M/S Pierian Services PVT LTD vs. Designated Committee

Held

The Court held that the Designated Committee erred in issuing the impugned SVLDRS-2 and SVLDRS-3 statements by not considering the undisputed service tax paid by the petitioner. The Court found that the Order-in-Original dated 27.09.2018, relied upon by the Designated Committee, did not discuss or decide on the tax paid by the petitioner after the Show Cause Notice dated 29.12.2014. The Audit Report dated 08.04.2015 clearly indicated a total tax paid of Rs. 2,52,46,749/-, including a sum of Rs. 92,33,857/- deposited after the Show Cause Notice. The Court accepted the petitioner's explanation that this difference was due to further deposits made and considered it incontrovertible. The Court reasoned that under Section 124(2) of the SVLDR Scheme, any deposit during enquiry or investigation or audit shall be deducted. The Designated Committee's assertion that the petitioner declared only Rs. 27,66,646/- in its CESTAT appeal memorandum was rejected in light of the petitioner's explanation and the duty under Rule 6 to verify records. The Court concluded that the right to tax relief is substantial and cannot be refused on technical grounds. Therefore, the writ petition was allowed, the impugned statements were quashed, and the first respondent was directed to issue an appropriate Discharge Certificate considering the undisputed deposit of duty of Rs. 2,52,46,749/- and the disputed claim of Rs. 1,77,06,985/-.

Facts

The petitioner, M/s Pierian Services Pvt. Ltd., filed a writ petition challenging statements issued by the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme). The petitioner had initially received a Show Cause Notice in December 2014, followed by an Audit Report in April 2015 stating a total service tax payment of Rs. 2,52,46,749/-. An Order-in-Original in September 2018 demanded Rs. 1,77,06,985/-. The petitioner appealed this order to the CESTAT. Under the SVLDR Scheme, the petitioner filed a declaration, but was issued SVLDRS-2 and SVLDRS-3 statements indicating a lower pre-deposit/payment of Rs. 27,66,646/- and requiring a further payment of Rs. 60,86,846/- after tax relief. The petitioner contended that the statements failed to consider the actual undisputed tax paid.

Key Issues

1. Whether the Designated Committee erred in determining the pre-deposit/payment of duty by the petitioner under the SVLDR Scheme, contrary to the undisputed tax paid as recorded in the Audit Report dated 08.04.2015, thereby violating the provisions of Section 124(2) of the SVLDR Scheme? 2. Whether the Designated Committee, while issuing statements under the SVLDR Scheme, can refuse tax relief by relying on an Order-in-Original that does not consider subsequent undisputed tax payments made by the declarant, thus failing to verify records as mandated by Rule 6 of the SVLDR Scheme? Petitioner's arguments: The petitioner argued that the SVLDRS-2 and SVLDRS-3 statements incorrectly calculated the pre-deposit/payment of duty by not considering the actual undisputed service tax paid, amounting to Rs. 2,52,46,749/- as per the Audit Report. They contended that the Designated Committee failed to verify its records as required by Rule 6 of the SVLDR Scheme and took a technical approach by relying on the Order-in-Original, which did not account for subsequent payments. The petitioner asserted that the right to tax relief under the Scheme is substantial and should not be refused on technical grounds. Respondents' arguments: The respondents argued that the petitioner itself stated in its appeal memorandum before the CESTAT that only Rs. 27,66,646/- was deposited as tax. They contended that the Designated Committee correctly considered this amount as the pre-deposit/other duty paid under the SVLDR Scheme and that the petitioner could not later claim a higher deposit based on earlier notices or reports.