Implement Sabka Vishwas scheme to tackle pre-GST litigation: Bombay High Court

The Bombay High Court recently urged the administrative section of tax department to take steps to implement the Sabka Vishwas (Legacy Dispute Resolution) scheme in its letter and spirit in order to tackle pending tax litigation from the pre-GST regime [Nabeel Construction Pvt. Ltd. v. Union of India & Ors.]..The Legacy Dispute Resolution Scheme provides for total waiver of interest, penalty and fine, immunity from prosecution and reduction in payment of disputed tax amounts by 40-70%.The only condition for availing the scheme is that the tax liability should have been quantified by June 30, 2019..A Bench of Justices RD Dhanuka and SM Modak noted that the object of the scheme is to encourage persons to go for settlement who had bonafide declared outstanding tax dues prior to the cut off date of June 30, 2019.To implement the object of the scheme, the Central Board Indirect Tax and Customs (CBITC) issued circulars in order to close litigation from pre-GST regime quickly and to grant benefit to the business of availing of the said opportunity. The High Court in its order asked all the department head to make all endeavours “to unload the baggage relating to the legacy taxes viz. Central excise and service tax that have been subsumed under GST and allow business to make a new beginning and focus on GST.” .The Bench also emphasized on the importance of making the scheme a grand success.“The administrative machinery of the government will also be able to fully focus on helping the taxpayers in the smooth implementation of GST. The importance of making this scheme a grand success cannot be overstated. The authorities are instructed to familiarize themselves with the scheme and actively ensure its smooth implementation,” the order stated..The observations came while allowing a plea filed by Nabeel Constructions challenging the order of the Designated Committee rejecting the declaration made by the Nabeel’s director declaring the tax due and payable in order to avail the amnesty component of the scheme.The petitioner sought to settle its service tax liability under the scheme in the present plea.The issue that arose for the Court’s consideration was whether the liability was quantified before the cut-off date..The Court noted that resolving this issue required personal hearing which had not been granted to the company.“It could have pointed out admission of the quantification of tax dues of the petitioner during the course of recording statement of the director by the investigating officer and not disputed by the respondents,” the Court said..The Court deduced that the decision of the tax authorities was not only contrary to various principles of law laid down by the Court but also contrary to the intent of the Central government in introducing the said scheme for the benefit of the assessee and to bring them out of litigation forever pending under pre-GST regime..Having observed so, the Bench remanded the case back to the Designated Committee of the Central Goods and Services Taxes & Central Excise to consider the declaration filed by director of the petitioner in terms of the scheme and grant consequential reliefs to it after providing due opportunity of hearing to them before finally deciding the issue..Advocates Abhishek Rastogi Pratyushprava Saha and Kanika Sharma instructed by Khaitan & Co. appeared for Nabeel.Senior Advocate Pradeep Jetly with Advocate Jitendra Mishra appeared for the Department of Revenue and CGST & Central Excise department.[Read Order]