TaxTMI 
TaxTMI 
2025 (8) TMI 1210
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....oprietor S.Sathish Kumar challenging a show cause notice bearing No.01/2020 dated 06.02.2020 issued by A2. 3. The basis of the challenge was that the show cause notice would no longer survive, as the Designated Committee had issued a Discharge Certificate in Form SVLDRS - 4 on 23.07.2020 under the Scheme. The Writ Petition had come to be allowed on 13.12.2024 on the ground that the declaration filed by the respondent had been acknowledged, Form SVLDRS - 3 was issued on 28.02.2020, Form SVLDRS-4 issued on 23.07.2020 and hence hearing notice dated 07.02.2022 in reference to show cause notice dated 06.02.2020 could not have been issued, unsettling the case settled under the provisions of the Scheme. As against that order, the Designated Committee and the Central Excise Commissioner are in appeal. 4. Mr.AR.L.Sundaresan, learned Additional Solicitor General assisted by Mr.RajnishPathiyil, learned Senior Panel Counsel and Ms.Lydia Steffi, learned Junior Panel Counsel for the appellants advance the following submissions. 5. There are several illegalities in the Declaration made by the respondent. Firstly, the application purports to have been filed by 'Sundaram Satish Kumar, wher....
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....rely within the ambit of Section 129(2)(c) of the Scheme and hence the Department is within its rights to proceed with show cause notice dated 06.02.2020. He would conclude by saying that no prejudice would be caused to the respondent as the show cause notice would be adjudicated in accordance with law. 12. Per contra, Mr.Mudimannan, learned counsel for the respondent points out that, the requirement under Section 129(2)(c) of the Scheme is that the Discharge Certificate be revoked within one year. Such revocation has not transpired till date. Hence, the conclusion of the Writ Court is correct. 13. He would also point out that there is no suppression as the respondent has, in second reply dated 14.08.2020 to the impugned show cause notice, made a disclosure that a Declaration had been made under the Scheme, seeking time to file a reply. Even at that stage, it had been open to the Department to have taken action under Section 129(2)(c), despite which, they did nothing. Hence, the respondent cannot be penalised for the inaction and carelessness on the part of the Department. 14. Mr.Mudimannan draws attention to the Circulars issued on the heels of the SVLDRS Scheme, pointing....
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....Forms 3, receiving the payment and issuing the Discharge Certificate in Form 4 would not have transpired. They say that the choice of the incorrect category by the Respondent was deliberate so as to thwart the proper processes and attain the acceptance of his application. 22. We have carefully considered the rival contentions in this regard. The selection of category as 'voluntary disclosure' is, undoubtedly, incorrect. The factum of investigation in 2014 and 2019 is admitted, as statements have also been recorded from the respondent in the course thereof. Hence it stands to reason that the respondent ought to have selected the category 'Investigation, Enquiry or Audit' and the selection by him of another category which is incorrect amounts to a material falsehood, to the knowledge of the Respondent. 23. The Circulars relied upon by the Respondent are extracted below, and do indicate some discussion in regard to this aspect. Circular No. 1073/06/2019.GX F. No. 267/78/2019/CX-8-Pt.III Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs Dated, the 29th October, 2019 To The Princip....
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..... Subsequently, the Board has received references from field formations as well as from the trade seeking certain clarifications on the Scheme. 2. The references received by the Board have been examined, and the issues raised therein are clarified in the context of the various provisions of the Finance (No.2) Act, 2019 and Rules made thereunder, as follows: (i) Only the persons who are eligible in terms of Section 125 can file a declaration under the Scheme. The eligibility conditions are captured in Form SVLDRS-1 (Sr. No. 8). The system automatically disallows persons who are not eligible from filing a declaration. However, there is a possibility that such ineligible persons may still make a declaration by selecting an incorrect response. For instance, under Sr. No. 8.1, the person making a declaration has to indicate whether he/she has been convicted for an offence for the matter for which the declaration is being made. If, the answer is 'Yes', then the person is ineligible and is not allowed to proceed further by the system. However, such person is able to file a declaration if he/she incorrectly indicates 'No' as the answer even though he/she h....
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.... has been heard finally on or before the 30th day of June, 2019; (b) 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 a declaration; (c) who have been issued a show cause notice, under indirect tax enactment and the final hearing has taken place on or before the 30th day of June, 2019; (d) who have been 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 s....
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....ECM referring to SVLDRS application filed by the respondent. 34. The officer notes therein, for the first time, that an investigation was under process against the respondent by the Investigation and Compliance Management Section, Chennai Outer Commissionerate, show cause notice dated 06.02.2020 had been issued to the tax payer and that there was a deliberate misdeclaration in that application. 35. Interestingly, both the addressee and the addressor in that letter are one and the same, meaning essentially that the same person who was holding two charges, has written to herself from her capacity as Assistant Commissioner (ECM) to herself in the capacity as Assistant Commissioner (TRC Section). 36. The third reply to show cause notice is dated 27.08.2021, wherein the Respondent seeks withdrawal of the show cause notice on the ground that the notice had been issued subsequent to the filing of application under SVLDRS as detailed in his reply. The Department replied on 07.02.2022 stating that the show cause notice cannot be withdrawn, on the reasoning that they have verified the records and found that the SVLDRS Declaration had been filed by the respondent when he was under in....
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....n 129(1) says that every discharge certificate issued under Section 126 is conclusive, subject to certain caveats under Section 129(2). The exception that is applicable in this case is set out under Section 129(2)(c) of the Scheme. Our interpretation of clause (c), based on the plain language in which it is couched, is that if a material particular in an application is found to be false within one year from the issue of the Discharge Certificate, there shall be a presumption as though the Declaration had never been made with all statutory consequences to follow. 40. The application filed on 15.01.2020 certainly contains a false declaration of a material particular, as the very category under which it has been submitted is wrong. Hence we are of the considered view that the presumption for obliteration of the Declaration stands triggered as per Section 129(2)(c) of the Scheme with all consequences. These aspects ought to have been taken note of by the Writ Court as they have been set out in detail in additional affidavit dated 04.11.2022. 41. The obliteration of the Declaration would be complete and comprehensive in respect of all the processes that have transpired post submis....
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....he explanation tendered is that, there was no investigation or audit pending as on that date, that is on 26.02.2020, 27.02.2020 & 28.02.2020, when the letters had been sent, which is why those agencies had stated so in their letters. They also refer to the show cause notice issued on 06.02.2020 in this regard. This explanation is clearly an afterthought. 47. As on 27.02.2020, the stand of the Department as reflected in the file notings is that the Declaration of the Respondent is to be accepted, as they say. 'As per S.125(1)(f)(ii), where return has been filed and an amount of duty indicated as payable has not been paid, then the ARN become ineligible under SVLDRS. However, in this case no duty has been declared in the return filed. - DGGI, CZU, Audit and ECM have stated that no enquiry or audit initiated against the applicant. - Form 1 may be accepted and Form 3 may be issued.' 48. Subsequent file notings dated 16.07.2020 as well as the positive action taken by the Department by issuing Form 3 on 28.02.2020, receiving the declared amount on 29.06.2020 and issuing discharge certificate in Form 4 on 23.07.2020 establishes without doubt that they had no idea that there was a de....
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....t was only at that time and juncture, that the Department awoke to the situation and realised that the Declaration of the respondent was compromised. Though it is projected to be innocuous, this is a material point, that reveals that all was not well with the processing of the applications by the Designated Committee. That letter reads thus: OFFICE OF THE COMMISSIONER OF GST & CENTRAL EXCISE CHENNAI - OUTER : I - 2054 . II : 600 040 NEWRY TOWERS : NO.2054 -I : II AVENUE : ANNA NAGAR : CHENNAI - 600 040 C.No.IV/06/23/2014-SIR Gr XI Date: 27.08.2020 To, The Assistant Commissioner of GST & C Ex (TRC Section) Chennai Outer Commissionerate Madam, Sub: SVLDRS application of Shri Sundaram Satish Kumar (ARN No.LD1501200009288) - Reg. ----- Please refer SVLDRS application filed by Shri Sundaram Satish Kumar (STC BULPS3625PSD001) having ARN No.LD1501200009288. 2. In this regard, it is noticed that SVLDRS-4 has been issued to the taxpayer (Shri Sundaram Satish Kumar - STC BULPS3625PSD001) for an amount of Rs. 64,32,402/- for th....
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.... the Customs, GST and Central Excise, Chennai, Chennai Outer Commissionerate. 10. With reference to the above, it is submitted that vide letter dated 28.08.2024, the office of the Principal Chief Commissioner of GST and Central Excise, Chennai has informed inter alia that the investigation in respect of the case/issue referred to in the Memorandum No.GEXCOM/IGG/MISC/88/2021-VIG-O/O COMMRCGST- CHN(O) dated 28.02.2022 was taken up by the Director General of Vigilance (DGOV), New Delhi and that after completion of the investigation the DGOV, New Delhi has communicated its decision/directions through a letter F.No.V.527/03/2023/794 dated 15.01.2024 to the Principal Chief Commissioner of GST and Central Excise wherein, at Para 4(ii) it is stated that "regarding the role of Ms.Supriya Chandran, the then Assistant Commissioner, it was observed that she was in-charge of both investigation and SVLDRS processing in the material time; that however, there was a lapse on her part in as much as furnishing "NIL" report denoting that there was no investigation against the declarant; that it appeared that the officer did not notice the name of the unit viz. M/s.Heaven Engineering while put....
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....application is presumed not to have been filed at all. We hence reverse the order of the Writ Court and allow this Writ Appeal. 60. The Department is directed to proceed with the show cause notice in accordance with law, adhering to the principles of natural justice and conclude the proceedings within a period of three (3) months from date of receipt of a copy of this order. In light of the discussion as above, let the adjudication of the impugned Show Cause Notice be entrusted to some other Commissionerate and the directions in this paragraph, be communicated, to ensure compliance. No costs. Connected Miscellaneous Petition is closed. ============= Document 1 C.NO.14/06/994/2020-TRC -11- Y 3 Points for Consideration by the committee Declarant agrees with the tax dues as calculated by the system Yes Amount to be paid by the declarant : Rs 64,32,402/- The file is put up for perusal and orders, please. Rathaus 27-02-2020 (P.Ratan Dup) Super Voluntary Disclosure - Period - 01/04/2014 - 30/06/2017 - ST 3 returns filed for period Ags 2014. (with NIL tax liability) 27) ADC/JC'S UNIT 27/2 OUT Mai 2015 IN 27/2 No ST3 returns fi....