Ms Om Prakash Kashyap Through Its Proprietor Om Prakash Kashyap vs. The Union Of INDIA Through The Central Board Of Indrect Taxes And Customs

Facts

The petitioner, M/s Om Prakash Kashyap, filed a writ petition challenging the rejection of their declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The petitioner had filed a declaration in Form SVLDRS-1 under the 'Arrears' category, computing a payable amount of Rs. 33,69,111/-. The respondents rejected this declaration on May 15, 2020, on the ground that a decision had been taken to file an appeal against the order-in-original, thus classifying the case under the 'Litigation' category. The petitioner argued that the appeal was filed by the department only after the rejection of their declaration. The petitioner had previously received a Demand-cum-Show Cause Notice on October 28, 2019, and an order-in-original was passed on January 14, 2020, confirming a demand of Rs. 71,18,136/-.

Held

The Court held that the impugned order rejecting the petitioner's declaration was without jurisdiction and beyond the powers vested in the Designated Committee. The Court found that the Designated Committee's role was to verify declarations and estimate amounts payable, not to deny benefits based on the department's intention to file an appeal. The Court reasoned that the petitioner's case correctly fell under the 'Arrears' category as defined in Section 121(c) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, because no appeal was pending at the time the declaration was filed. The Court noted that the department's appeal was filed after the declaration was submitted and subsequently rejected. The Court also observed that the show-cause notice was issued after the cut-off date of June 30, 2019, and the order-in-original was passed on January 14, 2020, further supporting the 'Arrears' classification. The Court concluded that the Designated Committee acted illegally and arbitrarily by shifting the petitioner from the 'Arrears' to the 'Litigation' category based on the department's subsequent appeal filing. The Court quashed the rejection order and directed the respondents to decide the declaration in accordance with the law, extending consequential benefits if any, within four weeks.

Key Issues

1. Whether the petitioner's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, filed under the 'Arrears' category, was validly rejected by the Designated Committee on the ground that the department had decided to file an appeal against the order-in-original, thereby shifting the case to the 'Litigation' category? Petitioner's Arguments: The petitioner contended that their case fell under the 'Arrears' category as defined in Section 121(c) of the Scheme, which does not stipulate a cut-off date for the pendency of appeals. They argued that the show-cause notice was issued after the cut-off date of June 30, 2019, and the order-in-original was passed on January 14, 2020. Crucially, they asserted that the department's appeal was filed on June 25, 2020, which was after the petitioner filed their declaration and after the rejection order was passed. They relied on Section 121(c) and Clause 2(viii) of the Circular dated December 12, 2019, to support their classification. They also argued that the Designated Committee's power was limited to verifying declarations and estimating amounts payable, not denying benefits based on the department's appeal intentions. Respondents' Arguments: The respondents argued that the petitioner's case fell under the 'Litigation' category because the department had taken a decision to file an appeal against the order-in-original. They referred to Section 125 of the Finance (No. 2) Act, 2019, which excludes cases where an appeal has been finally heard on or before June 30, 2019, and to Section 123, which defines 'Tax Dues' and refers to cut-off dates for litigation and enquiry/investigation/audit.