B.L. Goel And Co. vs. Additional Director General Of GST Intelligence, Gurugram Zonal Unit & Anr.

Facts

The petitioner, B.L. Goel and Co., is challenging a show cause notice dated July 10, 2020, issued by the Additional Director General of GST Intelligence, Gurugram Zonal Unit. This notice proposed a demand of service tax amounting to ₹2,67,26,113/- for the period 2014-15 to 2017-18, invoking the extended period of limitation under Section 73 of the Finance Act, 1994. The dispute arises from the petitioner's service tax liability on works contracts, where the Revenue Authorities alleged short payment by availing incorrect benefits of Notifications No. 24/2012-S.T. and 30/2012-S.T. A prior show cause notice dated April 23, 2019, had proposed a demand of ₹5,34,58,093/-. While proceedings were ongoing, the Finance (No. 2) Act, 2019, introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Held

The Court allowed the petition and set aside the impugned show cause notice. The Court reasoned that the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, was enacted with the legislative intent to provide a resolution mechanism for pending litigations from the pre-GST regime. The Scheme was designed to allow quick closure of disputes. Although the impugned show cause notice was issued after the declaration date of June 30, 2019, the Court found that the Scheme was broad enough to encompass such situations, especially when the underlying dispute was a legacy issue. The Court emphasized the objective of the Scheme to reduce the backlog of litigation. The Court held that the petitioner was entitled to avail the benefits of the Scheme, and therefore, the show cause notice, which sought to demand service tax under the normal procedure, was unsustainable. The operative direction was to set aside the show cause notice.

Key Issues

1. Whether the impugned show cause notice dated 10.07.2020 is liable to be set aside on the ground that the petitioner was entitled to avail the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, as per Chapter V of the Finance (No. 2) Act, 2019, despite the show cause notice being issued after the cut-off date for declarations under the Scheme? Petitioner's arguments: The petitioner contended that the Scheme was intended to resolve legacy disputes and that the issuance of a fresh show cause notice after the Scheme's introduction should not preclude them from availing its benefits. They argued that the Scheme's objective was to provide a resolution mechanism for pending disputes, and the Revenue's action circumvented this intent. Revenue's arguments: The Revenue Authorities argued that the impugned show cause notice was issued on July 10, 2020, which was after the declaration date of June 30, 2019, stipulated by the Scheme. Therefore, the petitioner was not eligible to avail the Scheme for this particular notice. They relied on the specific dates and provisions of the Finance (No. 2) Act, 2019.