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2015 (11) TMI 1828 - HC - Central ExciseRejection of declaration under the Kar Vivad Samadhan Scheme, 1998 - seeking settlement of case - seeking declaration of tax arrears of Central Excise Duty of ₹ 2,69,944 and Penalty of ₹ 3,64,238 - whether the factual position stated by the petitioner in the declaration, which is required to be filed in the prescribed Form No. 1-B, is incorrect in any manner? HELD THAT - The Department is right in pointing out that the duty/cess was already paid by the petitioner and was not due on 4-12-1998 when the declaration was filed, we fail to understand as to how that would result in causing willful loss to the public exchequer, as such. It would be a different matter, if the petitioner was to incorrectly claim that the amount was not outstanding on the day of filing declaration. Only then it would be a case of wrong or incorrect disclosure made to cause loss to public exchequer. Further, we hold that the correctness of the declaration submitted in the prescribed form for settlement of the dispute under the Scheme, cannot be judged on the basis of the stand taken by the assessee in the correspondence exchanged with the Department, prior to submission of such declaration. That approach will be counterproductive to the purpose and intent for which the Scheme has been launched - for resolution of the disputes. In other words, the declaration cannot be jettisoned at the threshold as has been done in the present case, by referring to the stand taken by petitioner in its previous correspondence exchanged with the Department. Instead, the Department ought to have treated the disclosures made in the declaration by the petitioner as relevant facts; and the correctness thereof could be judged on its own merits. We have no manner of doubt that in the facts of the present case, it was not open to the Department to non-suit the petitioner from participating in the said Scheme at the threshold on the ground that the factual position stated in the declaration dated 4-12-1998, submitted in the prescribed Form 1-B, Annexure P-11, was incorrect as it was not consistent with the previous communication sent by the petitioner dated 15-6-1998 - much less is of such a nature that it would cause loss to public exchequer either directly or indirectly. If the petitioner has already paid the amount towards Duty/cess, there can be no loss to the public exchequer as such. The petitioner, at best, would be entitled for adjustment as per the Scheme propounded, which is a matter to be considered by the Appropriate Authority. It is also open to the Appropriate Authority to consider as to whether the assessee, who has already paid the amount towards Duty/cess is eligible to participate in the Scheme. The communication dated 3-3-1998, Annexure P-12, is founded on incorrect understanding of the requirement of declaration to be filed in the prescribed format and disclosures made by the assessee in respect of the respective items to be declared therein. In the fact situation of the present case, it is not possible to hold that the petitioner had misdeclared the relevant information, as noted in the impugned communication. The impugned communication, Annexure P-12, is quashed and set aside. Instead, the Appropriate Authority is directed to process the proposal/declaration of the petitioner under the Scheme as per law - Petition allowed.
Issues Involved
1. Validity of the rejection of the declaration under the Kar Vivad Samadhan Scheme, 1998. 2. Alleged misdeclaration by the petitioner. 3. Correctness of the figures stated in the declaration. 4. Compliance with procedural requirements for the declaration. 5. Impact of previous communications on the declaration's validity. Issue-Wise Detailed Analysis 1. Validity of the Rejection of the Declaration The petitioner challenged the rejection of their declaration under the Kar Vivad Samadhan Scheme, 1998, by the Department. The rejection was based on the claim that the petitioner had willfully misdeclared the amount of pending arrears to avail undue benefits. The court scrutinized whether the factual position stated in the declaration was incorrect or constituted a misdeclaration. 2. Alleged Misdeclaration by the Petitioner The Department argued that the petitioner had misdeclared the amount of tax arrears in their declaration dated 4-12-1998. They pointed out discrepancies between the figures in the declaration and a previous communication dated 15-6-1998. The petitioner contended that the declaration was accurate and based on the factual position as of the date of filing, supported by the affidavit in the prescribed form. 3. Correctness of the Figures Stated in the Declaration The court examined the figures stated in the declaration, particularly in columns 4 to 7. The Department failed to demonstrate how these figures were incorrect. The petitioner had made book entries as per the Assistant Commissioner's instructions, which were communicated on 2-12-1998. The court found that the figures in the declaration were consistent with these entries and the actual financial position on 4-12-1998. 4. Compliance with Procedural Requirements for the Declaration The court emphasized that the declaration's correctness should be judged based on the information provided in the prescribed form, not on previous communications. The declaration is a formal statement of material facts and must be evaluated on its own merits. The court cited the Supreme Court's definition of "declaration" to support this view, emphasizing that it constitutes a deliberate and solemn statement of facts. 5. Impact of Previous Communications on the Declaration's Validity The court held that previous communications between the petitioner and the Department should not affect the validity of the declaration. The Department's rejection of the declaration based on these communications was deemed inappropriate. The court stated that the declaration should be processed based on the information provided in the prescribed form, and any discrepancies should be addressed during the processing, not at the threshold. Conclusion The court quashed the impugned communication dated 3-3-1999, which rejected the petitioner's declaration. It directed the Appropriate Authority to process the declaration as per the law, without being influenced by previous communications. The court clarified that it was not expressing any opinion on the merits of other issues related to the Scheme's applicability to the petitioner. The petition was disposed of with no order as to costs, and the amount already deposited by the petitioner was to be adjusted in the final decision.
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