JUDGMENT : BHARGAV D. KARIA, J. 1. Heard learned advocate Mr.Prasannan Namboodiri with learned advocate Mr.Jainish Shah for the petitioner and learned advocate Mr.P.Y.Divyeshvar for the respondent nos.2 and 4. 2. Rule returnable forthwith. Learned advocate Mr.P.Y.Divyeshvar waives service of notice of rule on behalf of respondent nos.2 and 3. 3. By these petitions under Article 227 of the Constitution of India, the petitioner has challenged the following orders as under: Special Civil Application No.11604 of 2020 is with regard to the rejection of the 27 Forms of SVLDRS–1 filed by the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2015, (for short ‘SVLDRS’). The second petition being Special Civil Application No. 11043 of 2023 is filed by the petitioner challenging the order passed by the Appellate authority dated 16.03.2021 confirming the sanction/ rejection of refund of the petitioner by adjusting outstanding arrears of service tax from the eligible refund to the petitioner. 4. The brief facts of the case are as under: 4.1. The petitioner is a manufacturer of steel furniture and was liable for payment of excise duty as well as service tax on the services received under the reverse charge mechanism. 4.2. The petitioner was liable to pay service tax on monthly basis and was also required to be declared in periodical half yearly returns i.e. ST-3 returns. 4.3. The petitioner filed ST-3 returns for the period from April 2015 to June 2017, however the petitioner did not discharge the service tax liability either in full or in part. It is the case of the petitioner that after filing the returns, the petitioner voluntarily discharged some tax liability through various challans. 4.4. The Subka Vishvas (Legacy Dispute Resolution) Scheme (SVLDRS) came into effect from 01.07.2019 by the Finance Act No.02 of 2019 with a legislative intention to reduce the litigation of Pre-GST regime under the Excise Act and Service Tax Act and other allied indirect taxes. As per the SVLDRS, the assessee is required to ascertain the outstanding tax arrears/tax dues as per the Scheme as on 30.06.2019 and file application in Form SVLDRS-1 before the Designated Authority under the Scheme. 4.5. As per the SVLDRS, the assessee is required to ascertain the outstanding tax arrears/tax dues as per the Scheme as on 30.06.2019 and file application in Form SVLDRS-1 before the Designated Authority under the Scheme. 4.5. In the case of the petitioner an audit was carried out for the period from January 2015 to June 2017 by the Officers of the Central Excise/ Service Tax Audit department of Surat Commissionerate during the month of May 2019 and June 2019 and Final Audit Report in EA-2000 was issued on 21.08.2019 determining the service tax liability payable by the petitioner under the reverse charges mechanism in the respect of each service. 4.6. The petitioner by letter dated 19.07.2019 in reply to the initial observation raised by the Audit Group 63, Circle-11 during the course of EA-2000 audit informed to the respondent Assistant Commissioner Circle 9, Vapi that the petitioner would pay voluntarily the outstanding dues to be determined +by audit group, however in view of the SVLDRS, if the petitioners are eligible under the Scheme the petitioner would avail the benefit of the same. 4.7. After the Scheme came into the force vide notification dated 21.08.2019, the petitioner initially filed 13 declarations in form SVLDRS-1 on 23.11.2019 and on rejection of the same again filed another 28 declarations in form SVLDRS-1 on 31.12.2019. On rejection of the 28 declarations, the petitioner for the third time filed 27 online applications/ declaration in Form SVLDRS-1 on 15.01.2020 declaring a total service tax liability of Rs.34,42,240/- as 'arrears of tax' as per the ST-3 returns for the period from April 2015 to June 2015, which were shown as service tax liability by the petitioner but not paid till 30.06.2019. 4.8. The respondent no.3-Designated Committee rejected 27 declarations in Form SVLDRS-1 filed by the petitioner with remark for rejection in the said application declaration form as under: “The audit of the unit was conducted in the months of May and June, 2019. The Final Audit report was issued after 30.06.2019 wherein certain amounts were quantified. The jurisdictional Assistant Commissioner had adjusted the amount quantified in the FAR from the pending refund of the declarant in the month of September,2019 as the amount quantified in the FAR was admitted by the declarant as mentioned in the FAR. Therefore, there are no arrears pending against the declarant." 4.9. The jurisdictional Assistant Commissioner had adjusted the amount quantified in the FAR from the pending refund of the declarant in the month of September,2019 as the amount quantified in the FAR was admitted by the declarant as mentioned in the FAR. Therefore, there are no arrears pending against the declarant." 4.9. Being aggrieved the petitioner has preferred Special Civil Application no.11604 of 2020 with following prayers: “(a) Your Lordships be pleased to admit and allow this petition; (b) Your Lordships be pleased to set aside the rejection of 27 Applications/Declarations in Form No. SVLDRS-1 dated 15.01.2020 by the Respondent No. 3 and allow the Petition; (c) Issue a writ of mandamus and/ or any other appropriate writ, order ?? direction to the Respondents to finally settle their Applications/Declarations in Form No. SVLDRS- 1dated 15.01.2020 under the Scheme; (d) The Hon'ble Court may pending hearing and final disposal of the petition, direct the Respondents, to accept their declaration all in the 27 Applications/Declarations in Form No. SVLDRS-1 dated 15.01.2020and issue Form No. SVLDRS-3 and/or discharge certificate in Form SVLDRS-4 under the Scheme.” 4.10. Special Civil Application No. 11043 of 2023 is preferred with following prayers: “15(a) Your Lordships be pleased to admit and allow this petition; b) Your Lordships be pleased to issue a writ of mandamus and/or any other appropriate writ, order or direction setting aside the Order-in-Original No. 042/GST/REF- (F)/DIV-UBR/2019-20 of Respondent No. 3 and Order-In-Appeal AK/JC/APL/10/2021 dated 16.03.2021 upholding the same; No. (c) Your Lordships be pleased to issue a writ of mandamus and/or any other appropriate writ, order or direction to the Respondent No. 3 for the payment of sanctioned refund amount of Rs. 42,10,947/- to the Petitioner along with applicable interest thereon.” 4.11. Both the matters are arising from the same facts and therefore so far as the Special Civil Application no.11043 of 2023 is concerned, the facts are not repeated. The only difference is that the petitioner preferred a refund application in Form GST-RFD-01A on 28.05.2019 for an amount of Rs.42,10,947/- for the month of January and February 2019 under Section 16 of the IGST Act 2017, read with Section 54 of the CGST Act, 2017 read with Rule 89 of the CGST Rules, 2017. The only difference is that the petitioner preferred a refund application in Form GST-RFD-01A on 28.05.2019 for an amount of Rs.42,10,947/- for the month of January and February 2019 under Section 16 of the IGST Act 2017, read with Section 54 of the CGST Act, 2017 read with Rule 89 of the CGST Rules, 2017. The respondent no.3- Assistant Commissioner of GST and Central Excise, Division–XII, Umaargam in Special Civil Application No.11043 of 2023 issued show-cause notice and after scrutinizing the refund claim came to the conclusion that the entire claim of amount of Rs.42,10,947/- was inadmissible in view of the arrears of service tax as per the audit report dated 28.05.2019 determining the outstanding dues of Rs.55,27,341/- payable by the petitioner. 4.12. The respondent no.3 therefore adjusted Rs.42,10,947/- against the outstanding dues and passed an order-in-original dated 23.09.2019 adjusting/ appropriating the entire refund amount to which the petitioner was eligible towards refund of input tax credit on export made by the petitioner of various taxable goods to different countries under the letter of undertaking (LUT) without payment of integrated tax after realising the export proceeds. 4.13. The petitioner being aggrieved by the order-in-original dated 23.09.2019 filed appeal before the Joint Commissioner of CGST and Central Excise Appeal, Surat, challenging the adjustments/ appropriation of the refund amount demanded in the audit report. 4.14. The appellate authority by order dated 16.03.2021 rejected the appeal filed by the petitioner confirming the order-in- original appropriating the refund amount towards outstanding dues as per the amount of service tax quantified in the audit report observing as under: “The adjudicating authority has rightly deducted the refund amount under Section 54(10). The relevant portion of the Section 54(10) are: 10) Where any refund is due under sub-section (3) to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest, or penalty, which has not been stayed by any court, Tribunal, Appellate, Authority by the specified date, the proper officer may (a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be: (b) deduct from the refund due, any tax, interest, penalty. fee, or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law. fee, or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law. After the findings and discussions, it is clear that the adjudicating authority has correctly adjusted sanctioned refund amount of Rs. 42,10,947/- against outstanding liability of Rs.55,27,341/- as the liability was already accepted as evident from the letter of appellant dated 19.07.2019 and audit report mentioned supra.” 5. Learned advocate Mr.Namboodiri appearing for the petitioner submitted that the petitioner is entitled to the benefit of SVLDRS as per Section 121(1)(c) (iii) of the Finance Act, 2019 (for short ‘the Act’), as the petitioner has not paid service tax though the returns were filed in Form ST-3 for the period from April 2015 to June 2017, it would be categorized as ‘amount in arrears of tax’. It was further submitted that as per the provisions of Section 123 of the Act, the tax dues would be as per clause (e) of the Section 123 which provides that tax dues means where an amount in arrears relating to the declaration is the amount in arrears. 5.1. Learned advocate Mr.Namboodiri invited attention of the Court to the Form SVLDRS-1 filed on 15.01.2020 by the petitioner which shows the category as ‘arrears’, Sub-category declared in arrears but not paid towards service tax. 5.2. It was therefore submitted that the petitioner is entitled to the benefit of the Scheme which is made for reducing the litigation and when the remarks made by the respondent no.3-Designated Authority without giving opportunity of hearing to the petitioner as provided under the Scheme by not issuing the notice as contemplated in Section 126 and 127 of the Scheme. It was pointed out that remarks put by respondent no.3-Designated Committee has rejected the Form SVLDRS-1 only on the ground that the final audit report was not available on 30.06.2019 and there was no quantification of the service tax payable by the petitioner in the audit which was under process. 5.3. It was submitted that contrary to the legislative intention, the respondent authorities have acted in a high-handed manner by appropriating the refund claim of the petitioner for the input tax credit under the Section 16 of the IGST Act against the amount of service tax quantified in the audit report without issuing any show-cause notice or providing any opportunity of hearing to the petitioner. 5.4. 5.4. It was submitted that when the petitioner is entitled to the benefit of the SVLDRS being benevolent Scheme for reducing the litigation, the respondent authorities could not have acted contrary to the interest of the petitioner by appropriating the refund and there by depriving the petitioner from the benefit of the Scheme. It was submitted that in the letter dated 19.07.2019, the petitioner has categorically stated that the petitioner would be entitled to get benefit of the SVLDRS if eligible and with that condition the petitioner had agreed for voluntary payment of the tax dues to be determined on completion of audit. 5.5. Learned advocate Mr.Namboodiri referred to the Circular dated 26.09.2019 issued by the Central Board of Indirect Taxes and Customs (for short ‘CBIC’) in relation to the SVLDRS and more particularly clause (iii) of para 2 of the said circular which provides that the Scheme provides for filing of separate declarations for returns filed under the Service Tax Act. It was submitted that the petitioner has filed 27 applications under the Scheme, based on each service availed by the petitioner and therefore such applications ought to have been considered as valid applications based upon the amount in arrears show by the petitioner as per the provisions of the Scheme. 5.6. Learned advocate Mr.Namboodiri further referred to and relied upon circular dated 29.10.2019, to point out that when the CBIC has clarified the doubt expressed whether a party who has filed a ST-3 return and has also paid dues in full before filing the application, then such a party would be entitled to the benefit of interest and penalty and where no duty is paid, a single declaration can also be filed for more than one returns. It was therefore submitted that the CBIC has from time to time has clarified the intention of the legislature to reduce litigation. 4.8. Learned advocate Mr.Namboodiri also referred on the decision of the Division Bench of this Court in case of Hitech Projects Pvt. Ltd. Vs. Union of India rendered on 06.07.2020 in Special Civil Application No.7292 of 2020, wherein the entire legislative intention of the SVLDRS is explained in detail. 5.7. 4.8. Learned advocate Mr.Namboodiri also referred on the decision of the Division Bench of this Court in case of Hitech Projects Pvt. Ltd. Vs. Union of India rendered on 06.07.2020 in Special Civil Application No.7292 of 2020, wherein the entire legislative intention of the SVLDRS is explained in detail. 5.7. Learned advocate Mr.Namboodiri also referred to and relied upon question no.65 in the Frequently Asked Questions(FAQ) published by CBIC to point out that any show-cause notice is received subsequently after 30.06.2019 and in a case where return is filed but duty is not paid before 30.06.2019, then the subject matter of SCN has to be treated separately then that of the ST-03 returns and the amount in arrears. Question 65 and answer thereto reads as under: “Q.65 I have filed a return and not paid duty in a return before 30.06.2019. However, subsequently, I have received an SCN for declaring lesser duty. If I file a declaration under the Scheme for such returns, will the SCN get covered automatically? Ans. A case where a return has been filed and duty not paid is a case of arrears of revenue, whereas an SCN is a case under litigation. Section 129 provides that a discharge certificate issued with respect to the amount payable under this scheme shall be conclusive as to matter and time period stated therein and the declarant shall not be liable to pay any further duty, interest or penalty with respect to the matter and time period covered in the declaration. In some cases, during subsequent investigation, it is discovered that the taxpayer has declared and paid lesser duty in the returns filed. Therefore, on conclusion of investigation etc., a show cause notice is issued demanding the differential duty. It may be noted that 'matter' under Section 129 means a case for which the taxpayer intends to file a declaration under the. Scheme. In the instant case, a 'return filed but duty not paid' is a separate matter and the SCN issued for 'differential amount' is a separate matter.” 5.8. Reliance was also placed on the decision of the Honorable Kerala High Court at Ernakulam in case of Hi-Lite Projects Private Limited Vs. Scheme. In the instant case, a 'return filed but duty not paid' is a separate matter and the SCN issued for 'differential amount' is a separate matter.” 5.8. Reliance was also placed on the decision of the Honorable Kerala High Court at Ernakulam in case of Hi-Lite Projects Private Limited Vs. The Joint Commissioner, Central Tax and Central Excise in Writ Petition(C) No.14135 of 2020(N) to submit that the Hon’ble Kerala High Court has in the facts of the case relying upon para 10(g) of the Circular held that the quantification as defined under Section 2(r) would include duty payable admitted by the person during inquiry, investigation or audit and when the petitioner in facts of the said case had declared the service tax dues even before the verification proceedings were initiated on 07.09.2017 and therefore the amount admitted by the petitioner was ordered to be taken as quantified amount due from the petitioner for the purpose of testing the eligibility of the petitioner for availing benefit of the Scheme under Section 125 of the SVLDRS. It was therefore submitted that in the facts of the case when the petitioner has filed ST-3 returns prior to 30.06.2019 and the amount of service tax was admittedly not paid by the petitioner, the same amount of Rs.34 lakhs would be amount of tax in arrears on 30.06.2019 and the petitioner would be eligible for the said amount irrespective of the pendency of the audit because as per the audit report dated 25.08.2019, the total quantification was more than Rs.34 lakhs that is Rs.55 lakhs. It was therefore submitted that the petitioner is entitled to the benefit of SVLDRS and once the petitioner is entitled for the benefit under the Scheme, the appropriation of the outstanding dues as per the amount quantified in audit report is liable to be deleted and the petitioner would be entitled to the refund under Section 16 of the IGST Act. It was therefore prayed that that both the petitions may be allowed as prayed for. 6. On the other hand learned advocate Mr.P.Y.Divyeshvar appearing for the respondent submitted that as per the provisions of Clause (e) of section 125 (1) of the SVLDRS, the petitioner is not eligible for the Scheme. It was therefore prayed that that both the petitions may be allowed as prayed for. 6. On the other hand learned advocate Mr.P.Y.Divyeshvar appearing for the respondent submitted that as per the provisions of Clause (e) of section 125 (1) of the SVLDRS, the petitioner is not eligible for the Scheme. It was pointed out that Section 125 provides for eligibility for all the persons to make declaration under the Scheme except a person who has been subjected to inquiry or investigation or audit and the amount of duty involved in the said inquiry or investigation or audit has not been quantified on or before 30.06.2019. It was therefore submitted that admittedly the petitioner was subjected to audit prior to 30.06.2019 but no amount of duty involved in the audit was quantified before the 30.06.2019 and therefore the petitioner was not eligible to make declaration under the Scheme. 6.1. Learned advocate Mr.Divyeshvar relied upon the following averments made in the affidavit-in-reply filed on behalf of the respondent nos.3 and 4 which reads as under: “7. With reference to para-6 of the petition, it is submitted that the declarant has filed 27 declarations on 15.01.2020 and the same were rejected on 08.02.2020 as final audit report (FAR) was issued after 30.06.2019 and the amount quantified in the FAR was adjusted by the Jurisdictional Assistant Commissioner from the pending refund of the party in the month of September- 2019 as the amount quantified in FAR was admitted by the party. As a result, there were no arrears pending against the declarant as on date of filing of declaration. 8. With reference to para-7(a) of the petition, it is submitted that whatever is stated in this para is a matter of record whereby the Petitioner has narrated his version of facts. I say that the same being the facts at this stage the answering respondent is not offering any comments at this stage however the same is subject to verification and the answering respondent reserve it's liberty to reply to the same in future. With reference to para-7(b) of the petition, it is submitted that the petitioner declared their liability in ST-3 returns of for the period from F.Y. 2014- 15 to 2017-18. With reference to para-7(b) of the petition, it is submitted that the petitioner declared their liability in ST-3 returns of for the period from F.Y. 2014- 15 to 2017-18. It is pertinent here to note that effective from May 14, 2015, new sub-section (1B) has been inserted in Section 73 of the Finance Act to provide that the Service tax amount self- assessed and declared in the Return (ST-3) but not paid (either in part or full) shall be recovered under Section 87 thereof, without service of any notice as required under Section 73(1) of the Finance Act. Section 73(1B) of the Finance Act is reproduced hereunder: "(1B) Notwithstanding anything contained in sub- section (1), in a case where the amount of service tax payable has been self- assessed in the return furnished under sub-section (1) of section 70, but not paid either in full or in part, the same shall be recovered along with interestthereon in any of the modes specified in section 87, without service of notice under sub- section (1)." 10. With reference to para-7(c) of the petition, it is submitted that EA-2000 Audit i.e. Excise Audit was undertaken for the period of January 2015 to June 2017 and it was found that the petitioner defaulted/Short payment of government revenue. The Audit Report No. 374/2019-20 had been issued vide F. No. V(a) EA-2000/Ahura Mazda Mfg Co. Pvt. Ltd., /Gr. 63/2019-20, dated 21.08.2019 under which the service tax liability declared in ST -3 returns but not paid by the petitioner are mentioned in above audit report including the tax liability ascertained after scrutinizes the ST 3 returns. 11. With reference to para-7(d) of the petition, it is submitted thatthe petitioner had filed refund application of accumulated ITC due to Export of Goods and Services without payment of tax for the month of January 2019 to February 2019 vide ARN AB2402190573927, dated 18.05.2019, accordingly, deficiency memo in FORM-GST-RFD-03 dated 17.06.2019 has been issued to the petitioner for the differences between Service Tax paid and payable. The petitioner replied the same vide their letter dated 08.08.2019 received on 23.08.2019. Further, it was found that the petitioner defaulted/short paid of the Central Excise Duty/Service Tax and not paid interest applicable of delayed payment. The Assistant Commissioner recover/adjusted the amount of Rs. 42,10,947/-, under Refund Sanction order No. 042/GST/REF-(F)/Div. UBR/2019- 20, dated 23.09.2020 which was payable by the petitioner. Further, it was found that the petitioner defaulted/short paid of the Central Excise Duty/Service Tax and not paid interest applicable of delayed payment. The Assistant Commissioner recover/adjusted the amount of Rs. 42,10,947/-, under Refund Sanction order No. 042/GST/REF-(F)/Div. UBR/2019- 20, dated 23.09.2020 which was payable by the petitioner. It is to mention that any amounts due to the Central Government the Central Excise officer deduct the amount so payable from any money owing to such person under Section 11 of the Central Excise Act, 1944 and Section 87 of the Finance Act, 1994.” 6.2. With regard to the refund claim made by the petitioner and appropriation of the same by passing an order-in-original rejecting such claim and appropriating the amount of refund towards the amount quantified in audit report, it was submitted that the Adjudicating Authority as well as the Appellate Authority has rightly rejected the refund claim of the petitioner on the ground that the petitioner has admitted liability of tax and had filed an undertaking for voluntary payment of the same by letter dated 19.07.2019 during the course of the audit proceeding subject to eligibility of the Scheme. It was submitted that as the petitioner was not eligible for the Scheme, the respondent authority was justified in appropriating the amount quantified in audit report as outstanding dues payable by the petitioner under the service tax for the period from April 2015 to June 2017. 7. In rejoinder learned advocate Mr.Namboodiri for the petitioner submitted that the respondent authorities were not justified in adjusting or appropriating the amount of refund towards the amount quantified in the audit report without issuing any show-cause notice. Learned advocate Mr.Namboodiri referred to and relied upon Section 73 of the Finance Act, 1994 and proviso thereunder to submit that assuming for a while that the petitioner has made voluntary payment of Rs.5,13,279/- then for the differential amount, the respondent authorities were required to issue show-cause notice before appropriation of any amount as quantified in audit report assuming for a while that the petitioner has admitted voluntarily payment of amount to be determined in audit during the audit proceedings without prejudice to the other contentions raised by the petitioner. It was submitted that the entire exercise of appropriation is without any basis and adjudication by the respondent authorities is in clear breach of principles of natural justice. It was submitted that the entire exercise of appropriation is without any basis and adjudication by the respondent authorities is in clear breach of principles of natural justice. It was submitted that while processing the refund claimed under the IGST Act without any adjudication process and without any quantification as provided under the provisions of Finance Act, 1994, the respondent authorities could not have made appropriation of the amount quantified in audit report which is a prelude to the adjudication process for determining the service tax liability. It was submitted that the petitioner has been denied the opportunity to challenge any adjudication which could have been made after giving an opportunity of hearing to the petitioner as provided under the provisions of the Act. 7.1. It was further submitted that Section 87 read with Section 73(1B) of the of the Finance Act, 1994 could not have been pressed into service only on the basis of the letter dated 19.07.2019 which is a conditional letter issued by the petitioner during the course of the audit process as on the date of issuance of the letter that is on 19.07.2019 there was no amount quantified by audit party and in absence thereof it cannot be said that the petitioner has voluntarily agreed to pay the amount to be quantified in future. 8. Having heard learned advocates for the respective parties and considering the facts of the case as well as material placed on record and relevant provisions of the Act, following two issues are arising for determination in these two petitions. (1) weather the petitioner is eligible to make a declaration to get benefit under the provisions of SVLDRS or not? (2) Whether the respondent authorities were justified in appropriating the amount quantified in audit report from the eligible refund to the petitioner under Section 16 of the IGST Act read with Section 54 of the CGST Act read with Rule 89 of the CGST Rules 2017? 9. With regard to the eligibility of the petitioner to make declaration under SVLDRS-3, following provisions of the Scheme are relevant and therefore the same are reproduced herein below: “121. 9. With regard to the eligibility of the petitioner to make declaration under SVLDRS-3, following provisions of the Scheme are relevant and therefore the same are reproduced herein below: “121. In this Scheme, unless the context otherwise requires,— (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; 123.(c) where an enquiry or investigation or audit is pending against the declarant, the amount of duty payable under any of the indirect tax enactment which has been quantified on or before the 30th day of June, 2019; (d) where the amount has been voluntarily disclosed by the declarant, then, the total amount of duty stated in the declaration; 124(1)(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 percent. Of the tax dues; (ii) the amount of duty is more than rupees fifty lakhs, then, forty percent 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 percent. of the tax dues; (B) amount indicated is more than rupees fifty lakhs, then, forty percent. of the tax dues; Declaration under Scheme 125(1) All persons shall be eligible to make a declaration under this Scheme except the following, namely:— (a) who have filed an appeal before the appellate forum and such appeal has been heard finally on or before the 30th day of June, 2019; (b) who have been convicted for any offence punishable under any provision of the indirect tax enactment for the matter for which he intends to file a declaration; (c) who have been issued a show cause notice, under indirect tax enactment and the final hearing has taken place on or before the 30th day of June, 2019; (d) who have been issued a show cause notice under indirect tax enactment for an erroneous refund or refund; (e) who have been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before the 30th day of June, 2019; (f) a person making a voluntary disclosure,— (i) after being subjected to any enquiry or investigation or audit; or (ii) having filed a return under the indirect tax enactment, wherein he has indicated an amount of duty as payable, but has not paid it; (g) who have filed an application in the Settlement Commission for settlement of a case; (h) persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944. (2) A declaration under sub-section (1) shall be made in such electronic form as may be prescribed. 126.(1) The designated committee shall verify the correctness of the declaration made by the declarant under section 125 in such manner as may be prescribed: Provided that no such verification shall be made in case where a voluntary disclosure of an amount of duty has been made by the declarant. (2) The composition and functioning of the designated committee shall be such as may be prescribed. (2) The composition and functioning of the designated committee shall be such as may be prescribed. 127.(1) Where the amount estimated to be payable by the declarant, as estimated by the designated committee, equals the amount declared by the declarant, then, the designated committee shall issue in electronic form, a statement, indicating the amount payable by the declarant, within a period of sixty days from the date of receipt of the said declaration. 128.Within thirty days of the date of issue of a statement indicating the amount payable by the declarant, the designated committee may modify its order only to correct an arithmetical error or clerical error, which is apparent on the face of record, on such error being pointed out by the declarant or suo motu, by the designated committee.” 10. On perusal of the above provisions it is clear that the petitioner would not be eligible to make a declaration as per Section 125 (1)(e) as the audit in case of the petitioner was initiated prior to 30.06.2019 and the amount of duty involved in the audit was not quantified on 30.06.2019. 11. Section 123(1)(c) provides that the petitioner would be entitled to quantify the amount of tax dues as per the amount quantified in audit report on or before 30.06.2019 or in the facts of the case the amount in arrears relating to the declarant is due the amount in arrears. The question of applicability of Section 23 determining the “Tax Dues” for the purpose of the Scheme would arise only if the petitioner was eligible to make declaration under the Scheme, however the petitioner falls in exception in clause(e)of section 125(1) of the Act as the petitioner was subjected to audit and amount of duty involved in audit was not quantified on or before 30.06.2019. Therefore, the respondent authorities have rightly rejected 27 declarations filed by the petitioner at the threshold relying upon the final audit report issued after 30.06.2019. 12. In view of the above, reliance placed by the petitioner on the decision of Honorable Kerala High Court in case of Hi- Lite Projects Private Limited Vs. The Joint Commissioner, Central Tax and Central Excise would not be applicable as the petitioner is found to be ineligible to make a declaration as per the provision of Section 125(1)(e) of the Scheme. The Joint Commissioner, Central Tax and Central Excise would not be applicable as the petitioner is found to be ineligible to make a declaration as per the provision of Section 125(1)(e) of the Scheme. The attempt made by the learned advocate for the petitioner to draw parity between the facts of the case before the Honorable Kerala High Court and the facts of the present case, it is pertinent note that in the facts of the case, admittedly the audit was in process on 30.06.2019 and no show-cause notice was issued as was the case before the Kerala High Court and the amount was quantified by audit after 30.06.2019 and therefore as per the provisions of Section 125(1)(e) of the Scheme, the petitioner would fall within the exception and would be ineligible to get benefit of the Scheme. 13. Therefore issue no.1 is answered accordingly. 14. With regard to the issue no.2, as to whether the respondent authorities were justified in appropriating the amount quantified in audit report from the refund claim of the petitioner is concerned, it would be germane to refer to the provision of Section 73(3) of the Finance Act,1994 which reads as under: “(3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid: Provided that the [Central Excise Officer] may determine the amount of short payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the [Central Excise Officer] shall proceed to recover such amount in the manner specified in this section, and the period of “one year” referred to in sub-section (1) shall be counted from the date of receipt of such information of payment. Explanation.-1. Explanation.-1. For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer], but for this sub-section. Explanation.- 2. the removal of doubts, it is hereby declared that no penalty under any of the provisions of this Act or the rules made there under shall be imposed in respect of payment of service-tax under this sub- section and interest thereon.” 15. On perusal of the above provisions, it is clear that the petitioner had paid an amount of Rs.5,13,279/- during the course of audit voluntarily and out of the total dues of Rs.60,40,619/- and accordingly there was outstanding amount quantified in audit report was Rs.55,27,341/- after considering the payment made by the petitioner. Therefore, as per the proviso to Section 73 of the Finance Act,1994, the differential amount of Rs.55,27,341/- could not have been adjusted/ appropriated out of the refund amount of the petitioner without issuing any show-cause notice or giving opportunity of hearing to the petitioner by the respondent authority while adjudicating the refund claim of the petitioner. 16. The appellate authority while rejecting the appeal has also committed an error by relying upon letter dated 19.07.2019 of the petitioner on the ground that the petitioner admitted the liability of the amount to be quantified in the audit. However, the amount quantified in the audit could not have been recovered without any adjudication or issuance of the show-cause notice for adjudication and providing an opportunity of hearing to the petitioner under the provisions of the Finance Act 1994, merely relying upon letter issued by the petitioner wherein it was agreed to pay the remaining liability. The respondent authority while adjudicating refund claim was not justified in appropriating the same as outstanding dues as there was no quantified or outstanding service tax dues till that date and as such the rejection of the refund claim on such ground by making appropriation of the alleged outstanding dues is without any basis and contrary to the provisions of the Finance Act, 1994. Issue no.2 is answered accordingly. 17. Issue no.2 is answered accordingly. 17. In view of the foregoing reasons the order-in-original dated 23.09.2019 and the Appellate order are hereby quashed and set aside and the matter is remanded back to the adjudicating authority to issue fresh show-cause notice to the petitioner and to provide an opportunity of hearing with regard to the refund claim made by the petitioner under Section 16 of the IGST Act read with Section 54 of the CGST Act and Rule 89 of the CGST Rules, 2017. 18. The petitions are accordingly disposed of. Rule is made absolute to the aforesaid extent. No order as to cost.