M/S Airlink Communication PVT LTD vs. Union Of INDIA

Facts

The petitioners, M/s Airlink Communication Pvt Ltd, were under investigation for showing lesser taxable value in service tax returns. The Intelligence Officer of Service Tax, Vapi, initially quantified their differential service tax demand at Rs. 82,26,42,852/- vide a communication dated May 20, 2019. Subsequently, the petitioners sought to avail the "SVLDRS-2019" Scheme, which allowed applications for liabilities quantified before June 30, 2019, by depositing 50% of the quantified amount. The petitioners discovered an error in the initial quantification, as it included transactions after April 2015. They represented this to the authorities, and on December 27, 2019, the Directorate General of Goods and Services Tax Intelligence revised the quantified amount to Rs. 4,99,03,524/-. The petitioners applied under the SVLDRS-2019 Scheme on December 31, 2019, but their application was rejected because the revised quantification was made after the June 30, 2019 cut-off date.

Held

The Court held that the revised quantification communicated on December 27, 2019, should be deemed to substitute the figures in the earlier communication dated May 20, 2019. The Court reasoned that the initial quantification was an apparent and glaring mistake by the Department, which included taxable services subsequent to the period of investigation, leading to a significantly inflated demand. The Court found it unfair and unreasonable to deprive the petitioners of the benefit of the SVLDRS-2019 Scheme due to the Department's error. Therefore, the Court ruled that the quantification should be considered as prior to June 30, 2019, making the petitioners eligible. The reason for rejecting the application was set aside, and the application was to be treated as within time and processed accordingly. The Court directed the Department to communicate the necessary forms for making the deposit under the Scheme forthwith, and upon receipt, the petitioners shall make the deposit within 15 days.

Key Issues

1. Whether the revised quantification of service tax liability communicated on December 27, 2019, should be deemed to relate back to the original quantification dated May 20, 2019, for the purpose of eligibility under the SVLDRS-2019 Scheme? Petitioner's argument: The petitioners contended that the initial quantification on May 20, 2019, was erroneous due to the department's mistake, which was subsequently rectified. They argued that the revised quantification should be treated as a correction of the earlier figure and therefore considered to have been made prior to the cut-off date of June 30, 2019. They relied on the principle of fairness, stating that they should not be deprived of the Scheme's benefit due to the department's error. Revenue's argument: The respondent Department argued that the revised quantification of Rs. 4,99,03,524/- was made on December 27, 2019, which is after the cut-off date of June 30, 2019. Therefore, according to the Scheme's conditions and their instructions, the petitioners were ineligible to apply.