Show Cause Notice Cannot Be Issued Solely On Basis Of Voluntary Disclosure Under SVLDRS Scheme: CESTAT

The Bangalore Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that a show cause notice cannot be issued solely based on voluntary disclosure by the assessee under the SVLDRS Scheme [Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019]. The bench, consisting of P.A. Augustian (Judicial Member) and R. Bhagya Devi (Technical Member), agreed with the Commissioner that even though documents were placed before the authorities concerned, the original authority confirmed the demand only based on the SVLDRS Form-1 filed by the assessee, which is non-existent as per Clause 2(c) of Section 129 of the SVLDR Scheme. In this case, the assessee/appellant M/s. Dynamic Infratech, which is a service provider, had availed the benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) and filed Form-1 in terms of Section 125 of the Finance Act, 2019. They had declared and admitted service tax liability of Rs.29,18,974/-, and Form-3 was issued accordingly. However, the assessee failed to pay the service tax dues before the last date. Accordingly, the department, based on the available records by invoking an extended period of limitation, confirmed the demand of Rs.29,18,974/-. The assessee submitted that the impugned order is illegal and not sustainable, and should not have been remanded for relooking into the entire case, in view of the fact that the show-cause notice was issued purely based on our SVLDRS statement, and there is nothing on record to show that the liability could be fastened on them. The department argued that since the assessee himself had admitted the liability by filing SVLDRS-1 and having not adhered to the scheme by paying the dues that were to be paid by them on or before 30.06.2020. Hence, the impugned order needs to be sustained. The bench examined the provisions of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) issued under Chapter 5 of the Finance Act, 2019 and noted that in view of the provisions of the SVLDR Scheme on non-payment of the declared service tax liability by a person who has voluntarily disclosed, the Revenue should have proceeded under the regular course of demand as available as per the provisions under the service tax laws. The Tribunal noted that the show-cause notice has been issued purely on the basis of voluntary disclosure (form-1) made by the assessee under the SVLDR Scheme without referring to any services rendered by him or to any documents to determine the value and service tax amount. No investigation or documents or evidences were placed on record to establish the liability on the assessee, noted the bench. The Tribunal stated that …..we find that this remand by the Commissioner (A) to establish the demand after factual verification and to pass a speaking order is equivalent to redrafting of the show-cause notice, thus, implying the remand is beyond the scope of the show-cause notice, which is impermissible as per law….. Moreover, having observed that the original authority has not passed a speaking order and the show-cause notice itself is issued only based on SVLDRS-1, the authorities cannot be given an opportunity to make good a wrong show-cause notice, added the bench. In view of the above, the Tribunal allowed the appeal. Case Title: M/s. Dynamic Infratech v. Commissioner of Central Tax Case Number: Service Tax Appeal No. 20455 of 2023 Counsel for Appellant/ Assessee: Mr. Jatin. A Chirstopher, Chartered Accountant for the Appellant Counsel for Respondent/ Department: Mr. Neeraj Kumar, Supt. Authorised Representative for the Respondent Click Here To Read/Download The Order

Show Cause Notice Cannot Be Issued Solely On Basis Of Voluntary Disclosure Under SVLDRS Scheme: CESTAT

Mehak Dhiman

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