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2009 DIGILAW 772 (GUJ)

SORT FINANCIAL SERVICES P. LTD. v. UNION OF INDIA

2009-12-23

K.A.PUJ, RAJESH H.SHUKLA

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JUDGMENT K. A. Puj J. - Rule. Mr. Y. N. Ravani, learned standing counsel appearing for the Revenue, waives service of rule. The petitioner has filed this petition under articles 226 and 227 of the Constitution of India praying for quashing and setting aside the impugned order dated October 7, 2008 passed by the Assistant Commissioner of Service Tax, Division-III, Ahmedabad rejecting the declaration filed by the petitioner on the ground that the petitioner has given false particulars with regard to payment of Rs. 6 lakhs. This court has issued notice on August 12, 2009. On service of notice Mr. Y. N. Ravani, learned standing counsel appears for the Revenue and affidavit-in-reply was filed on behalf of respondent No. 2. The petitioner has also filed affidavit-in-rejoinder to the said reply affidavit filed on behalf of respondent No. 2. It is the case of the petitioner that the petitioner was appointed as direct sales agent (DSA) for personal loan and car finance by M/s. Kotak Mahendra Bank Ltd. The petitioner got the service tax registration No. on becoming aware that service tax will be applicable on the services provided by it to Kotak Mahendra Bank. However, the petitioner was under constant follow up with the bank seeking clarity as to who will bear the service tax and whose responsibility would it be to pay the service tax. Despite all its efforts it was unable to collect the service tax from the bank. Despite not being able to collect service tax from the bank, the petitioner paid the service tax of Rs. 6 lakhs through various challans over the period. The Department after inquiry, issued a show-cause notice on January 25, 2007 to the petitioner demanding service tax amounting to Rs. 6,08,737 along with interest and penalty thereon by invoking the extended period of five years. The Joint Commissioner vide his order-in-original dated November 29, 2007 confirmed the demand in the said show-cause notice without taking into consideration that Rs. 6 lakhs have already been paid by the petitioner before the issuance of show-cause notice. In 2008 the Government announced the Dispute Resolution Scheme, 2008 for all arrears of tax below Rs. 25,000 outstanding as on March 1, 2008. The tax in arrears of the petitioner was only Rs. 8,737 and hence the petitioner, only with a view to avail of the benefit of the said scheme, made a declaration. In 2008 the Government announced the Dispute Resolution Scheme, 2008 for all arrears of tax below Rs. 25,000 outstanding as on March 1, 2008. The tax in arrears of the petitioner was only Rs. 8,737 and hence the petitioner, only with a view to avail of the benefit of the said scheme, made a declaration. The petitioner has also received an intimation to that effect on August 5, 2008 and pursuant to the said intimation the petitioner preferred an application on September 22, 2008 in the prescribed form being declaration under section 94 of the Finance Act, 2008. In the said application it was clearly stated that the outstanding is Rs. 8,737 as the petitioner has already paid Rs. 6 lakhs earlier. The said application was, however, rejected on October 7, 2008 on the ground that the declaration is found to have false particulars since the figures of payment shown in the declaration are allegedly different from the one shown in the balance sheet, without verifying the challans of Rs. 6 lakhs attached with the application and without understanding the facts properly that the balance sheet is prepared on accrual basis while details given in application are in respect of actual payment on cash basis. It is this order which is under challenge in the present petition. Mr. Nitin Mehta, learned advocate appearing for the petitioner, has submitted that in the balance sheet it is clearly stated that Rs. 6 lakhs is the agreed liability and the payments were made on different dates. He has further submitted that all the six challans for payment of Rs. 6 lakhs have been enclosed and since there is no dispute about such payment, the remaining liability was only to the extent of Rs. 8,737. Hence, an application preferred by the petitioner under the Scheme which was wrongly denied to the petitioner on the ground that false particulars were filed. As such the particulars were true and correct and duly supported by necessary evidence to that effect. Mr. Y. N. Ravani, learned standing counsel appearing for the Revenue, on the other hand, has submitted that since the challans were not available, the application was rejected and there was different version in the balance sheet as well as in the application. As such the particulars were true and correct and duly supported by necessary evidence to that effect. Mr. Y. N. Ravani, learned standing counsel appearing for the Revenue, on the other hand, has submitted that since the challans were not available, the application was rejected and there was different version in the balance sheet as well as in the application. Since the challans are produced for the first time before this court, the petitioner may be directed to produce the said challans before respondent No. 2, who will examine the same and issue necessary certificate to that effect. Having heard learned advocates appearing for the parties and having considered the documents on record, we are of the view that the petitioner, in fact, has made the payment of Rs. 6 lakhs as the payment is duly supported by the bank entries as well as duly receipted challans and hence there is no dispute about the payment of Rs. 6 lakhs. If this payment of Rs. 6 lakhs is considered then admittedly the balance amount of Rs. 8,737 remains outstanding and on that basis the petitioner is entitled to avail of the benefit of the scheme. Thus, the petitioner's application cannot be rejected on the ground that the petitioner has supplied false information with regard to payment of Rs. 6 lakhs. In the above view of the matter, the impugned order passed by respondent No. 2 is hereby quashed and set aside and respondent No. 2 is hereby directed to issue certificate after verification of the payment of Rs. 6 lakhs. This petition is accordingly allowed to the above extent. Rule is made absolute without any order as to costs.