Supreme Court: While considering the matter wherein the appellant was aggrieved with rectification of Form No. SVLDRS-3 by the designated committee, thereby revising the amount payable as tax, which was done without any notice to the appellant; the Division Bench of B.V. Nagarathna and Ujjal Bhuyan, JJ., found that the impugned enhancement in tax demand was made without issuance of any show-cause notice (SCN) and furthermore, the appellant was not heard in the matter. The Court thus held that this action by the designated committee was an instance of violation of principles of natural justice.
Background
The appellant is the proprietor of Balaji Marketing, Jabalpur. On 18 March 2019, a SCN was issued by the Deputy Commissioner, CGST and Central Excise, Jabalpur for the period from April 2016 to June 2017 by way of demand of service tax of Rs 29,90,124 and accounting for CENVAT credit and penalty for delayed payment, the total demand was Rs 53,43,018.
On 3 December 2019, the demand for service tax was dropped to Rs 21,33,439 and the total demand came to Rs 44,86,333.
The Finance Act, 2019 introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS, 2019) and the Rules framed thereunder.
In December 2019 the appellant filed Form No. SVLDRS-1 to settle the tax dispute. On 16 January 2020, the designated committee issued Form No. SVLDRS-3 for final payment of Rs 8,97,037. The appellant paid this amount in February 2020.
However, on 28 February 2020, the designated committee rectified Form No. SVLDRS-3 and revised and enhanced the amount payable to Rs 26,71,509. The appellant contended that this rectification and enhancement was done without any notice and any opportunity of hearing.
Aggrieved with this, the appellant approached Madhya Pradesh High Court, however his petition was dismissed. Thereafter the appellant filed a review petition which was also dismissed. Hence the appellant approached the Supreme Court.
Court’s Assessment and Decision
Perusing the matter, the Court found that under SVLDRS, 2019 the appellant agreed to pay, and in fact paid, a sum of Rs 8,97,037 as per Form No. SVLDRS-3. However, 44 days thereafter, the demand as per Form No. SVLDRS-3 was enhanced.
Taking note of the appellant’s submission, the Court found that the impugned action by the designated committee violated the principles of natural justice. “We find that instead of unilaterally and behind the back of the assessee, raising the demand by issuance of a fresh Form No. SVLDRS-3, the designated committee could have issued a show cause notice or reissued Form No. SVLDRS-2 so that on receipt of the same, the assessee could have responded to the same and a fresh Form No. SVLDRS-3 could have been thereafter issued.”
Therefore, on the ground of violation of principles of natural justice, the Court set aside demand made vide Form No. SVLDRS-3 dated 28 February 2020 and restored the proceedings on the file of the designated committee. The impugned order of Madhya Pradesh High Court in Dinesh Kalway v. Union of India, 2023 SCC OnLine MP 6877 was also set aside.
The Court further directed the designated committee to issue notice to the appellant for appearance before the committee and pass fresh orders in terms of Form No. SVLDRS-3 upon giving a reasonable opportunity to the appellant.
[Dinesh Kalway v. Union of India, SPECIAL LEAVE PETITION NO(S). 5590-5591/2024, order dated 16-4-2026]
Advocates who appeared in this case:
For Petitioner(s): Ms. Aditi Anil Dani, AOR Mr. Rajat Srivastava, Adv. Ms. Niharika Singh, Adv. Ms. Chamundeshwari Pemmasani, Adv. Ms. Arlene Noronha, Adv.
For Respondent(s): Mr. N. Venkataraman, A.S.G. Mr. Gurmeet Singh Makker, AOR Mr. V.c. Bharathi, Adv. Mr. Suyash Pande, Adv. Mr. B.k. Satija, Adv. Mr. Gaurav Kumar Meghwal, Adv. Mr. Shashank Bajpai, Adv.
