Partly allowed

H. M. Trust v. Designated Committee Sabka Vishwas

Karnataka HC19 Feb 2021WP/11204/2020

Case brief

AI extract

What is this about?

High Court of Karnataka quashed departmental estimates and statements under the Sabka Vishwas Scheme refused adjustment of certain pre-deposits. Held that pre-deposits subsequent to SCN show can be adjusted as per Scheme and circulars; manual processing allowed ex relio SC order.

What did the court decide?

Estimation in SVLDRS-2 and Statement in SVLDRS-3 set aside; Declaration in Form SVLDRS-1 to be reconsidered and Discharge Certificate made out in SVLDRS-4.

H. M. Trust Vs Designated Committee Sabka Vishwas — Consumer Protection | Karnataka HC (2021)

¶1

¶2

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶3

DATED THIS THE 19^TH DAY OF FEBRUARY 2021

¶4

BEFORE

¶5

THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV

¶6

WRIT PETITION No.11204/2020 (T-RES)

¶7

BETWEEN:

¶8

H.M.Trust Office at H M Geneva House No.14, Cunningham Road Vasantha Nagar Bangalore - 560 052 Represented by its Managing Trustee Mr.H.J.Siwani Aged about 60 years No.15/1, Binney Crescent Benson Town Bangalore - 560 046. … Petitioner (By Ms.Vani.H, Advocate)

¶9

AND:

¶10

Designated Committee

¶11

Sabka Vishwas (Legacy Dispute Resolution Scheme) No.59, HMT Bhavan Bellary Road Bangalore - 560 032

¶12

Central Board of Indirect Taxes and Customs, North Block, New Delhi - 110 011 Represented by its Chairman.

¶13

¶14

Union of India

¶15

Ministry of Finance Department of Revenue Through its Secretary (Revenue) North Block, New Delhi - 110 001. … Respondents

¶16

(By Sri Jeevan J. Neeralgi, Advocate for R1 & R2; Sri B.S.Venkatanarayana, Advocate for R3)

¶17

This Writ Petition is filed under Articles 226 & 227 of the Constitution of India, praying to quash the estimation dated 09.12.2019 in Form No.SVLDRS-2 vide Annexure-C and statement under Section 127 in Form SVLDRS-3 dated 27.02.2020 vide Annexure-G issued by the R1 and etc.

¶18

This Writ Petition coming on for preliminary hearing in 'B' Group this day, the Court made the following:

¶19

ORDER

¶20

The petitioner is stated to be engaged in the activity of renting their properties and is stated to have registered itself with the Service Tax Department under the category of "Renting of Immoveable Property of Service" for the purpose of payment of service tax as per the registration No.AAATH5951RST001 dated 09.08.2007.

¶21

It is stated that the Department had issued the show cause notice bearing No.SCN.C.No.IV/16/327/ 2012/ST-Adjn-8731/12 on 18.10.2012 proposing to demand service tax to the tune of Rs.7,48,290/- alongwith interest

¶22

¶23

thereon. It is further submitted that there were various stages in the litigation, including that the matter was pending before the Apex Court.

¶24

During the pendency of the litigation, Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 (SVLDRS) came to be introduced as per the Finance Act, 2019 with effect from 01.09.2019.

¶25

The petitioner has exercised his option of availing the benefit under SVLDRS and has filed his declaration in Form No.SVLDRS-1, a copy of which is produced at Annexure-B, wherein the petitioner has specifically sought

¶26

for adjustment of Rs.7,48,290/- (though pre-deposit was Rs.8,19,643/-) which was a pre-deposit as against the penalty of Rs.7,48,290/-.

¶27

It is the contention of the petitioner that a sum of Rs.8,19,643/- deposited during the period 01.04.2008 to 31.03.2011 with respect to the show cause notice at Annexure-A, which claim the petitioner is sought to resolve by recourse to SVLDRS scheme.

¶28

¶29

The petitioner submits that in response to the estimate under SVLDRS as made by the Department, the petitioner has availed of the opportunity of making written submissions in Form No.SVLDRS-2A and has specifically submitted that "In the SVLDRS-2, the relief amount and the amount already paid not considered. The detailed reply will be submitted during the personal hearing."

¶30

The petitioner draws attention to the

¶31

communication at Annexure-E addressed to the Joint Commissioner, Designated Committee (SVLDRS) Bangalore

¶32

North Commissionerate, Bangalore where the amount payable of Rs.7,48,290/- is also sought to be set off on the ground of pre-deposit.

¶33

The petitioner further submits that the details of pre-deposit with reference to Challan Nos.00484, 01294 and 00011 amounting to Rs.8,19,643/- has been furnished to the Authority as per the communication at Annexure-F. However, despite such explanation, the respondent Authority in its statement in Form SVLDRS-3 has given

¶34

¶35

credit only with respect to the pre-deposit of Rs.63,558/and has quantified the amount payable after availing of the relief under the Scheme at Rs.1,60,929/-.

¶36

The petitioner submits that as regards to the details of pre-deposit with the Department, as per the response through RTI as reflected at Annexure-H, it would indicate that there was pre-deposit of Rs.8,19,643/-. Hence, the petitioner contends that as per the provisions of the Scheme and the Board Circulars, the petitioner is entitled for adjustment of pre-deposit of a sum of Rs.8,19,643/-.

¶37

The respondents have filed their statement of objections and have contended that the deposit stated to have been made by the petitioner could not be considered, as there was no evidence that the said amount has been paid towards the liability recovered under the particular application and as regards the specific show cause notice, which is the subject matter of dispute in the present writ petition.

¶38

¶39

It is also contended that the deposits which the petitioner relies upon and is seeking the Department to give credit ought to have been claimed in their ST-3 returns and not having done so, they are not entitled for any consideration as sought for in the present petition.

¶40

It is further contended that the amount of Rs.8,19,643/- which the petitioner is seeking adjustment cannot be linked to the tax liability as regards to the particular application. Accordingly, it is stated that the action of Designated Committee considering the request of the petitioner after having given credit of Rs.63,558/- does not call for any interference.

¶41

Section 124(2) of the Finance Act is clear and reads as hereunder:-

¶42

" 124. (2) The relief calculated under sub-section (1) shall be subject to the condition that any amount paid as predeposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant:

¶43

¶44

Provided that if the amount of predeposit or deposit already paid by the declarant exceeds the amount payable by the declarant, as indicated in the statement issued by the designated committee, the declarant shall not be entitled to any refund."

¶45

The Circular bearing No.1071/4/2019-CX.8 by the Department dated 27.08.2019 referred to supra at Clause-10(c) further clarifies the matter and reads as hereunder:

¶46

"10(c) This scheme provides for adjustment of any amount paid as predeposit during appellate proceedings or as deposits during enquiry, investigation or audit [Sections 124 (2) and 130(2) refer]. In certain matters, tax may have been paid by utilising the input credit and the matter is under dispute. In such cases, the tax already paid through input credit shall be adjusted by the designated committee at the time of determination of the final amount payable under the scheme."

¶47

Further, Clause-2(ii) and (iii) of the Circular bearing No.1074/07/2019-CX dated 12.12.2019 reads as follows:

¶48

" 2(ii) Section 124(2) provides for adjustment of any amount paid as pre-deposit at any stage of

¶49

¶50

appellate proceedings or as deposit during enquiry, investigation or audit. However, an amount paid after issuance of show cause notice, but before adjudication are not mentioned therein. Further, these amounts gets appropriated/adjusted at the time of adjudication. There may be situations where such deposits may have been made but could not be appropriated due to pendency of adjudication proceedings. With a view to facilitate the taxpayer, as well as to recognise and appropriate these deposits as revenue, it is clarified that such deposits can be deducted/adjusted when issuing the statement indicating the amount payable by the declarant.

¶51

(iii) Many a times the deposits during enquiry, investigation or audit etc. are made 'under protest'. Such deposits need to be adjusted by the designated committee in order to determine the final amount payable by the declarant, once a declaration has been filed by the taxpayer. Section 130(2) provides that in case any pre-deposit or other deposit already exceeds the amount payable under the Scheme, the differential amount will not be refunded. Any person who files a declaration under the Scheme undertakes to comply with all the provisions of the Scheme. Therefore, there is no question of refund of any excess deposit in any case."

¶52

¶53

Clauses 2(ii) and (iii) that are extracted hereinabove and an entire reading of Section 124(2) read with Board Circulars extracted hereinabove would make it clear that the pre-deposit made at any point of time subsequent to the issuance of show cause notice ought to be taken note of and credit extended while indicating the amount payable by the assessee in the estimate in SVLDRS-3.

¶54

It is to be noted that the petitioner at an earlier point of time in its communication dated 07.08.2013 to the Assistant Commissioner of Service Tax, Division-II, Bangalore had stated that the entire amount payable towards the service tax on rent as regards the show cause notice for the period 01.04.2008 to 31.03.2011 had been paid and details of the challans are produced alongwith the letter dated 07.08.2013, a copy of which has been produced by way of a memo dated 19.02.2021.

¶55

It is also to be noted that the show cause notice issued at Annexure-A also refers to the period of 01.04.2008 to 31.03.2011 and accordingly, the contention

¶56

¶57

that there is co-relation with the deposits made by the petitioner cannot be brushed aside without further enquiry as sought for in the present petition.

¶58

Insofar as the contention that the petitioner

¶59

ought to have claimed credit under ST-3 returns, it is to be noted that, as the petitioner has sought for the benefit under the Scheme and the application in SVLDRS-1 specifically has a column relating to pre-deposit and as the Scheme is a self-contained Code calling upon the petitioner to resort to any general procedure for claiming the credit and adjustment cannot be made applicable, where the Scheme provides for a procedure.

¶60

Insofar as the contention of the Department as

¶61

found in para-9 of their statement of objections that SVLDRS is time specific and cannot be extended and accordingly any relief granted at this point of time would be futile is to be noted, that on an earlier occasion, pursuant to an interim order passed on 27.11.2020 in W.P.No.11485/2020 and connected petitions, the Central

¶62

¶63

Board of Indirect Taxes and Customs, in its communication dated 08.01.2021 has stated as follows:-

¶64

"Sub:Interim order dated 27.11.2020 of the Hon'ble High Court of Karnataka in Writ Petition No.11485/2020 filed by M/s.Mars Estates Pvt. Ltd. pertaining to the issue of SVLDRS 2019 - reg.

¶65

I am directed to refer to your office letter dated 29.12.2020 on the above mentioned subject.

¶66

2. It is hereby informed that in cases, where the Hon'ble High Court decides in favour of the petitioner and directs the department to extend the benefit of the SVLDRS, 2019 to the petitioner, then to give effect to such directions, the Board may allow manual processing of the subject declaration subject to the following conditions:

¶67

(i) The said order has been accepted

¶68

by the concerned Commissionerate is not proposed to be challenged before the Hon'ble Supreme Court.

¶69

(ii) The Ld. ASG of the concerned High Court has advised for acceptance of the said order.

¶70

(iii) The Systems Directorate has expressed its inability in allowing electronic processing of the said declaration due to technical reasons.

¶71

¶72

3. It is requested that the above stand of the Board may be submitted before the Hon'ble High Court."

¶73

In light of such clarification, as it is specifically clarified that manual processing of declaration would be allowed subject to conditions mentioned in the communication dated 08.01.2021, the objection has been addressed.

¶74

Accordingly, the Estimation in SVLDRS-2 at Annexure-C dated 09.12.2019 is set aside and consequently the Statement in Section 127 in Form SVLDRS-3 at Annexure-G dated 27.02.2020 is also set aside. The Declaration in Form No.1 is to be reconsidered in light of the discussion made above and a Discharge Certificate if eligible

¶75

to be made out in SVLDRS-4 in light of the discussion as

¶76

made above.

¶77

Sd/JUDGE

¶78

VGR

H. M. Trust v. Designated Committee Sabka Vishwas

Case brief

What is this about?

What did the court decide?

H. M. Trust v. Designated Committee Sabka Vishwas

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

B P Manjunath Vs Official Liquidator

Mr. Vivek Mathias Vs United Breweries (Holdings) Limited

Ms Kiran Mazumdar Shaw Vs the Official Liquidator

M/S Trinco Property Vs Mr. N.R. Sumanth Kumar

Rahim Khan Vs H Mushtari Jan

Ruptub Solutions Private Limited Vs Radhe Shyam Gautam HUF