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2020 DIGILAW 1375 (ALL)

Samtel Avionics Limited v. Union Of India

2020-11-25

SURYA PRAKASH KESARWANI, YOGENDRA KUMAR SRIVASTAVA

body2020
JUDGMENT : 1. Heard Sri Anurag Khanna, learned Senior Counsel assisted by Sri Shivam Shukla, learned counsel for the petitioner, Sri Shashi Prakash Singh, learned Assistant Solicitor General of India assisted by Sri Krishna Agarwal, learned counsel for Respondent No1 and Sri B.K. Singh Raghuwanshi, learned counsel for Respondent Nos.2 and 3. 2. This writ petition has been filed praying for the following reliefs: “(a) “certiorari” quashing and setting aside the circular dated 25.09.2019 (Annexure No.8) passed by the Designated Committee. (b) “certiorari” quashing and setting aside the SVLDRS-3 dated 1.2.2020 (Annexure No.6) passed by the Designated Committee. (c) mandamus directing the Designated Committee to accept the SVLDRS-1 Declaration (Annexure No.3) filed by the petitioner. (d) Declaration that no amount of tax or duty or impost is payable by the petitioner. (e) Mandamus directing the Respondents to grant the relief of remission on Rs.8,23,50,252/- in accordance with Section 124(1) (c) and grant deduction of pre-deposit thereafter. (f) Issue any other Writ, order or direction in favour of the petitioner which this Hon'ble Court deems fit in the facts and circumstances of the case. (g) Award cost of the petition to the petitioner.” 3. Learned counsel for the petitioner submits as under: (i) Paragraph 2(iv) of the impugned circular dated 25.09.2019 is violative of the provisions of sub-section (2) of Section 124 of The Finance (No.2) Act, 2019, inasmuch as it provides for the relief under Section 124(1) (c) of the said Act on the net outstanding amount whereas the amount for the purpose of relief has first to be determined on the basis of the original demand and thereafter the estimated amount/the amount payable has to be adjusted against the deposits made by the petitioner. (ii) The amount determined by the Respondent No.2 in SVLDRS-3 is in breach of provisions of Section 124 (2) of the Finance (No.2) Act, 2019. 4. Learned Additional Solicitor General of India and learned counsel for Respondent No.2 have supported the action of the respondents. 5. We have carefully considered the submissions of learned counsels for the parties. 6. Provisions of Chapter V of the Finance (No.2) Act, 2019, whereby “Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019” has been enacted; is an offer by the Government to settle tax arrears locked in litigation at a substantial discount. 5. We have carefully considered the submissions of learned counsels for the parties. 6. Provisions of Chapter V of the Finance (No.2) Act, 2019, whereby “Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019” has been enacted; is an offer by the Government to settle tax arrears locked in litigation at a substantial discount. Section 124 Finance (No.2) Act 2019 provides the slabs of tax arrears and the discount slabs in percentage for payment by an applicant/declarant to settle the dispute. Section 125 provides that all persons shall be eligible to make a declaration under the Scheme except those mentioned in Clauses (a) to (h). Section 126 empowers the designated Committee to verify the correctness of the declaration made by the declarant under Section 125 in the manner as may be prescribed. Section 127 of the Act empowers the designated Committee to issue statement indicating the amount payable by the declarant and in the event the amount estimated by the designated Committee exceeds the amount declared by the declarant then the designated Committee shall afford an opportunity of hearing to the declarant and thereafter issue a statement in electronic form indicating the amount payable by the declarant. Thereafter, the declarant shall pay the amount through internet banking and on payment the designated committee shall issue a discharge certificate in electronic form within 30 days of the payment and production of proof. Sub-Section 6 and Sub-Section 7 of Section 127 provides for withdrawal or deemed withdrawal of Appeal, Revision, Reference or Writs relating to the matter in question. Section 129 provides for certain immunities to the declarant. Section 130 prohibits payment through input tax credit account, refunds and to take input tax credit of the amount deposited under the Scheme. Section 131 provides for removal of doubts and Section 134 provides for removal of difficulties. Section 132 empowers the Central Government to make Rules by notification to carry out the provisions of the Scheme. Section 133 empowers the Central Board of Indirect Taxes to issue orders, instructions etc. Section 135 provides for protection to the Officers. 7. Thus, perusal of the provisions of the Scheme briefly noted above, shows that the Scheme is a complete Code in itself. In substance, it is a scheme for recovery of duty/indirect tax to unlock the frozen assets and to recover the tax arrears at a discounted amount. Section 135 provides for protection to the Officers. 7. Thus, perusal of the provisions of the Scheme briefly noted above, shows that the Scheme is a complete Code in itself. In substance, it is a scheme for recovery of duty/indirect tax to unlock the frozen assets and to recover the tax arrears at a discounted amount. Thus, “Sabka Vishwas Scheme”, although a beneficial scheme for a declarant, is statutory in nature, which has been enacted with the object and purpose to minimise the litigation and to realise the arrears of tax by way of settlement at discounted amount in an expeditious manner. In other words the scheme is a step towards the settlement of outstanding disputed tax liability. 8. Provisions of Sections 121(c)/(d)/(e) and 124 are relevant for the purpose of present controversy, which are reproduced below: “121. In this Scheme, unless the context otherwise requires,— (a) x x x (b) x x x "amount in arrears" means the amount of duty which is recoverable as arrears of duty under the indirect tax enactment, on account of— (i) no appeal having been filed by the declarant against an order or an order in appeal before expiry of the period of time for filing appeal; or (ii) an order in appeal relating to the declarant attaining finality; or (iii) the declarant having filed a return under the indirect tax enactment on or before the 30th day of June, 2019, wherein he has admitted a tax liability but not paid it: (d) “amount of duty” means the amount of central excise duty, the service tax and the cess payable under the indirect tax enactment; (e) “amount payable” means the final amount payable by the declarant as determined by the designated committee and as indicated in the statement issued by it, in order to be eligible for the benefits under this Scheme and shall be calculated as the amount of tax dues less the tax relief; x x x 124. (1) Subject to the conditions specified in sub-section (2), the relief available to a declarant under this scheme shall be calculated as follows:- (a) where the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice which is pending as on the 30th day of June, 2019, and if the amount of duty is— (i) rupees fifty lakhs or less, than, seventy per-cent of the tax dues; (b) where the tax dues are relatable to a show cause notice for late fee or penalty only, and the amount of duty in the said notice has been paid or is nil, then, the entire amount of late fee or penalty; (c) where the tax dues are relatable to an amount in arrears and, (i) the amount of duty is, rupees fifty lakhs or less, then, sixty per cent of the tax dues; (ii) the amount of duty is more than rupees fifty lakhs, then, forty per cent of the tax dues; (iii) in a return under the indirect tax enactment, wherein the declarant has indicated an amount of duty as payable but not paid it and the duty amount indicated is,— (A) rupees fifty lakhs or less, then, sixty per cent of the tax dues; (B) amount indicated is more than rupees fifty lakhs, then, forty per cent of the tax dues; (d) where the tax dues are linked to an enquiry, investigation or audit against the declarant and the amount quantified on or before the 30th day of June, 2019 is— (i) rupees fifty lakhs or less, then, seventy per cent of the tax dues; (ii) more than rupees fifty lakhs, then, fifty per cent of the tax dues; (e) where the tax ones are payable on account of voluntary disclosure by the declarant, then, no relief shall be available with respect to tax dues. (2) The relief calculated under sub-section (1) shall be subject to the condition that any amount paid as predeposit at any stage of appellate proceedings under the direct tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant; Provided that if the amount of predeposit or deposit already paid by the declarant exceeds the amount payable by the declarant, as indicated in the statement issued by the designated committee, the declarant shall not be entitled to any refund.” 9. Facts of the present case are that an order in original dated 29.03.2019 was passed by the Respondent No.3 against the petitioner confirming a demand of service tax of Rs. 4,53,63,720/-, Rs. 2,84,02,508/- and Rs. 85,84,024. The amount already deposited by the petitioner i.e. Rs. 3,64,81,370/- + Rs. 2,18,84,061/-, were appropriated by the order in original itself. Thus as per aforesaid order in original dated 29.03.2019 the amount of tax in arrear was Rs. 1,74,66,374/-. This amount was recoverable as arrears of duty under the indirect tax enactment. Thus, the aforesaid amount of Rs. 1,74,66,374/- is the “amount in arrears” under Section 121(c) of the Act. 10. The words “amount payable” has been defined in Section 121 (e) of the Act. It means the amount calculated by the authority as the amount of tax dues less the tax relief. Thus, the amount of tax dues being the amount in arrears in terms of provisions of Section 124(1)(c) read with Section 121(c) of the Finance (No.2) Act, 2019 is the amount of duty which is in arrears as per order in original dated 29.03.2019 i.e. Rs. 1,74,66,374/-. Accordingly, it has been reflected in the SVLDRS-3, by the designated authority who computed the amount of tax relief under Section 124(1)(c) at Rs. 69,86,549.60. Thus, the balance amount as estimated amount payable has been determined at Rs. 1,04,79,824.40. 11. As per provisions of Section 124(1) the relief available to a declarant under the Scheme shall be calculated as per Clauses (a),(b),(c),(d) and (e). According to the petitioner Clause (c) is attracted to this case. 12. As per clause (c) the relief available to the petitioner/declarant under the Scheme was to be calculated on the amount of tax dues relatable to an “amount in arrears”. According to the petitioner Clause (c) is attracted to this case. 12. As per clause (c) the relief available to the petitioner/declarant under the Scheme was to be calculated on the amount of tax dues relatable to an “amount in arrears”. The words “amount in arrears” has been defined in Section 121(c) of the Act 2019, to mean the amount of duty which is recoverable as arrears of duty under the indirect tax enactment on account of (i) no appeal having been filed by the declarant against an order or an order in appeal before expiry of the period of time for filing appeal; or (ii) an order in appeal relating to the declarant attaining finality; or (iii) the declarant having filed a return under the indirect tax enactment on or before the 30th day of June, 2019, wherein he has admitted a tax liability but not paid it. In the definition of the words “the amount in arrears” the words “amount of duty” has been used, which has been defined in Section 121(d) to mean the amount of central excise duty, the service tax and the cess payable under the indirect tax enactment. The words “amount payable” has been defined in Section 121(e). Thus, under the scheme the amount payable by a declarant is the arrears of Tax dues under Section 123 less the Tax relief under Section 124. 13. The amount in arrears as per order in original dated 29.03.2019 is Rs.1,74,66,374/-. The relief under Section 124 of the Act, 2019 “Sabka Vishwas Scheme” has been computed on the aforesaid amount in arrears. Accordingly, the Tax relief under Section 124(1)(c) has been given to the petitioner for Rs.69,86,549.60. The balance amount of Rs. 1,04,79,824.40 determined by the designated authority and payable by the petitioner under Section 127, is in accordance with the provisions of Section 124(1)(c) read with Section 121(c)/(d) and (e) of the Act which does not suffer from any error of law. 14. From the facts and the legal provisions as aforenoted neither the circular is in breach of the provisions of Section 124(1)(c) or sub-section (2) of Section 124 nor the amount estimated as per SVLDRS-3 dated 01.02.2020 suffers from any error of law 15. For all the reasons aforestated, we do not find any merit in this writ petition. Consequently, the Writ Petition fails and is hereby dismissed. 16. For all the reasons aforestated, we do not find any merit in this writ petition. Consequently, the Writ Petition fails and is hereby dismissed. 16. After this judgment was dictated in open Court, Sri Anurag Khanna, learned Senior Advocate for the petitioner submits that the SVLDRS-3 was issued on 01.02.2020 but the petitioner could not deposit the amount due to COVID -19 Pandemic and the pendency of the present writ petition. He, therefore, submits that the respondent no.2 may be directed to accept the payment of the amount determined by SVLDRS-3, within a time bound period. 17. Without issuing any direction in this regard, we leave it open to the petitioner to approach the respondent no.2 to make a request and the respondent no.2 shall be at liberty to consider the request in accordance with law. It is made clear that we have not issued any direction in this regard.