2022 (6) TMI 863 - HC - Service Tax

Court dismisses writ petitions due to delay, non-compliance with scheme, and concealment of facts. Equity principle applies.

Om Shanti Electric Co. (Through Shri Rajkumar Bhandari Proprietor of The Firm), M/s. Hindustan Electric Store, Bhandari Electric Co., Darvesh Sales Corporation Versus Union Of India & Ors.

The Court dismissed the writ petitions due to the Petitioners' failure to explain the delay of 2.5 years in approaching the Court, non-compliance with the ... Rejection of application under the SVLDR Scheme - delay in filing present application - steps and procedures set forth in the SVDLR Scheme which are required to be followed by an Applicant, were not duly followed - HELD THAT:- There is no pleading or document to show that the remarks/instructions given by Respondent No. 4 as set forth in Annexure P-2 have been adhered to. There are various other steps and procedures set forth in the SVDLR Scheme which are required to be followed by an Applicant. Therefore, although the Petitioner was given an opportunity to participate further in the SVLDR Scheme, it chose not to do so in the manner prescribed Besides this, there is an issue relating to delay which needs to be dealt with as well. The SVLDR Scheme was in force for a limited period, which came into effect from 01.09.2019. Rule 3 of the said Scheme, inter-alia, states that any declaration to be made under the SVLDR Scheme was to be made by an Applicant (Declarant) on or before 31.12.2019. The Petitioner states that his application was rejected on 25.12.2019 - The only other explanation that has been given by the Petitioner is that of the onset of COVID-19. However, the Petitioner chose not to challenge the order of rejection in the pre-Covid period or thereafter, until 2.5 years later. The Petitioner has failed to discharge this burden of delay and laches. No cogent explanation for why the Petitioner waited 2.5 years to approach this Court has been provided. No reasons have been given for not following the procedure as set forth in the SVLDR Scheme. In fact, the Petitioner decided not to disclose these facts to the Court in its pleadings. Clearly these details have been deliberately concealed by the Petitioner in the present Petition. It is a matter of record that the SVLDR Scheme came into force on September 1, 2019 and in terms, inter-alia, of the provisions of the Scheme, the declaration thereunder was to be made electronically on or before 31.12.2019. The Scheme has come to an end more than 2.5 years ago and admittedly, no new Scheme or similar Scheme has been floated by the Respondent No. 2/Ministry of Finance, Government of India. Therefore, the Petitioner has failed to show any cause why the relief sought by him under the SVLDR Scheme should be granted once the Scheme and all its proceedings have been closed. Writ Petition is dismissed. Issues Involved:1. Confiscation of unaccounted goods and imposition of redemption fine and penalty.2. Rejection of applications under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme).3. Delay in filing the writ petitions challenging the rejection under the SVLDR Scheme.4. Compliance with procedural requirements of the SVLDR Scheme.Issue-wise Detailed Analysis:1. Confiscation of unaccounted goods and imposition of redemption fine and penalty:The Petitioners, manufacturers of electrical motors, control switches, MCBs, distribution boards, and electricity fans, had certain goods seized during a search at their factory premises which were unaccounted for in their books of accounts. They paid the duty along with interest and penalty to close the matter. However, a show cause notice dated 30.08.2016 proposed confiscation of the seized goods and levying of a redemption fine and penalty. The Order-in-Original imposed redemption fines on the Petitioners which were upheld by the Commissioner (Appeals) and subsequently by the Customs Excise and Services Tax, Appellate Tribunal (CESTAT).2. Rejection of applications under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme):The Petitioners approached the Designated Committee of Respondent No. 4 for settlement under the SVLDR Scheme on 10.12.2019. By separate emails dated 25.12.2019, the applications were rejected. The rejection was based on the premise that the redemption fine was out of the purview of the SVLDR Scheme. The Petitioners sought adjudication under the SVLDR Scheme through the present petitions.3. Delay in filing the writ petitions challenging the rejection under the SVLDR Scheme:The rejection orders were communicated on 25.12.2019, but the writ petitions were filed on 31.05.2022, after a lapse of 2.5 years. The Petitioners claimed they made personal visits to the Central Excise Commissionerate but were informed verbally that the email dated 25.12.2019 was the only order. The Court found no documents supporting this claim and noted that the Petitioners failed to explain the delay adequately. The Petitioners also cited the onset of COVID-19 and the Supreme Court's orders extending the period of limitation, but the Court found this reliance misplaced as the Courts were functioning, albeit in a truncated manner.4. Compliance with procedural requirements of the SVLDR Scheme:The Petitioners were required to follow certain procedures and provide documents as per the SVLDR Scheme, which they failed to do. The remarks in the acknowledgment receipts indicated that the Petitioners needed to produce proof of pre-deposit and other supporting documents. The Court found no evidence that the Petitioners adhered to these instructions. The Petitioners' non-compliance and concealment of these facts led to the dismissal of the writ petitions.Conclusion:The Court dismissed the writ petitions due to the Petitioners' failure to explain the delay of 2.5 years in approaching the Court, non-compliance with the procedural requirements of the SVLDR Scheme, and the deliberate concealment of material facts. The Court emphasized that the SVLDR Scheme had ended, and no similar scheme had been introduced, making the relief sought by the Petitioners untenable. The principle that 'one who seeks equity must come with clean hands' was reiterated, and all pending applications were closed.