TaxTMI 
TaxTMI 
2022 (8) TMI 542
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.... 2. In the writ petitions, following issues arise for adjudication:- (i) Whether amount paid as pre-deposit and/or deposit during enquiry, investigation or audit is required to be deducted after extending the relief available to a declarant u/s 124 of SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 (for short 'Scheme'), or the said amount of pre-deposit/deposit is first required to be adjusted while determining the amount of 'tax dues' u/s 123 of the Scheme and, thereafter, relief u/s 124 of the Scheme is to be extended to a declarant ? (ii) Whether clause 2(iv) of Circular No. 1072/05/2019/CX dated 25.09.2019 has an effect of altering the definition of 'tax dues' as defined u/s 123 of the Scheme, to the extent said Circular provides that the amount of pre-deposit/deposit made by a declarant is to be first adjusted against the 'tax dues' of the declarant and, thereafter, benefit of relief as provided u/s 124 of the Scheme is to be extended to a declarant? 3. The brief facts of the case in [W.P.(T) No. 1405 of 2020)] is that the petitioner is a Proprietorship Firm and is engaged in the business of providing services of Cargo Handling and Supply of Tangib....
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....ause as to why its declaration be not treated under category 'Arrears' and, accordingly, relief be not extended to the petitioner in terms of Section 124(1) (c) as opposed to the claim of relief of the petitioner u/s 124(1) (a) of the Scheme. Petitioner submitted its reply in Form SVLDRS-2A and contended that its declaration should be treated under 'Litigation Category' on the ground that as on 30th June, 2019, show cause notice of the petitioner was pending adjudication and, thus, petitioner is entitled for the relief to the extent of 50% of the tax due. However, the Designated Committee treated the declaration of the petitioner in category 'Arrears' and held that petitioner is eligible for tax relief only to the extent of 40% of the tax dues. The said decision of the Designated Committee was communicated to the petitioner in Form SVLDRS-3. Although Designated Committee accepted the declaration of the petitioner in category 'Arrears', but while extending the benefit of tax relief to the petitioner, the Designated Committee first adjusted/reduced the amount of pre-deposit/deposit of Rs. 2,45,24,953/- from the amount of 'tax due' of Rs. 4,69,12,227/- and thereafter extended the b....
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.... sum of Rs. 2,37,48,427/- towards service tax liability for the period January, 2013 to March, 2016, in terms of provisions of Section 73(1), was held to be liable to be recovered from the petitioner, and, further, an amount of Rs. 61,84,644/- was directed to be appropriated against the aforesaid demand. Equivalent penalty of Rs. 2,37,48,427/- u/s 78 of the Finance Act and penalty of Rs. 10,000/- each u/s 77 and 77(2) of the Finance Act along with Late Fee of Rs. 1,36,100/- u/s 70 of the Finance Act, was also imposed upon the petitioner. 8. Petitioner, under the Scheme, filed its declaration in the category - 'Litigation' in Form SVLDRS-1 and petitioner was also issued show cause notice in Form SVLDRS-2A directing the petitioner to show cause as to why its declaration be not treated in the category 'Arrears' instead of category-'Litigation'. In substance, petitioner was also directed to show cause as to why tax relief of 40% of the 'tax due' under category 'Arrears' be not extended to it instead of tax relief of 50% in category 'Litigation'. Petitioner objected to the said action of the Designated Committee and contended that it was entitled to the benefit of tax relief to the e....
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....egory 'Arrears', but, at the time of computation of the tax relief under the Scheme, the Designated Committee, while placing reliance upon Circular dated 25.09.2019, has altered the definition of 'tax dues' as defined under Section 123 of the Scheme and has first reduced the amount paid by petitioners as pre-deposit/deposit and, thereafter, computed the balance outstanding dues and extended the benefit of tax relief to petitioners under 'Arrears' category, which is contrary to the very purpose and intent of the Scheme. 13. It has been argued that Section 124(2) specifically provides, inter alia, that the amount paid as pre-deposit at any stage of appellate proceedings or deposit during enquiry, investigation or audit shall be deducted while issuing statement to a declarant indicating the amount payable by it under the Scheme. 14. Referring to the Scheme, it was further contended that Section 123 of the Scheme defines the term "tax dues" and Section 123(e) provides, inter alia, that where an 'amount in arrears' relating to the declarant is due, 'the amount in arrears' would be deemed to be the 'tax dues' of a declarant. Further, while referring to the definition of 'amount in ....
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....r relied upon the decision of Eureka Fabricators Pvt. Ltd. v. Union of India, reported in 2021 SCC OnLine Bombay 321 and have submitted that the amount of duty paid by a declarant in terms of section 124(2) of the Scheme is required to be reduced from the amount payable at the time of issuance of Statement under the Scheme after extending benefit of tax relief on the 'tax dues' amount. Further, while referring to the Circular dated 25.09.2019, it has been submitted that Clause 2(iv) of the Circular has altered and changed the term 'tax dues' as defined under Section 123 and in the said Circular, the word 'tax dues' has been de novo defined to be an amount of duty which is outstanding against a declarant, which is not permissible in law. It has been submitted that the Circular issued by CBIC dated 25.09.2019 has an effect of effacing the provisions of the Scheme, which is not permissible in view of several decisions of the Hon'ble Apex Court including the following decisions namely.- (i) Securities and Advance Exchange Board of India v. Magnum Equity Services Limited, reported in (2015) 16 SCC 721. (ii) Sandur Micro Circuits Limited v. Commissioner of Central Excis....
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....amount payable by petitioners. However, he fairly conceded that said Judgment of Hon'ble Allahabad High Court has been stayed by Hon'ble Supreme Court vide its order dated 20th April, 2021 passed in Special Leave to Appeal (Civil) No. 1839 of 2021. 19. We have heard learned counsel for the parties and have carefully gone through the provisions of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. We deem it appropriate to quote relevant provisions of the Scheme for better appreciation of the case, which are as under:- "Section 121 (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. For the purposes of the Scheme, "tax dues" means- (a) xxx xxx x....
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....deposit/pre-deposit made by petitioners, but the only dispute in the instant cases, is with respect to computation of the amount payable by the declarants. As per petitioners, 'amount of arrears' means the 'amount of duty' which is reflected as recoverable in the Orders-in-Original, being the 'tax dues' amount, and, accordingly, relief under Section 124(1)(c)(ii) is to be granted on the said amount; whereas, as per the Revenue, the amount recoverable under the Orders-in-Original is the 'amount of duty demanded less the amount already paid by petitioners', and, accordingly, benefit of tax relief has to be granted on the net outstanding amount. 22. In our opinion, if the interpretation given by the Revenue of the word 'recoverable' u/s 121(c) is accepted, the same would lead to an incongruous interpretation leading to absurdity which is to be avoided. Admittedly, in both the cases, show cause notice has been issued to petitioners under section 73(1) of the Finance Act, 1994, wherein the total amount of duty recoverable from petitioners has been reflected, and, further, in the show cause notice, petitioners have been directed to show cause as to why the amount of pre-deposit/deposi....
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....r short-levied or short-paid or erroneously refunded. Admittedly, in the case of petitioners, show cause notices were issued for recovery of service tax not paid of the amount reflected in the show cause notices. Even Orders-in-Original clearly reflected the amount of recoverable service tax not paid by petitioners, which were, admittedly Rs. 4,69,12,227/- and Rs. 2,37,48,427/- and it is the said amount which was adjudicated as recoverable towards 'arrears of duty' against the petitioners. There is difference between the terms 'amount recoverable towards arrears of duty' and 'amount outstanding towards arrears of duty', whereas, in the case of petitioners, amount recoverable towards arrears of duty were Rs. 4,69,12,227/- and Rs.2,37,48,427/- respectively, and, amounts outstanding towards arrears of duty were Rs. 2,23,87,274/- and Rs. 1,75,99,783/- respectively. 26. The impugned Circular No.1072/05/2019/CX dated 25.09.2019 has an effect of altering the definition of 'amount in arrears' as defined under section 121(c) of the Scheme. Admittedly, section 121(c) of the Scheme uses the term 'recoverable' as opposed to the term 'outstanding' and to this extent, impugned Circular is con....
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.... to be appropriated and deducted from the tax dues after grant of relief under section 124 of the Scheme. We are in agreement with the aforesaid authoritative pronouncements of respective High Courts. 28. Even from a plain reading of Section 124(2), it would be evident that the amount of deposit made during enquiry, investigation or audit is required to be deducted after extending relief under section 124(1) of the Scheme and at the time of issuing statement indicating the amount payable by a declarant. Even otherwise, the intent of legislature cannot be in such a way that an assesse who pays some amount either suo motu prior to demand or after demand put in worse condition than an assesse who does not pay any amount after demand and avail the benefit of the scheme because admittedly; if the contention of the revenue is accepted then if an assesse is having liability of 1 crore rupees and he does not pay any amount then he will get benefit of 40% as per the scheme and he will have to pay 60 lacs. However, if an assesse who is having a demand of 1 crore and during course of investigation or otherwise he pays an amount of 30 lacs then if 40% will be deducted from 70 lacs than he w....