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30 October 2020

SVLDRS - Duty communicated and admitted orally on or before 30 June 2019 during Audit stood 'quantified' as per the Scheme

Seventh Plane Networks Pvt. Ltd. v. Union of India & Ors., reported at 2020 (41) GSTL 165 (Del.); MANU/DE/1555/2020

The declaration filed by the Petitioner under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (for short "SVLDRS") on 26 December 2019 was rejected by Designated Committee holding that that the audit was conducted and conveyed on 02 July, 2019 and amount of duty involved in the audit had not been 'quantified' on or before the 30 day of June, 2019 as the Scheme contemplates.

The Petitioner contended that though the Audit memo was issued on 02 July 2019, yet the audit was concluded on 28 June 2019 when the team of officers visited the Petitioner and tax amount on each issue was quantified, verbally communicated and also accepted by the Petitioner. Further, inter-alia, reliance was placed on Circular No. 1071/4/2019 - CX.8 dated 27 August 2019 wherein it was clarified that 'quantified' includes duty liability admitted by the person during audit. Whereas the Respondent contended that the word 'quantified' defined under Section 121(r) means a written communication only, on or before 30 June 2019 to be eligible for the Scheme.

Hon'ble High Court of Delhi took note of audit memo dated 02 July 2019 and counter affidavit filed by Respondent which stated that demand quantified was verbally communicated on 28 June 2019 during audit to which Petitioner categorically agreed to pay tax demand. It was held that duty liability stood admitted in an oral statement by the petitioner before 30 June, 2019 and consequently stood quantified prior to the cut-off date and thus, taking a liberal interpretation, Hon'ble Court quashed the rejection order of Designated Committee and directed to decide the declaration of the Petitioner based on Court's observations and findings.