Delhi HC in the case of Chaque Jour HR Services Pvt. Ltd. Versus Union of India

Case Covered:

Chaque Jour HR Services Pvt. Ltd.

Versus

Union of India

Facts of the Case:

Briefly stated the facts of the case are that the Petitioner is a Company engaged in the business of providing staffing services and solutions which includes general staffing, recruitment, and supply of manpower, etc. It was previously registered under the Finance Act, 1994, and was allotted a Service Tax registration. With Central Goods and Services Tax Act (hereinafter referred to as ‘GST Act’) coming into force, the Petitioner migrated under the said Act and is now allotted a GST registration.

The case of the Petitioner is that the Principal Commissioner of Central Excise and Service Tax Commissionerate, Delhi-South (now known as Central Goods and Service Tax Commissionerate) initiated an investigation against it. In connection therewith, pursuant to summons dated 26th July 2018, Sh. Shaji Kumar, Director of Petitioner company, appeared before the authorities and tendered his statement acknowledging that the Petitioner had mistakenly reflected the same Service Tax deposit challans in two different half-yearly returns on account of a bona fide error committed by one of its employees. In his statement dated 26th July 2018, the liability of Service Tax of Rs. 1,75,63,982/- (Rupees One Crore Seventy-Five Lakhs Sixty-Three Thousand Nine Hundred and Eighty-Two) was admitted by him. Later on, between 27th July 2018 to 1st August 2018, Petitioner deposited an amount of Rs. 64,00,001/- towards partial discharge of the said liability. In the meantime, another summons dated 26th July 2018 was issued calling upon the Director to again appear before Respondent No. 3. In the said summons a specific reference was made concerning the payment schedule of the admitted tax liability. In response to the said notice, the Director again appeared before the authorities, and during the course of the proceedings, he again acknowledged and admitted the liability of Rs. 1,75,63,982/- towards Service Tax dues. He was asked to submit a payment plan to discharge the same. Then in the letter dated 6th August 2018, sent to the Respondents Petitioner, yet again, admitted the liability and also acknowledged the fact of tendering the statement on 26th July 2018. The deposit of Rs. 6,40,00,001/- along with the relevant payment challans was also brought to the notice of the department with further assurance that the remaining amount shall be deposited as per the detailed time plan given in the said letter. The Petitioner also corresponded with the office of Respondent No. 3 and furnished payment challans and continued to extend assurances to pay the balance admitted tax liability. Petitioner then received a summons dated 10th October 2018 calling upon them to appear and produce a reconciliation of the Balance Sheet vis-a-vis ST-3 and Form 26AS along with the calculation of liability of Service Tax, GST & interest applicable for the period FY 2015-16 to FY 2018-19. The petitioner asserts that the entire admitted tax liability of Rs. 1,75,63,982/- stands deposited, as on 1st September 2018 and a further sum of Rs. 16 lacs, towards interest on the admitted liability, stands paid between 3rd December 2018 to 10th May 2019. 

Observations of the Court:

The question that arises for our consideration is whether, by virtue of the aforesaid admission, the ‘tax dues’ can be said to quantified by the Investigating Authority before 30th June 2019. The demand-cum-show cause notice dated 13th March 2020, on the face of it relates to tax dues which are much more than the amount admitted by the Petitioner. No doubt, in so far as the Service Tax liability is concerned, which is one of the components of the demand-cum-show cause notice dated 13th March 2020, there is no dispute between the parties with respect to the quantum. However, the aforesaid admission of liability of Service Tax, to our understanding, cannot be held to be the quantification of the entire ‘tax dues’. It is the admission of Service tax liability only. Petitioner’s contention that this should be treated as the quantified tax dues, is, therefore, plainly incorrect. Mr. Puneet Agarwal had relied upon Section 129 of the Act to contend that even a single component of the entire demand can be taken up for settlement by the declarant.

The Decision of the Court:

Certainly, SVLDR is a beneficial scheme and purposive interpretation of its terms is desirable. However, we cannot give an interpretation that would run counter to its objective. The scheme is a one-time measure for liquidation of past disputes under the erstwhile regime and affords an opportunity of voluntary disclosure to non-compliant taxpayers. The declarants are thus expected to come clean in order to take their benefit. During the investigation, Petitioner only admitted Service Tax liability and did not make any disclosure with respect to the other tax dues and as a result whereof, after investigation, Respondents have issued the demand-cum show-cause notice for an amount of Rs. 13,77,13,890/-. This show cause notice would have to be adjudicated in entirety and cannot be done in a piecemeal manner. We cannot construe admitted tax liability to be ‘matter’ and the remainder dues as per show-cause notice to be a ‘separate matter’, especially since the investigation was still ongoing on the relevant date. Settlement under the SVLDRS scheme with respect to the Service Tax due, with the continuation of parallel proceeding for the remainder or differential amount by way of adjudication of the show cause notice, would also not result in resolution of the legacy dispute, which is the predominant aim of the scheme. 

We find no infirmity in the rejection of the Petitioner’s declaration. The present petition is without any merit and hence it is dismissed.

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