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2024 DIGILAW 1522 (GUJ)

Amoli Organics Pvt. Ltd. v. Union Of India

2024-07-05

BHARGAV D.KARIA, NIRAL R.MEHTA

body2024
JUDGMENT : BHARGAV D. KARIA, J. 1. Heard learned advocate Mr. Dhaval Shah for the petitioner and learned advocate Mr. Jay Mehta for the respondent Nos.2 to 4. 2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Mehta waives service of notice of rule for the respondents. 3. Having regard to the controversy involved which is in a narrow compass, with the consent of the learned advocates for the parties, the matter is taken up for hearing. 4. By way of this petition under Article 226 of the Constitution of India, the petitioner has challenged the communication dated 14.08.2020 whereby, the declaration/application filed by the petitioner under Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 (for short ‘SLVDRS’) was not accepted. The petitioner was served with notice of recovery of Rs. 30,34,955/-. 5. The petitioner is engaged in business of production and clearance of finished goods viz. Organic Chemicals falling under Chapter 29 of the First Schedule to Central Excise Tariff Act,1985. 6. A show-cause notice dated 28.03.2018 was issued upon the petitioner to recover service tax on payment made to the Foreign Government Agencies for statutory fees/charges for the licenses and permissions. After considering the detailed reply, the Order-in-Original dated 27.03.2019 was passed imposing penalty of Rs. 3,03,495/- with service tax amounting to Rs. 30,34,955/- and interest thereon. 7. Being aggrieved, the petitioner preferred the appeal before the Commissioner (Appeals) after deposit of Rs. 2,27,622/- as mandatory pre-deposit to file appeal as per the provision of section 35F of the Central Excise Act,1944 read with section 83 of the Finance Act,1994. 8. The First Appellate Authority dismissed the appeal by order dated 30.08.1999 and confirmed the Order-in-Original. 9. Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 was introduced w.e.f. 5th July,2019 for resolving pending disputes arising out of the Central Excise Act, Service Tax etc. The petitioner therefore, without challenging the appeal order, filed an application in Form SVLDRS-1 as the demand confirmed under the Order-in- Original became the tax dues and the amount in arrears. On 30.12.2019, the petitioner declared the amount of Rs. 6,82,805/- as tax dues payable. 10. The respondent No.3-Designated Committee under the SVLDRS issued Form SVLDR-2 on 02.01.2020 as prescribed under sub-rule (3) of Rule 6 of Sabka Vishwas Legacy Dispute Resolution Rules, 2019 [for short ‘the Rules’] and indicated that Rs. 11,22,933/- is payable by the petitioner instead of Rs. 6,82,805/-. 11. 6,82,805/- as tax dues payable. 10. The respondent No.3-Designated Committee under the SVLDRS issued Form SVLDR-2 on 02.01.2020 as prescribed under sub-rule (3) of Rule 6 of Sabka Vishwas Legacy Dispute Resolution Rules, 2019 [for short ‘the Rules’] and indicated that Rs. 11,22,933/- is payable by the petitioner instead of Rs. 6,82,805/-. 11. The petitioner submitted Form SVLDR-2A on 06.01.2020 along with written submission and rectified the amount payable to the tune of Rs. 9,86,360/-. 12. Respondent No.3, without considering the written submissions and without providing opportunity of hearing to the petitioner, issued Form SVLDRS-3 on 11.02.2020 directing the petitioner to deposit Rs. 11,22,933/-. 13. The petitioner filed detailed submissions dated 12.02.2020 with a request to correct the amount payable by the petitioner. 14. The petitioner submitted further detailed submissions on 04.03.2020 reiterating the stand that the petitioner is entitled to pay only Rs. 9,86,360/- as under: Sr. No Descriptions Amount (Rs) 1 Tax Dues as arrears/Service Tax demand confirmed as per OIO dated 27.03.2019 (Section 124(1)(c)(i) 30,34,955/- 2 60% of the amount in arrears as tax Relief Section 124(1)(c)(i) 18,20,973/- 3 Net amount eligible for the scheme 12,13,982/- 4 As per Section 124(2) of the Scheme, it is stated that “the relief calculated under sub-section(1) shall be subject to the conditions that any amount paid as pre- deposit at any stage of appellate proceedings under the indirect tax enactment or as a deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant… … 2,27,973/- 5 Net payable and declared by the Appellant in its SVLDRS-2A 9,86,360/- 15. It is the case of the petitioner that time and again, the petitioner requested the respondent-authority to correct the amount payable by it. However, the petitioner received a letter dated 30.07.2020 from respondent No.4 directing the petitioner to pay dues confirmed under Order-in- original or to make payment of Rs. 11,22,933/- as per Form SVLDRS-3. 16. However, it is the case of the petitioner that thereafter also, the petitioner approached respondent No.3 and filed various reminders to rectify Form SVLDRS-3 as error is committed by respondent No.3 by reducing the amount of pre-deposit from the total demand instead of reducing the amount of pre-deposit from 60% of the amount payable by the petitioner. 17. 16. However, it is the case of the petitioner that thereafter also, the petitioner approached respondent No.3 and filed various reminders to rectify Form SVLDRS-3 as error is committed by respondent No.3 by reducing the amount of pre-deposit from the total demand instead of reducing the amount of pre-deposit from 60% of the amount payable by the petitioner. 17. The petitioner thereafter received impugned letter dated 14.08.2020 rejecting the claim of the petitioner and the petitioner was informed that the time to make the payment under SVLDRS has already been expired. 18. Being aggrieved, the petitioner has preferred this petition with following prayers: “A. Your Lordships be pleased to issue a Writ of Certiorari or any other appropriate writ, direction or order, quashing and setting aside the order of the Designated Authority (Respondent No.3) in the Form of SVLDRS-3 and letter dated 14.08.2020 (Annexure A collectively) made under Sabka Vishwas (Legacy Dispute Resolution) Scheme,2019 thereby directing the respondents, their servants and agents to treat the declarations/ applications filed by the petitioners under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 valid and accept the calculation submitted by the petitioner in its Form SVLDRS-2A as sufficient compliance of the Scheme. B. Your Lordships be pleased to issue a Writ of Certiorary or any other appropriate writ, direction or order, quashing and setting aside the letter dated 30.07.2020 (Annexure B) issued by respondent No.4 and held the same as pre mature and without authority; C. Your Lordships be pleased to issue a writ of mandamus or a writ in the nature of mandamus, or any other appropriate writ, direction or order, to the respondents, their servants and agents to accept the declarations filed by the petitioners and further directing the respondents to consider the submissions (Annexure J to L) made by the petitioner and decides the issue after giving the opportunity of personal hearing and issue the Form SVLDRS-3 afresh, and direct them to issue discharge certificates under section 127(8) of the Finance Act, 2019” 19. The Co-ordinate Bench of this Court [Coram: Hon’ble The Chief Justice Mr. Vikram Nath and Hon’ble Mr. Justice J.B.Pardiwala] passed the following order on 10.09.2020: “1. We have heard Shri Dhaval Shah, the learned counsel appearing for the petitioners. 2. Issue notice to the respondents, returnable on 21st October, 2020. 3. The Co-ordinate Bench of this Court [Coram: Hon’ble The Chief Justice Mr. Vikram Nath and Hon’ble Mr. Justice J.B.Pardiwala] passed the following order on 10.09.2020: “1. We have heard Shri Dhaval Shah, the learned counsel appearing for the petitioners. 2. Issue notice to the respondents, returnable on 21st October, 2020. 3. Shri Dhaval Shah, the learned counsel, is further permitted to serve an advance copy of the petition in the office of Mr. Devang Vyas, the learned Addl. Solicitor General of India within three days. 4. By way of this writ application under Article 226 of the Constitution of India, the challenge is to the communication dated 14th August, 2020, whereby the declaration/application filed by the petitioner under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 did not find favour with the authority and has not been accepted. As a consequence to the same, the petitioners were served with the recovery notice of Rs.30,34,955.00. According to Mr. Shah, initially the petitioners had filed the declaration giving a self-assessment of Rs.6,82,805. Later on, it was modified to Rs.9,86,361.00 However, the Department insisted for deposit of Rs.11,22,934.00. Mr. Shah submitted that the declaration submitted by the petitioners under the Scheme, 2019 has been wrongly not accepted by the authority and he has been unnecessarily placed under heavy financial burden of Rs.30 Lakh, whereas earlier, only Rs.11 Lakh had been claimed by the Department. 5. Considering the facts and circumstances of the case, as the scheme only provided with recovery pursuant to the nonacceptance of the declaration made by the petitioners under the Scheme of 2019, the petitioners may not be further proceeded with provided they deposit Rs.11,22,934/- within two weeks from today without prejudice to his rights to claim any refund of any amount which is found to be paid in excess on the final determination. 6. It goes without saying that in case the above amount is not deposited within the time stipulated, the respondents authorities would be free to proceed with the recovery. 7. Mr. Shah submits that the Department would need to unlock the portal to enable the petitioners to deposit the amount online under the scheme, for which, the petitioners would make an appropriate application within next three days. Once the written request is made, the Department would provide the access so that the amount may be deposited within the time allowed.” 20. Shah submits that the Department would need to unlock the portal to enable the petitioners to deposit the amount online under the scheme, for which, the petitioners would make an appropriate application within next three days. Once the written request is made, the Department would provide the access so that the amount may be deposited within the time allowed.” 20. Learned advocate Mr.Dhaval Shah submitted that pursuant to the order passed by this Court, the petitioner has deposited the amount of Rs. 11,22,934/- on 27.10.2020 with the respondent-authority. 21. Learned advocate Mr. Shah on merits submitted that respondent No.3 committed an error in determination of the amount payable by the petitioner as per the SVLDRS by considering the pre-deposit as an appropriation instead of deposit. 22. Learned advocate Mr. Shah submitted that as per the provision of section 124(2) of the SVLDRS, the amount of pre-deposit is to be deducted from net amount payable after the applying rate of 60% to the tax dues and amount in arrears whereas, the respondent No.3 has reduced the tax dues and amount in arrears by appropriating the pre-deposit and thereafter, calculated amount payable under SVLDRS by the petitioner as under: Sr.No. Descriptions Amount (Rs.) 1 Tax dues/service tax demand confirmed as per OIO dated 27.03.2019 30,34,955/- 2 Amount paid on 30.05.2019 2,27,622/- 3 Amount in arrears 28,07,333/- 4 Less Relief (60%) 16,84,400/- 5 Estimated Amount Payable 11,22,933/- 23. It was therefore submitted that calculation of the petitioner is correct considering various provisions of the SVLDR Scheme. In support of his submissions reliance was placed on the decision of Madras High Court in case of M/s. Himang Infrastructure Solutions Pvt. Ltd rep. By its Director Srivatsava Rajagopalan vs. The designated committee, SVLDRS Scheme, GST & Central Excise, Chennai reported in 2024 (2) TMI wherein, it is held as under: “17. Therefore, on the tax amount of Rs. 47,27,896/as confirmed by the Assistant Commissioner vide Order in Original No.20/2018 dated 13.08.2018, which was affirmed by the Appellate Commissioner vide Order in Appeal No.90/2019(CTA-II) dated 29.04.2019, the petitioner is entitled to 60% for relief in terms of Section 124(1)(c) of Sabka Vishwas - (Legacy Dispute Resolution) Scheme, 2019. Thus, the petitioner is entitled to relief upto 60% of Rs. 47,27,896/and therefore the petitioner was required to pay a sum of Rs. 18,99,158.40/(rounded off to Rs. 18,99,158/-) being 40% of Rs. Thus, the petitioner is entitled to relief upto 60% of Rs. 47,27,896/and therefore the petitioner was required to pay a sum of Rs. 18,99,158.40/(rounded off to Rs. 18,99,158/-) being 40% of Rs. 47,27,896/of the amount as confirmed by the Assistant Commissioner vide Order in Original No.20/2018 dated 13.08.2018, which was affirmed by the Appellate Commissioner vide Order in Appeal No.90/2019(CTA-II) dated 29.04.2019. 18. The amount that was pre-deposited by the petitioner is available for being set off in terms of Section 124(2) of Sabka Vishwas - (Legacy Dispute Resolution) Scheme, 2019. Section 124(2) of the said Act which reads as under: 124(2): The relief calculated under sub-section (1) shall be subject to the condition that any amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the petitioner. Provided that if the amount of pre-deposit or deposit already paid by the declarant proceeds 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. 19. The petitioner is entitled to deduct Rs. 15,35,735/being the amount pre-deposited by the petitioner during the course of investigation in terms of Section 124(2) of Sabka Vishwas - (Legacy Dispute Resolution) Scheme, 2019 from the aforesaid sum of Rs. 18,99,158.40 Thus, required to pay the petitioner only a sum is of Rs. 3,63,419/(Rs. 18,99,154.40 — Rs. 15,35,735/-) and not Rs. 12,75,256/-. 20. The amounts quantified as payable both by the petitioner in Form SVLDRS-1 and by the respondent vide impugned Form SVLORS3 dated 19.11.2019 are incorrect.” 24. On the other hand, learned advocate Mr. Jay Mehta for the respondent submitted that respondent No.3 has calculated the amount payable by the petitioner as per the Circular No. 1072/05/2019 dated 25.09.2019 issued by the Central Board of Indirect Taxes and Customs (CBIC). It was therefore, submitted that as per the said Circular, the amount payable under SLVDRS is calculated by the respondent No.3 after considering the pre-deposit made by the petitioner at the time of filing of appeal as payment of tax by appropriating the same from the tax dues and thereafter, the amount in arrears is calculated which is in accordance with the scheme as well as circular issued by the CBIC. 25. 25. Having heard learned advocates for the respective parties and considering the benevolent scheme of SVLDRS, it appears that respondent No.3 has calculated the amount payable by the petitioner under the SVLDR Scheme contrary to the Scheme as well as Circular No. 1072. Section 124(1) of the Scheme reads as under: “124 Relief available under Scheme:- (1) Subject to the conditions specified in sub-section (2), the relief available to a declarant under this Scheme shall be calculated as follows: … … …. …. …. … (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; …. … … … … … …. … … … … … (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 indirect tax encatment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the delcarant; Provided that if the amount of predposit 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.” 26. As per section 121(c), ‘amount in arrears’ is defined as under: “121 (c) “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.” 27. Section 121(d) defined ‘amount of duty’ referred to in clause (c) of section 121 as under: “(d) “amount of duty” means the amount of central excise duty, the service tax and the cess payable under the indirect tax enactment.” 28. From the above provisions and the definitions, the benefit of deduction in tax dues where the amount of duty is less than Rs. From the above provisions and the definitions, the benefit of deduction in tax dues where the amount of duty is less than Rs. 50 lakhs, the amount in arrears is to be computed as per 60% of the amount of duty comprising of amount of central excise duty, service tax and cess payable under the indirect tax enactment. Therefore, the amount of pre-deposit made by the petitioner, at the time of filing of appeal, cannot be said to be an amount paid towards the amount in arrears as such amount is only a deposit. The Legislature has therefore, stipulated in sub-section (2) of section 124 that relief calculated under sub-section (1) shall be subject to the condition that amount paid as pre- deposit at any stage of appeal proceedings under the indirect tax enactment or as deposit during the inquiry etc. shall be deducted when issuing the statement indicating amount payable by the declarant. Meaning thereby that, at the time of calculation of the amount payable under sub-section (1) of section 124, the amount of pre-deposit is not required to be deducted but the same is required to be deducted while issuing the statement indicating amount payable by the declarant. 29. This aspect is further clarified by the CBIC in the Circular No. 1072 dated 25.09.2019 as under: “(iv) Section 121(c) defines an amount in arrears as the amount of duty which is recoverable as arrears of duty. Further, Section 123 defines ‘tax dues’ in respect of arrears as the amount which is due in arrears. In other words, tax dues is the amount of duty which is outstanding against the declarant. This is the net amount after deducting the dues that he has already paid. Such payment may be in the form of pre- deposits appropriated or paid subsequently by the taxpayer voluntarily against the outstanding amount. It is clarified that the relief available under Section 124(1) (c) will be applied to the net outstanding amount so arrived at. it may be noted that in respect of all other categories, any money paid before its appropriation is in the nature of a deposit only. Hence, in respect of declarations made under these other categories, the relief will be applied to the outstanding amount and, only thereafter the pre- deposits/deposits [Section 124(2)} shall be adjusted. it may be noted that in respect of all other categories, any money paid before its appropriation is in the nature of a deposit only. Hence, in respect of declarations made under these other categories, the relief will be applied to the outstanding amount and, only thereafter the pre- deposits/deposits [Section 124(2)} shall be adjusted. The same is illustrated as follows: (a) Taxpayer has outstanding arrears of confirmed duty demand of Rs. 1 crore and he has already paid Rs. 60 Lakhs. So, the amount of tax dues is Rs 40 Lakhs. After applying applicable relief @ 60%, the amount payable under the Scheme is Rs 16 Lakhs. (b) Taxpayer has outstanding arrears of confirmed duty demand of Rs 1 Crore apart from Rs 20 lakh penalty and interest as applicable. He has already paid Rs 1 Crore towards duty. So, the amount of tax dues is zero, and the amount payable under the Scheme is zero)” 30. From the above circular it is clear that CBIC has clarified that the relief available under section 124(1)(c) is to be applied to the net outstanding amount of tax dues in arrears after deducting the amount already paid in form of pre-deposit appropriated or paid subsequently by the tax payers voluntarily against the outstanding demand. It is also further clarified that money paid before appropriation is in nature of deposit only. 31. In view of the above clarification of the CBIC, the declaration made by the petitioner for availing the benefit of SVLDRS by computing amount payable as Rs. 9,86,360/- is in accordance with the provisions of the scheme read with circular issued by the CBIC whereas, the computation made bye respondent No.3 in Form SVLDRS-3 is contrary to the provision of the Scheme as the amount paid by the petitioner of Rs.2,27,622/- on 30.05.2019 is pre-deposit cannot be deducted from the total tax dues amounting to Rs. 30,34,955/- as per the Order-in- original. The petitioner has therefore rightly deducted the amount of Rs. 2,27,622/- from the net amount eligible for the Scheme after deducting 60% of Rs. 30,34,955/- from the net eligible amounting to Rs. 12,13,982/- The petitioner is therefore liable to pay Rs. 9,86,360/- only under the scheme and not Rs. 11,22,933/- as stated by the respondent No.3 in Form SVLDRS-3. 32. In view of the foregoing reasons, the petition succeeds and is accordingly allowed. 30,34,955/- from the net eligible amounting to Rs. 12,13,982/- The petitioner is therefore liable to pay Rs. 9,86,360/- only under the scheme and not Rs. 11,22,933/- as stated by the respondent No.3 in Form SVLDRS-3. 32. In view of the foregoing reasons, the petition succeeds and is accordingly allowed. The respondent-authority is directed to appropriate the amount of Rs. 9,86,360/- from the amount of Rs.11,22,934/- deposited by the petitioner with the respondent on 27.10.2020 pursuant to the order passed by this Court dated 10.09.2020 and to return the remaining amount of Rs. 2,27,622/- by issuing rectified From SVLDRS-3 towards full and final settlement of the outstanding dues of the petitioner and thereafter, issue consequential Form SVLDRS-4. Rule is made absolute to the aforesaid extent. No order as to costs.