TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1158
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....a part of the batch of petitions wherein the short question that arises for consideration of this Court is whether redemption fine is to be considered as part of duty, penalty or the amount eventually payable and is hence, covered by the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinafter, 'the SVLDR Scheme') or not. 4. The background giving rise to the petition is that initially, the Petitioner was issued a show cause notice dated 23rd June, 2014 (hereinafter, 'the SCN'), which was adjudicated by the Commissioner of Central Excise, Delhi-II vide Order-in-Original dated 28th October, 2015, confirming duty demand of Rs. 2,35,42,201/- along with interest and penalty. 5. The said Order-in-Original dated 28th October, 2015 was then challenged by the Petitioner before the Central Excise and Service Tax Appellate Tribunal (hereinafter, 'CESTAT') and the CESTAT, vide order dated 23rd February, 2018 allowed the appeal filed by the Petitioner and remanded the matter to the adjudicating authority for de novo adjudication of the SCN. The relevant portion of the final order dated 23rd February, 2018 is extracted herein below: "7. In the peculiar finding of the case we set a....
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....nt Name: RBI Virtual IFSC Code: RBIS0CBICER Challan Expiry Date: Jul 1, 2020, 12:00:00 AM Total Duty Amount: 87,85,107.00 13. However, due to a glitch in the portal, the payment made by the Petitioner did not go through. On 30th June, 2020 itself the Petitioner wrote to Central Board of Indirect Taxes and Customs (hereinafter, 'CBIC') informing them as under: "...In this regard, I have been issued SVLDR-3 No: L130320SV300488 on 13.03.2020. Amount of payment to be made has also been indicated in the said Form. Owing to Covid-19 pandemic, the date for making the payment has been extended to 30.06.2020. I had been trying to make to make the payment after generating the CTIN No. 2006258884 at around 3.00PM. Since then I had been trying continuously for making the payment but either the website shows 'no challans' or gives and error code HTTP 404. After continuously receiving the message, I had also called the help line number 180030101000. On calling. the help desk, I had been advised to browse through 'internet explorer' for making the payment. After great difficulty, I had been able to enter the payment site and had also generated a mandate form at....
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....2020 and the said payment is duly reflected under the 'Details of Taxpayer Summary View Tab', where the amount collected is shown as Rs. 87,85,107/- through the Reserve Bank of India by RTGS bank transfer. 17. Under such circumstances, the Petitioner submits that the amount having been paid, the benefit of the SVLDR Scheme ought to be afforded to the Petitioner. 18. Reliance is also placed upon on the Track Challan Status, wherein under the SVLDR Scheme, the Petitioner's amount is shown as `PAID'. The same is extracted herein below: 19. Ld. Counsel for the Petitioner has also relied upon certain judicial precedents in support of their contention. Relevant portions of the same are extracted herein below: i. Shekhar Resorts Ltd. Vs. Union of India, 2023 3 SCC 220 "23. Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand, the appellant cannot be punished for not doing something which was impossible for it to do. There was a legal impediment in the way of the appellant to make any payment during the moratorium. Even if the appellant wanted to deposit settlement amount within the stipulated period. it could not do so in view of....
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....object of the Scheme is to reduce litigation by allowing the eligible assessee to make the payment of the outstanding dues after availing the relief under the Scheme. As per the provisions of the Scheme, respondent No. 2 has issued a statement as provided under section 127 of Chapter V of the Finance Act (No. 02) 2019 determining the amount payable by the petitioner under the Scheme. Therefore, in the given facts and circumstances, the petitioner made bona fide attempt to make the payment as determined under the Scheme and is also prepared to pay the amount in question in accordance with the Scheme along with interest for the period for which the petitioner was not permitted to make payment by respondent authorities considering extreme Pandemic condition of Covid-19, we are of the opinion that this is a fit case for invocation of the powers under Article 226 of the Constitution of India. 11. The contention raised on behalf of the respondents relying upon the decision of the Apex Court in case of Yashi Constructions (supra) would not be applicable in the facts of the case as the petitioner made a bona fide attempt to make the payment within the stipulated time, however, due to te....
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....d to the benefit of the scheme. 25. Another argument raised on behalf of the Respondents is that penalty and redemption fine are different from each other and penalty does not include redemption fine. Therefore, the Petitioner has to pay redemption fine along with dues as mentioned in SVLDR Scheme-III issued to them by the Designated Committee. Since the Petitioner could not deposit the settled amount, along with the redemption fine under SVLDR Scheme-III within the stipulated time period, the Designated Committee could not issue SVLDR Scheme-IV, i.e. the discharge certificate and hence, the SVLDR Scheme-I declarations filed by the Petitioner are deemed to have lapsed. 26. This Court observes that the SVLDR Scheme-III Form, was issued to the Petitioner inter alia declaring that redemption fine is required to be paid by the Petitioner before issuance of discharge certificate. The said declaration was issued to the Petitioner on 13th March, 2020 with the following remarks: "Remarks SVLDRS-3 ISSUED SUBJECT TO SVLDRS, 2019 ACT AND RULES APPLICABLE. DISCHARGE CERTIFICATE WILL BE ISSUED AFTER THE PAYMENT OF REDEMPTION FINE AS AND WHEN ADJUDICATED. 27. The Court has considered....
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....pending as on the 30th day of June, 2019, and if the amount of duty is,- (i) rupees fifty lakhs or less, then, seventy per cent. of the tax dues; (ii) more than rupees fifty lakhs, then, fifty per cent. of the tax dues; (b) where the tax dues are relatable to a show cause notice for late fee or penalty only, and the amount of duty in the said notice has been paid or is nil, then, the entire amount of late fee or penalty; (c) where the tax dues are relatable to an amount in arrears and,- (i) the amount of duty is, rupees fifty lakhs or less, then, sixty per cent. of the tax dues; (ii) the amount of duty is more than rupees fifty lakhs, then, forty per cent. of the tax dues; (iii) in a return under the indirect tax enactment, wherein the declarant has indicated an amount of duty as payable but not paid it and the duty amount indicated is,- (A) rupees fifty lakhs or less, then, sixty per cent. of the tax dues; (B) amount indicated is more than rupees fifty lakhs, then, forty per cent. of the tax dues; (d) where the tax dues are linked to an enquiry, investigation or audit against the declarant and the amount quantified on or before the 30th day of June, 20....
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....d; (c) in a case of voluntary disclosure where any material particular furnished in the declaration is subsequently found to be false, within a period of one year of issue of the discharge certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted." 28. A perusal of the above provisions of the SVLDR Scheme would show that the same applies only to legacy disputes and under Section 124 of the SVLDR Scheme, different amounts are prescribed, which if paid, would result in a discharge certificate being issued to the tax payer stating that their liability stands discharged. 29. Further a reading of Section 123 (b) of the SVLDR Scheme would show that `tax dues' in terms of the said provision would mean the duty payable in a show cause notice issued prior to 30th June 2019. In the present case, both SCNs have been issued to the Petitioners prior to the said date. Thus, the SCNs had raised a demand which was pending and yet to be adjudicated. 30. Various amounts which are prescribed in the SVLDR Scheme are amounts relatable to the show cause notices, tax dues relatable to a show cause no....
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....missioner of Central Excise or such other Central Excise Officer as may be notified by the Board has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any Central Excise Officer to search and seize or may himself search and seize such documents or books or things. [(2) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to search and seizure shall, so far as may be, apply to search and seizure under this section subject to the modification that sub-section (5) of Section 165 of the said Code shall have effect as if for the word "Magistrate", wherever it occurs, the words [Principal Commissioner of Central Excise or Commissioner of Central Excise] were substituted.]] "34. Option to pay fine in lieu of confiscation. - Wherever confiscation is adjudged under this Act or the rules made thereunder, the officer adjudging it, shall give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks fit. [34-A. Confiscation or penalty not t....
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....y, the word 'penalty' appearing in section 129 of the Scheme includes, within its plain ambit, both, a penalty in personam and a penalty in rem. Here, both, personal penalty and the penalty in rem arose from a single transaction. Clearly, both penalties are part of the same dispute, for a common period. It is so because even according to the revenue both those penalties were imposed vide the Order-in Original 2/A/Ayukt/M/97 dated 14.08.1997. Though that order has not been shown to us, yet it is not the case of the revenue that the 'redemption fine' in question was imposed on the petitioner, independent of that order. The revenue only contends that by its very nature, 'redemption fine' is not a 'penalty' at all. That submission is contrary to the law laid down by the Supreme Court. We have no hesitation to hold, 'redemption fine' is a kind or type of 'penalty' under the Central Excise Act, 1944. xxxx 35.As noted above, the Scheme being a piece of reformative legislation, 'redemption fine' that is a penalty in rem must dearly be shown to have been excluded from the meaning of the word 'penalty' used in section 129 ....
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.... to allow the respondent authorities to overlook the clear and binding statutory provision, in favour of the concession claimed to have been made by the petitioner. The concession, if any, made by the petitioner in the Discharge Certificate proceedings - to deposit the 'redemption fine', would remain contrary to the express provision of law and therefore unenforceable and of no consequence." 40. Similarly, in Synpol Products Pvt. Ltd. 2020 (374) E.L.T. 851, the Gujarat High Court has taken a similar view to the following effect: "10. In view of the above facts and situation, when the respondents had issued show cause notice demanding excise duty together with confiscation of the goods in terms of Rule 25(a) and (d) of the Central Excise Rules, 2002 and redemption fine in lieu of confiscation under Rules 25 as goods were not available for confiscation, it is clear that by issuing the show cause notice, the respondent has invoked Rule 25 of the Central Excise Rules, 2002 for levy of redemption fine in lieu of confiscation as goods which were sought to be confiscated were not available for confiscation. Therefore, the levy of the redemption fine equivalent to demand of cent....
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....n this petition would also apply to the similarly situated declarants who have not approached this Court, in order to reduce the multiplicity of proceedings. Accordingly, this order would apply to the cases of all the declarants involving confiscation/redemption fine. In such circumstances, the respondent authorities are directed to issue necessary discharge certificate under Section 129 of the Finance Act, 2019 to the petitioners subject to fulfilment of all other conditions as per the Scheme. Rule is made absolute to the aforesaid extent, with no order as to costs." 41. The SLP being SLP (C) No. 449/2021 against this decision of the Gujarat High Court has been dismissed. Subsequently, this very view has been followed in respect of the SVLDR Scheme by the Punjab and Haryana High Court in M/s Shoe Sales Corporation CWP-1493-2021 & CWP-1496-2021 where the decision in Synpol Products Pvt. Ltd. (supra) and in M/s Jay Shree Industries (supra) have been followed in the following terms: "The petitioner-M/s Shoe Sales Corporation is seeking writ of certiorari for setting aside orders of the Designated Committee made under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinaf....
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....d flyers, press release and FAQs, it was clearly stated that there would be full waiver of interest, fine and penalty and also complete immunity from prosecution and the cases involving redemption of fine and confiscation cannot be excluded under the said scheme. In this backdrop, the explanation given by the Board with respect to redemption fine cannot be treated separately than the amount of duty under the scheme. The term 'fine' mentioned in the Board's flyers, press release and FAQs cannot be fine imposable under Section 9 of the Central Excise Act, 1944 and the fine mentioned in flyers, press release and FAQs is redemption fine only, As per Section 125 of the Scheme, a declarant cannot be made ineligible to file a declaration for non-payment of redemption fine. 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. Leamed counsel for the petitioner has also stated that Special Leave to Appeal (C) No. 449 of 2021 against the aforesaid judgment has been dismissed on 03.03.2021 and the judgment has attained finality. He has referred another judgment of Allahabad ....
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.... even in that case, the SVLDR Scheme grants immunity/waiver from such "redemption fine" if the basic excise duty is paid as per the Scheme. This is so because under Section 124, what is required to be paid is the prescribed percentage of "tax dues" which is defined in Section 123 to mean the amount of duty disputed and the "amount of duty" is further defined in Section 121 (d) to mean the amount of "central excise duty". Therefore, when Section 124 speaks of payment required to be made of the tax dues, it is certain percentage of central excise duty which entitles the applicant to waiver/immunity under Section 129 of the SVLDR Scheme. Therefore, payment has to be of basic excise duty and not redemption fine to avail benefit of SVLDR Scheme. Admittedly, "redemption fine" cannot be considered as "central excise duty". Section 129 (1) (a) which provides immunity/waiver states that the declarant shall not be liable to pay any further duty, interest or penalty. The phrase "further duty" by accepting the contention of respondents would cover redemption fine also. To put it simply, what is required to be paid for availing benefits of the scheme is the prescribed percentage of central exci....
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....est or penalty with respect to the period covered in the declaration. Although in Section 129 (1) (a) of SVLDR Scheme redemption fine is per se not included, but the Central Board of Indirect Taxes and Customs issued flyers, wherein it is stated that the benefit under the Scheme would be total waiver of interest, penalty and fine. To the same effect, is the press note dated 22nd August 2019 issued by the Ministry of Finance, Government of India, wherein it is clarified that there would be no other liability of interest, fine or penalty if the dispute is resolved under the SVLDR Scheme. This issue had come up for consideration before the Allahabad High Court in M/s. Jay Shree Industries (supra) wherein on similar facts, the High Court clarified by analysing the meaning of duty, penalty and fine and came to a conclusion that redemption fine under Section 34 of the Central Excise Act is only a payment akin to penalty and, therefore, a declarant is entitled to the waiver of redemption fine under Section 129 of SVLDR Scheme. The very same issue also arose before the Gujarat High Court in Synpol Products Pvt. Ltd. (supra) and the High Court in paragraph 4.5 of the said decision recorded ....
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....e duty in respect of any goods, there can be various consequences. There can be seizure of goods and/or relevant material, a redemption fine can be imposed for release of goods. Such seizure or imposition of redemption fine, is nothing but a fine being paid due to nonpayment of duty. Once the duty itself gets settled under the SVLDR Scheme, it would not be appropriate to interpret the Scheme in a manner that would be contrary to the intention thereof. 48. The discharge certificate that is to be issued by the Department upon payment of duty in terms of the scheme is for waiver of entire duty, interest or penalty and redemption fine would be part of these three terminologies, as has been rightly interpreted by the CBIC itself in its flyer and FAQs. 49. Tax payers who may not understand complex terminologies in a taxing statute heavily rely upon the FAQs or publicity material published by the CBIC to understand such Schemes. Hence, responsibility has to be borne by the Department to such FAQs/Publicity material which are followed as guidance by the tax payers and arguments to the contrary would not be tenable. 50. Under such circumstances, this Court is of the opinion that when pen....