346 held that if any enquiry or investigation or audit was initiated on or before 30th June, 2019, such a person would not be eligible to make declaration under the voluntary disclosure category. Logical corollary to this would be that an enquiry or investigation or audit post 30th June, 2019 would not act as a bar to the filing of declaration under the ‘voluntary disclosure’ category. 

In the facts of this case also the respondents had issued a summons only on 30th August, 2019 i.e. after 30th June, 2019 and thus summons issued after the cut-off date of 30th June, 2019 could not be the ground for declaring the application filed by the petitioner under SVLRDS-1 ineligible. 

Judgment 

Bombay HC held that this Court will take the  cognizance of the powers of the respondents under Section 129(2)(c) of the said Scheme which empowers the respondents to take an appropriate action against the petitioner, if within one year from the date of issuance of discharge certificate, if the respondents find any material particular in the declaration as false. In such circumstances, the respondents presume as if the declaration was never made and the proceedings under the applicable indirect tax enactment shall be instituted.

Thus the following order has been passed by this Court impugned orders dated 9th December, 2020 and 20th February, 2020 annexed at Exhibits ‘A1’ and ‘A2’ respectively are quashed and set aside. The Declaration Forms filed by the petitioners are restored to file and are remanded to the respondent no.3 for taking a fresh decision on these two declaration forms filed by the petitioner by treating the same as valid declarations under the ‘voluntary disclosure’ category and thereafter grant the admissible relief to the petitioner. The respondents shall grant an opportunity of personal hearing to the petitioner by issuing seven days clear notice before the date of proposed hearing.

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