Pro Sportify Private Limited vs. Principal Commissioner , CGST And Anr

Facts

Two petitioners, Pro Sportify Private Limited and Aastha Alumina Private Limited, filed writ petitions challenging the rejection of their declarations under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The declarations were filed under the 'voluntary disclosure' category. The respondent authorities rejected these declarations on the ground that an enquiry had been initiated against the petitioners prior to the date of filing the declaration. For Pro Sportify Private Limited, the period in question was 2016-17, for which service tax returns were not filed nor service tax paid. Their declaration was filed on December 31, 2019, and rejected on February 22, 2020. The basis for rejection was a letter dated October 14, 2019, indicating an enquiry.

Held

The Court held that the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, is a beneficial piece of legislation intended to reduce litigation and realize pending dues. A liberal interpretation that makes the scheme successful should be advanced, avoiding strict interpretations that frustrate its intent. The Court found the respondent's contention untenable, as upholding it would lead to different eligibility dates for individuals filing voluntary disclosures, creating discrimination. The Court noted that Section 125(1)(f) debars a person from making a voluntary disclosure after being subjected to enquiry, investigation, or audit. However, considering the intent of the scheme and various circulars issued by the Central Board of Indirect Taxes and Customs (CBIC) which enlarged the scope of the scheme to include cases excluded by Section 125, the Court opined that any enquiry initiated after September 1, 2019, the commencement date of the scheme, cannot make a person ineligible. The period from September 1, 2019, to December 31, 2019, was meant for filing applications, and events occurring after September 1, 2019, should not affect eligibility. The Court allowed the petitions, setting aside the impugned orders.

Key Issues

1. Whether a declaration filed under the 'voluntary disclosure' category of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, is maintainable if an enquiry was initiated against the declarant prior to the date of filing the declaration, but after the commencement date of the Scheme (September 1, 2019)? Petitioner's contention: The petitioner argued that the letter dated October 14, 2019, forming the basis of the alleged enquiry, was never served. Furthermore, any enquiry initiated after September 1, 2019, the commencement date of the Scheme, should be considered irrelevant for disqualification. They contended that while June 30, 2019, was a cut-off date for certain categories, no such cut-off date was prescribed for voluntary disclosures, making the period between September 1, 2019, and December 31, 2019, relevant for filing declarations. Respondent's contention: The respondents argued that June 30, 2019, was the notified cut-off date for various categories under Sections 123 and 125 of the Finance Act, 2019. They asserted that since no specific date was notified for the 'voluntary disclosure' category, the petitioners were ineligible, even if the enquiry was initiated after September 1, 2019.