2022 (1) TMI 666 - HC - Service Tax

Court grants mandamus, quashes SVLDRS application rejection, orders fresh review for procedural fairness.

The Court granted the Petitioner's request for a writ of mandamus, quashing the rejection of their application under the SVLDRS scheme. The Court directed ... Excisable goods or not - Superior Kerosene Oil - falls under Fourth schedule or not - seeking restoration of SVLDRS-1 declaration filed by the Petitioner - opportunity of personal hearing not provided - gross violation of principles of natural justice - HELD THAT:- The principles laid down in THOUGHT BLURB VERSUS UNION OF INDIA AND ORS. [2020 (10) TMI 1135 - BOMBAY HIGH COURT] are to be considered by the Respondents while deciding the Petitioner’s case, as to, whether Superior Kerosene Oil which was the subject matter of the said declaration under the SVLDRS scheme, falls under Fourth schedule or not and whether the said product is at all excisable or not. The Petitioner had also relied upon the communication dated 26/11/2019 from Shri Navraj Goyal, OSD (CX) clarifying that only the Petroleum Crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel and tobacco and tobacco products are under Central Excise. Based on this communication, the learned counsel for the Petitioner vehemently contended that the Superior Kerosene Oil is not an excisable product and would not fall under Fourth Schedule to the Central Excise Act, 1944 - If the Respondents would have given an opportunity to the Petitioner to produce the said communication dated 26/11/2019 and to explain as to how the Superior Kerosene Oil is not an excisable goods and as to why the Superior Kerosene Oil would not fall under the Fourth schedule, then the scenario would have been different. Even issue of interpretation whether the Superior Kerosene Oil was an excisable product or not and whether the Superior Kerosene Oil falls under Fourth Schedule or not would have bearing on the aspect of eligibility of the Petitioner to file such declaration under the said Scheme or not and thus warrant personal hearing to the Petitioner before deciding the issue of eligibility - the order of rejection is in violation of principal of natural justice and thus, it deserves to be quashed and set aside. Issues:Petitioner's application under SVLDRS scheme rejected without a personal hearing; Allegation of violation of principles of natural justice; Dispute regarding eligibility of Superior Kerosene Oil under Fourth Schedule; Failure to consider communication from OSD (CX); Request for writ of mandamus to restore and consider the declaration.Issue 1: Rejection of Petitioner's Application without a Personal HearingThe Petitioner filed a writ petition seeking a writ of mandamus to restore the SVLDRS-1 declaration and consider it on merit. The application was rejected on the same day it was filed, citing that it belonged to goods of the Fourth Schedule. The Petitioner contended that no personal hearing was granted during the rejection, violating principles of natural justice. The Respondents failed to provide an opportunity for the Petitioner to explain their case, leading to the petition challenging the rejection.Issue 2: Dispute Regarding Eligibility of Superior Kerosene OilThe core of the dispute revolved around the eligibility of Superior Kerosene Oil under the Fourth Schedule of the Central Excise Act. The Petitioner argued that the oil was not an excisable good and thus should not fall under the said schedule. Various representations were made to authorities, emphasizing that the product did not meet the criteria for excisable goods. The Petitioner highlighted the inconsistency in the treatment of similar cases and sought clarification on the applicability of the SVLDR scheme to Superior Kerosene Oil.Issue 3: Failure to Consider Communication from OSD (CX)The Petitioner referenced a communication from OSD (CX) clarifying the scope of products under Central Excise, excluding items like petroleum crude, high-speed diesel, and others, but not mentioning Superior Kerosene Oil. The Petitioner argued that this communication supported their claim that the oil was not excisable and should not be classified under the Fourth Schedule. However, the Respondents did not consider this communication while rejecting the application, raising concerns about the fairness of the decision-making process.Issue 4: Request for Writ of MandamusIn light of the above issues, the Petitioner sought a writ of mandamus to challenge the rejection of their application and to compel the authorities to reconsider the declaration under the SVLDRS scheme. The Court, after detailed arguments from both sides, found merit in the Petitioner's contentions regarding the lack of a personal hearing, the eligibility of the product in question, and the failure to consider crucial communications. Consequently, the Court quashed the rejection orders, restored the declaration, and directed the Respondents to grant a personal hearing, consider all relevant factors, and pass a fresh order within a specified timeline, ensuring adherence to principles of natural justice.This comprehensive analysis highlights the key legal issues, arguments presented, and the Court's decision in response to the challenges raised by the Petitioner in the context of the SVLDRS scheme and the eligibility of Superior Kerosene Oil under the Central Excise Act.