Petition challenging CENVAT credit inclusion in tax dues calculation under Sabka Vishwas Scheme 2019 dismissed

Bombay HC dismissed petition challenging inclusion of CENVAT credit in tax dues calculation under Sabka Vishwas Scheme 2019. Petitioners argued CENVAT credit was availed but not utilized, however court found this contention was previously rejected. Court held tax dues determination under clause 123 includes disputed duty amounts in pending appeals. CENVAT credit inclusion in calculations by Designated Committee was upheld as correct. Court directed respondents to expeditiously consider any fresh representation by petitioners regarding their specific case circumstances while adhering to scheme objectives.

---

---

Issues Involved:

1. Validity of the inclusion of CENVAT credit in the determination of tax dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019.
2. Compliance with the payment requirements under the Scheme.
3. Jurisdiction of the court to adjudicate on the merits of the determination and the Order-in-Original (O-I-O).
4. Potential relief or reconsideration by the Respondents if the Petitioners make a representation.

Issue-wise Detailed Analysis:

1. Validity of the Inclusion of CENVAT Credit:

The primary contention of the Petitioners was that the CENVAT credit of Rs. 1,03,16,150/- was availed but not utilized, and therefore should not have been included in the determination of tax dues under the Scheme. The Petitioners argued that this amount should have been reversed rather than included as tax dues. The Respondents, however, countered that the credit was both availed and utilized, as established in the O-I-O dated 4 February 2019. The court noted that this issue was already addressed in the O-I-O, where it was determined that the Petitioners failed to provide necessary documentation to disprove the allegations of wrong availment and utilization of CENVAT credit. Therefore, the inclusion of this amount in the tax dues was deemed appropriate under the Scheme.

2. Compliance with the Payment Requirements:

The Petitioners were required to deposit Rs. 38,21,796/- to avail of the benefits under the Scheme, calculated based on the total disputed tax dues of Rs. 4,80,00,050/-. Despite extensions due to the COVID-19 pandemic, the Petitioners did not make this payment within the stipulated or extended period. The court found no grounds to interfere with the Respondents' decision as the Petitioners did not comply with the Scheme's requirements.

3. Jurisdiction of the Court:

The Petitioners sought the court's intervention to adjudicate on the merits of the determination, including the O-I-O. However, the court emphasized that it could not undertake such an exercise, as the Petitioners had already filed an appeal before the CESTAT, which was pending adjudication. The court clarified that the Scheme required the Petitioners to proceed based on the total amount of duty disputed in the appeal, which included the CENVAT credit amount. Consequently, the court could not exclude the credit amount from the tax dues for the purposes of the Scheme.

4. Potential Relief or Reconsideration:

The Petitioners expressed willingness to pay the determined amount along with interest and requested the Respondents to consider granting Amnesty under the Scheme. The court directed that if the Petitioners make a representation in this regard, the Respondents should dispose of it expeditiously and in accordance with the law, considering the objectives of the Scheme and the peculiarities of the Petitioners' case. The court dismissed the petition but left open the possibility for the Petitioners to seek reconsideration from the Respondents.

Conclusion:

The court dismissed the petition, upholding the determination of tax dues by the Designated Committee under the Scheme, and emphasized the necessity for the Petitioners to comply with the payment requirements. The court also allowed for the possibility of reconsideration by the Respondents if the Petitioners make a formal representation, highlighting the importance of adhering to procedural requirements under the Scheme.

---