The Delhi High Court recently provided significant relief to a trader whose application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, was rejected by the GST Department without any reason. The court ruled that, in the absence of proof of service of a notice before the application was filed, it cannot be presumed that an investigation was pending against the applicant.
The decision was delivered by a division bench comprising Justice Prathiba M. Singh and Justice Dharmesh Sharma, emphasizing the necessity of procedural fairness in such cases.
Background of the Case
The petitioner, Daljeet Singh Gill, operates under the business name M/s Dhartiputra Infotech Inc., which provides business auxiliary services. He had outstanding service tax liabilities for the financial years 2015–2016 and 2016–2017. Seeking relief, he applied under the Sabka Vishwas Scheme.
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Gill’s first application on December 30, 2019, was rejected without any reason, followed by a second application on January 15, 2020, which also faced rejection. The GST Department later justified the rejection by citing three show cause notices dated October 9, 2019, September 15, 2020, and December 31, 2020. However, none of these notices were attached to the email rejecting the application.
The court ruled that there was no evidence of any investigation pending against the petitioner at the time of his application under the scheme. Without proof of service of notices, it could not be presumed that he was under an investigation.
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"Since there is no proof on record that there was any investigation on the date when the Petitioner applied to avail the benefit under the Scheme and the fact that the orders disqualifying the Petitioner are completely unreasoned and one-line orders, this Court is of the opinion that the Petitioner is entitled to relief."
— Justice Prathiba M. Singh, Delhi High Court
The Sabka Vishwas Scheme’s Clause 125(1)(e) disqualifies individuals under investigation before the scheme's implementation. Similarly, Clause 125(1)(f) bars voluntary disclosures after being subjected to an enquiry or audit.However, the court observed that the Department failed to prove that such an investigation was pending before the petitioner filed his application.
The Department failed to present evidence that the notices were served before rejecting the application. Despite multiple court directives, the Department could not produce any proof of dispatch or service.
“Though there may be a dispatch register, the original would not be available, and there is no proof of service upon the petitioner. When such is the position, the petitioner’s disqualification under the Scheme would not arise.”
— Justice Dharmesh Sharma, Delhi High Court
Since the Sabka Vishwas Scheme is no longer operational, the court directed the Department to accept the declaration of Rs.11,26,937 as tax liability from the petitioner. The three show cause notices were quashed, provided the petitioner pays the liability within one month.
If the payment is not made within the given period, the show cause notice of December 31, 2020, will be revived, and the petitioner will be allowed to respond.
Appearance: Mr. Mohit Kumar Hasija, Adv for Petitioner; Mr. Premtosh K. Mishra (CGSC) with Mr. Manish Vashist & Ms. Sanya Kalsi, Advs. for UOI. Mr. Atul Tripathi, SSC, CBIC
Case title: Daljeet Singh Gill v. Union Of India & Ors.
Case no.: W.P.(C) 4644/2021
