AI Drafter 
TaxTMI 
TaxTMI 
2020 (9) TMI 257
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....r Lordships may be pleased to issue a Writ of Mandamus or any other appropriate writ, direction or order. directing the Respondents, their servants and agents to accept the declarations filed by the Petitioners, which are rejected vide orders submitted at Annexure"G" to the petition, and further directing the Respondents, their servants and agents to issue discharge certificates for all such declarations under Section 127(8) of the Finance Act, 2019; (C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to direct the Respondents herein to allow the Petitioners to deposit requisite amounts for each of the declarations, which are rejected vide orders submitted at Annexure-"G" to the petition and be further pleased to direct the Respondents, their servants and agents to accept such deposits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme for discharge of tax dues under the Scheme: (D) An ex-parte ad-interim relief in terms of para 18(C) above may kindly be granted. (E) Any other further relief that may be deemed fit in the facts and circumstances of the case may also please be granted." 2. This Court (Cor....
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....risdiction of this court under article 226 of the Constitution of India. 2. The petitioners, against whom orders-in-original have been made by the adjudicating authority confirming demand of duty, ordering recovery of interest, imposing penalty and ordering confiscation of goods and imposing fine in lieu of confiscation, against which appeals are pending before the appellate forum, submitted requisite declarations under the Scheme. Separate notices were served upon the petitioners by the Designated Committee calling upon them to show cause as to why the declarations should not be treated as void as the Scheme permits waiver of duty, interest and penalty, but not fine in lieu of confiscation. 3. After hearing the petitioners, the Designated Committee has held that the cases involving confiscation and redemption fine have not been covered under the Scheme and, therefore, the declarations cannot be accepted and no relief can be granted to the petitioners under the Scheme. 4. Mr. Paresh Dave, learned advocate for the petitioners submitted that the dispute involved in this case is, whether or not, waiver from payment of redemption fine is allowed under the Sch....
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....mption fine. 4.2 It was further submitted that section 123 of the Finance Act defines "tax dues" to mean the total amount of duty being disputed in appeal /cross appeals. Clause (b) of the section refers to cases where a show cause notice is pending, and the amount of duty stated to be payable in the notice is tax due. This qualifying condition is also satisfied in the present cases and the cutoff date of 30th June, 2019 is also not violated in the present cases. It was urged that since all qualifying conditions are satisfied and no exclusion of section 125 of the Finance Act is attracted, the declarations of the petitioners herein cannot be treated as void, and hence, ought not to have been rejected. 4.3 Next, it was submitted that section 129(1) of the Finance Act lays down under clause (a) that the declarant shall not be liable to pay any further duty, interest or penalty. It was submitted that since the declarations made by the petitioners are maintainable under the Scheme, this relief can certainly be granted to them. It was contended that under clause (b) of the section, immunity from prosecution is allowed. Such relief can also be granted to the pe....
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.... question in this regard, therefore, is which is this "fine", which is to be waived under the Scheme. It was submitted that the "fine" that is to be waived has to be redemption fine, and it can never be imposed by the criminal court under section 9 of the Act. It was contended that ordinarily, a criminal case cannot be waived once instituted in the competent court of law. Therefore, the Government has issued Circular No.1072/05/2019-CX dated 25th September, 2019 laying down at para 2(ii) that the procedure laid down in Circular No.1009/16/2015-CX dated 23.10.2015 should be followed for withdrawal of prosecution after issuance of discharge certificate, if prosecution has already been launched. Vide para 10.2 of the other Circular dated 23.10.2015, it is provided that the appropriate Commissioner shall give direction to file an application through the Public Prosecutor to allow withdrawal of the prosecution. It was submitted that the procedure laid down for withdrawal of prosecution shows that a criminal case is to be withdrawn before its conclusion, that is, before it results in sentence of imprisonment or fine. It was submitted that the letter now issued on 20th December, 2019, is ....
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....er of the rest of the duty, entire interest and penalty. When waiver from all such liabilities including even the short payment of duty is allowed under the Scheme, confiscation and redemption fine clearly cannot be left out, which are clearly linked to the subject matter of the declaration. It was submitted that in view of the Ministry's clarification dated 20th December, 2019 for waiving linked liabilities, the waiver of redemption fine has to be read under section 129(1)(c) of the Finance Act. 4.9 Reference was made to para 3(b) of the letter dated 20th December, 2019, to submit that the Ministry's stand is that a show cause notice involving redemption fine is excluded if it was not adjudicated and the redemption fine quantified under the adjudication order was not paid by the declarant before lodging the declaration. It was submitted that getting a notice pending on 30th June, 2019 to be adjudicated and paying redemption fine imposed under the order-in-original is a virtually impossible exercise for a declarant; and when section 123(b) specifically provides that a show cause notice received on or before the 30th June, 2019 can also be settled under the Scheme because t....
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....mmunity insofar as confiscation and/or redemption fine is concerned. 5.1 Reference was made to the Board's letter dated 20th December, 2019, wherein it has been stated thus: "2. The matter has been examined. 'Fine' and 'Redemption Fine' denote different things. Section 9 of the Central Excise Act, 1944 provides for the offences and penalties under the Act. The penalties for the offences under the Act may extend to seven years of imprisonment and fine. Needless to say that once the person is granted immunity from prosecution, he also gets waiver from such 'fine'. However, redemption fine is levied in lieu of confiscation Section 34 of the Act, whereby the party can 'redeem' the confiscated goods. Under the Scheme, no immunity (Section 129) or relief (Section 124) has been granted for redemption fine. 3. A 'case' under the Scheme means 'a show cause notice, or one or more appeals arising out of such notice which is pending as on 30.06.2019' [Explanation to rule 3, SVLDRS Rules, 2019]. In the instant case, the SCNs also involve imposition of redemption fine. There are two scenarios that can emerge; (a) The SCN involving redemption fine has been adju....
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....en 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." 8. On a plain reading of clauses (a) to (h) of section 125 of the Finance Act, it is abundantly clear that persons whose cases involve confiscation and fine in lieu of confiscation are not placed in the categories of persons who are not elig....
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.... section 125 of the Finance Act, cases involving confiscation and fine in lieu of confiscation (redemption fine) are not excluded from the benefit of the Scheme, and (iii) according to the Board, the Scheme provides relief in tax dues for all categories of cases; prima facie it appears that the legislature did not have the intention of excluding cases involving confiscation and fine in lieu of confiscation from the purview of the Scheme. 11. It may be further noted that in the communication dated 20th December, 2019 of the Board, the contents whereof have been reproduced hereinabove, it has been stated that when a person gets immunity from prosecution, he also gets waiver of such fine for the offences under section 9 of the Central Excise Act, 1944. Thus, it is not the case of the Board that the Scheme does not provide for waiver of fine, but only that it does not provide for waiver of redemption fine. Testing the explanation put forth by the Board in the context of the relevant statutory provisions, section 9 of the Central Excise Act, 1944 specifies the categories of offences and the punishment thereunder, which may be punishable with imprisonment and fine or imprisonmen....
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.... However, if conditional interim relief is granted, the same would take care of the interests of the petitioners as well as the revenue. Accordingly, the impugned orders passed by the Designated Committee are hereby stayed. Since the last date for filing declarations under the Scheme is 31st December, 2019, the respondents are directed to permit the petitioners to file fresh declarations under the Scheme without payment of redemption fine, subject to the final outcome of the petition. Upon such declarations being submitted, the same shall be further processed by the Designated Committee, and shall not be turned down on the ground that the Scheme does not cover cases involving confiscation and redemption fine. 14. At this stage, Mr. Paresh Dave, learned advocate for the petitioners states that there are many persons similarly situated to the petitioners who have filed declarations which have been rejected by the Designated Committee but are not before the court and that if these persons come to the court, it would lead to multiplicity of proceedings before this court. It was, accordingly, urged that the benefit of the present order also be granted to the persons who have no....
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....nt. Reliance was placed to the observations made by the Apex Court, which read thus: "8. But the scope of sub-section (1) of section 52 is extremely restricted because it applies only where the transferee is a person directly or indirectly connected with the assessee and the object of the under-statement is to avoid or reduce the income-tax liability of the assessee to tax on capital gains. There may be cases where the consideration for the transfer is shown at a lesser figure than that actually received by the assessee but the transferee is not a person directly or indirectly connected with the assessee or the object of under-statement of the consideration is unconnected with tax on capital gains. Such cases would not be within the reach of sub section (1) and the assessee, though dishonest, would escape the rigour of the provision enacted in that sub-section. Parliament therefore enacted sub-section (2) with a view to extending the coverage of the provision in sub-section (I) to other cases of under statement of consideration. This becomes clear if we have regard to the object and purpose of the introduction of sub- section (2) as appearing from travaux preparatoire rela....
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....es of sales that this amendment has been drafted-It does not aim at perfectly bona fide transactions.. but essentially relates to the day-to-day occurrences that are happening before our eyes in regard to the transfer of property. I think, this is one of the key sections that should help us to defeat the free play of unaccounted money and cheating of the Government." Now it is true that the speeches made by the Members of the Legislature on the floor of the House when a Bill for enacting a statutory provision is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the Mover of the Bill explaining the reason for the introduction of the Bill can certainly be referred t o for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation is enacted. This is in accord with the recent trend in juristic thought not only in Western countries but also in India that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible. In fact there are at least three decisions of this C....
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....figure than that actually received. 9. This interpretation of sub-section (2) i strongly supported by A the marginal note to section 52 which reads 'Consideration for transfer in cases of under-statement'. It is undoubtedly true that the marginal note to a section cannot be referred to for the purpose of construing the section but it can certainly be relied upon as indicating the drift of the section or, to use the words of Collins MR in Bushel v. Hammond(l) to show what the section is dealing with. It cannot control the interpretation of the words of a section particularly when the language of the section is clear and unambiguous but, being part of the statute, it prima facie furnishes some clue as to the meaning and purpose of the section. Vide Bengal Immunty Company Limited v. State of Bihar(2) The marginal note to section 52. as it now stands, was originally a marginal note only to what is presently sub-section (I) and significantly enough, this marginal note remained unchanged even after the introduction of sub-section (2) suggesting clearly that it was meant by Parliament to apply to both sub-sections of section 52 and it must therefore be taken as indicating....
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....n the following words: "Section 13 of the Finance Act has introduced a new sub- section (2) in section 52 of the Income-tax Act with a view to countering evasion of tax on capital gains through the device of an under-statement of the full value of the consideration received or receivable on the transfer of a capital asset. The provision existing in section 52 of the Income-tax Act before the amendment (which has now been remembered as sub- section (2) enables the computation of capital gains arising on transfer of a capital asset with . reference to its fair market value as on the date of its : transfer, ignoring the amount of the consideration shown by the assessee, only if the following two conditions are satisfied: (a) the transferee is a person who is directly. or indirectly connected with assessee, and (b) the Income-tax officer has reason to believe that the transfer was effected with object of avoidance or reduction of the liability of assessee to tax of capital gains. In view of these conditions, this provision has a limited operation and does not apply to other cases where the tax liability on capital gains arising on transfer o....
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.... binding character, they are clearly in the nature of contemporanea expositio furnishing legitimate aid in the construction of sub-section (2). The rule of construction by reference to contemporanea expositio is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous. This rule has been succinctly and felicitously expressed in Crawford on Statutory Construction (1940 ed) where it is stated in paragraph 219 that "administrative construction (i. e. contemporaneous construction placed by administrative or executive officers charged with executing a statute) generally should be clearly wrong before it is overturned; such a construction, commonly referred to as practical construction, although non-controlling, is nevertheless entitled to considerable weight; it is highly persuasive." The validity of this rule was also recognised in Baleshwar Bagarti v. Bhagirathi Dass(1) where Mookerjee, J. stated the rule in these terms: "It is a well-settled principle of interpretation that courts in construing a statute will give much weigh....
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.... the ground that they imposed unreasonable restrictions on the fundamental right of the assessee under Article 19(1) (f) and (g) of the Constitution by taxing outstanding loans or advances of past years as dividend. The Revenue however relied on a circular issued by the Central Board of Revenue under section 5(8) of the Indian lncome-tax Act 1922 which corresponded to section 119 of the Present Act and this circular provided that if any such outstanding loans or advances of past years were repaid on or before 30th June 1922, they would not be taken into account in determining the tax liability of the shareholders to whom such loans or advances were given. This circular was clearly contrary to the plain language of section 2(6A)(e) and section 121(B), but even so this Court held that it was binding on the Revenue and since "past transactions which would normally have attracted the stringent provisions of section 12(1B) as it was introduced in 1955, were substantially granted exemption from the operation of the said provisions by making it clear to all the companies and their shareholders that if the past loans were genuinely refunded to the companies they would not be taken into acc....
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.... the aforesaid order dated 24.12.2019 in para-5 to 5.2 and relied upon the same. 8. Having heard the learned advocates for the respective parties and having gone through the material on record as well as the order dated 24.12.2019 passed by the Coordinate Bench of this Court while admitting the petition, we are of the opinion that, the Coordinate Bench of this Court has done analysis in detail of the provisions of the Scheme in para 6 to 9 of the order dated 24.12.2019 and has also discussed the frequently asked questions (FAQs) and flyers issued by the Central Board of Indirect Taxes as well as the letter dated 20.12.2019 in para-10 to 12 to form a prima-facie opinion that when the Board has issued FAQs, press notes and flyers stating that the scheme grants waiver of interest, fine and penalty, then the scheme would be relatable to redemption fine also, because there is no other fine which is contemplated under the Act coupled with the fact that Section 125 of the Finance Act, 2019 does not exclude the categories of cases involving confiscation / fine in lieu of confiscation. 9.1. We may once again do analysis of the scheme in detail, so as to arrive at a final conclusion as....
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....unt of duty being disputed in the departmental appeal: Provided that nothing contained in the above clauses shall be applicable where such an appeal has been heard finally on or before the 30th day of June, 2019." (b) Where a show cause notice under any of the indirect tax enactment has been received by the declarant on or before the 30th day of June, 2019, then, the amount of duty stated to be payable by the declarant in the said notice. Relief available under the Scheme 124- (1) Subject to the conditions specified in sub-section (2), the relief available to a declarant under this Scheme shall be calculated as follows: (a) Where the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice which is pending as on the 30th day of June, 2019, and if the amount of duty is- (i) rupees fifty lakhs or less, then, seventy percent of the tax dues; (ii) more than rupees fifty lakhs, then, fifty 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 ....
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.... 9.4. The press note dated 22.08.2019 issued by the Ministry of Finance, Government of India, also stated as under: "The two main components of the Scheme are dispute resolution and amnesty. The dispute resolution component is aimed at liquidating the legacy cases of Central Excise and Service Tax that are submitted in GST and are pending in litigation at various forums. The amnesty component of the Scheme offers an opportunity to the taxpayers to pay the outstanding tax and be free of any other consequence under the law. The most attractive aspect of the Scheme is that it provides substantial relief in the tax dues for all categories as well as full waiver of interest, fine, penalty. In all these cases, there would be no other liability of interest, fine or penalty. There is also a competent amnesty from prosecution." 9.5. In view of the above provisions of the Scheme r/w. flyers, FAQs and press note issued by the Board, the intent and purpose of the Scheme appears to reduce litigation by giving a window to the taxpayers to pay the tax and end the litigation. The object of the Scheme was to provide one time measure for putting an end to past disputes of central exci....
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....Section 125 of the Scheme. The designated committee appointed under the Scheme has to verify the declaration made by the declarant under Section 125 of the Scheme and issue a statement under Section 127 of the Scheme stating that the amount estimated to be payable by the declarant, as estimated by the designated committee, equals the amount declared by the declarant. However, in the facts of the present case, the designated committee has rejected the declaration itself on the ground that the Scheme does not apply to the cases involving confiscation / redemption fine. 9.8. Section 129 (1) of the Scheme provides for issue of discharge certificate under Section 126 with respect to the amount payable under this Scheme shall be conclusive as to the matter and time period stated therein and provides immunity to the declarant from payment of any further duty, penalty or interest and prosecution and reopening of the matter in any other proceedings under the indirect tax enactments. Clause (a) of sub-section 1 of Section 129 of the Scheme though provides that the declarant shall not be liable to pay any further duty, interest, or penalty, it does not expressly provide that the declarant ....
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.... that in the communication dated 20th December, 2019 of the Board, the contents whereof have been reproduced hereinabove, it has been stated that when a person gets immunity from prosecution, he also gets waiver of such fine for the offences under section 9 of the Central Excise Act, 1944. Thus, it is not the case of the Board that the Scheme does not provide for waiver of fine, but only that it does not provide for waiver of redemption fine. Testing the explanation put forth by the Board in the context of the relevant statutory provisions, section 9 of the Central Excise Act, 1944 specifies the categories of offences and the punishment thereunder, which may be punishable with imprisonment and fine or imprisonment or fine. Thus, the question of imposing fine arises only upon conviction for an offence specified in section 9 of the Central Excise Act. However, clause (b) of section 125 of the Finance Act, clearly excludes persons 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 declaration. As a necessary corollary therefore, it follows that the legislature would not have contemplated waiv....
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....e both the amount of duty as well as amount of redemption fine which is required to be recovered from the taxpayers. The amount of redemption fine cannot be treated separately then the amount of the duty under the Scheme. Therefore, the interpretation made by the Board in the communication dated 20.12.2019 in order to consider the declaration made by the declarant, the payment of redemption fine is prerequisite, is not tenable in law, because as per Section 125 of the Scheme a declarant cannot be made ineligible to file a declaration for non-payment of redemption fine. Moreover, the declarant is required to include redemption fine as part of the duty demanded, so as to calculate the amount in arrears as per Section 121 (c) of the Scheme. 11. The Supreme Court in the case of K.P. Varghese (supra) has laid down that the Rule of construction by reference to the principle of 'contemporanea exposition est optima et fortissima in lege' which is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous. Therefore, when the Central Board....