M/s. Jagadish Advertising vs. Designated Committee and others. Writ Petition 7801/2020 decided on 19 August 2020.
Judgment Link: http://judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/338063/1/WP7801-20-19-08-2020.pdf
HELD: The term “verify the correctness””in Section 126 of the Finance (No.2) Act, 2019 and Rule 6 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 cannot be stretched to mean that the Designated Committee can embark upon an adjudication regarding the entitlement or otherwise of the declarant.
Relevant Paragraphs: 16, 18 & 24. The Parliament, with the object of bringing to an end the disputes relating to the liability of service tax, enacted the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The object of the said Scheme was both Dispute Resolution and also Amnesty. The Scheme is basically designed to ensure minimum interface between the assessee and the Department and is designed in such a way that the dispute is resolved by the assessee by filing a declaration electronically and his tax liability is also determined electronically. Thus, basically a person whose liability to pay service tax was in dispute, such a person could avail the Scheme by making a declaration in the electronic form and the Designated Committee would verify the declaration and thereafter, issue a statement indicating the amount payable and on the said amount being paid, the person would be discharged of all liabilities i.e., both financial as well as penal.
31 & 33. The Circular dated 27.08.2019 issued by the Department categorically states that one of the objectives of the Scheme was to give an opportunity to those who had failed to correctly pay the tax. The Circular states that to this extent the Scheme comprised of an Amnesty component. The Circular also clarified a few issues raised after the Scheme was notified. Thus, a reading of the said clause would clearly indicate that in certain matters when tax had been paid by utilizing the input credit and the matter was under dispute, the tax already paid through input credit should be adjusted by the Designated Committee at the time of determination of the final amount payable under the Scheme. Therefore, even if there was a dispute regarding the tax paid through input credit, the Circular mandated that the Designated Committee should adjust the tax already paid through input credit. It, therefore, follows that the Designated Committee cannot embark upon an exercise of adjudication and state that it was not permissible for the declarant to claim that he had paid the tax through input credit.
38.…. A plain reading of the provisions would mean that the Designated Committee would be required only to examine the accuracy of the statement made in the declaration with reference to the records available with it and this would basically mean that the Designated Committee can only satisfy itself as to whether the Tax liability admitted by the declarant was accurate or not. The term “verify the correctness”” cannot be stretched to mean that the Designated Committee can embark upon an adjudication regarding the entitlement or otherwise of the declarant.
Compiled by S. Basavaraj, Advocate, Daksha Legal.
Daksha Legal 