2016 (4) TMI 448 - HC - Central Excise

Validity of order - Manufacturer of various types of motor vehicles - Whether the pendency of the Petitioner s RA before the CESTAT satisfies the requirement for acceptance of the Petitioner s declaration under the KVSS - Respondent did not consider the declaration filed by petitioner because the RA was pending before the CESTAT but not admitted - Held that - it has been clarified even in the circular issued by the CBDT that If the taxpayer has filed within the statutory time a legally valid reference application under Section 256(1) or 256(2) of the IT Act (corresponding to Section 35G of the CE Act) 1944 the condition of pendency of reference could be said to have been satisfied . Further it has been clarified that there could be cases where there may be no procedure for admitting an appeal and in such cases the mere proof of filing an appeal would be sufficient. In other words, as far as the RA filed by the Petitioner is concerned, since there is no procedure of admitting such an RA, the mere proof of pendency of the RA before the CESTAT should be sufficient for accepting the declaration filed by the Petitioner under the KVSS. - Petition disposed of

Summary

Issues:
1. Justification of rejection of application under Kar Vivad Samadhan Scheme (KVSS).
2. Interpretation of pendency of reference application under Section 35G of the Central Excise Act, 1944 for acceptance under KVSS.

Analysis:

Issue 1:
The petitioner, a manufacturer of motor vehicles, had a central excise demand confirmed by the Commissioner of Central Excise (CCE) in 1996. Subsequently, the Customs Excise & Gold (Control) Appellate Tribunal (CEGAT) confirmed the demand but reduced the penalty. The petitioner filed a reference application (RA) under Section 35G of the Central Excise Act, 1944 and sought to avail the benefit of KVSS by filing a declaration. However, the Assistant Commissioner of Central Excise rejected the application under KVSS, stating that the RA before CEGAT was not on a point of law. The petitioner's representations citing relevant circulars were also turned down. The High Court intervened, quashing the rejection and directing acceptance of the declaration under KVSS, subject to adjustment based on the Respondent's decision.

Issue 2:
The key question was whether the pendency of the RA before CEGAT satisfied the requirement for accepting the petitioner's declaration under KVSS. The Respondent argued that the RA was pending but not 'admitted'. However, legal precedents were cited to support the view that even if an appeal is time-barred or not maintainable, it should be treated as pending for KVSS consideration. The court emphasized that the mere proof of pendency of the RA should be sufficient for accepting the declaration under KVSS. Citing circulars and previous judgments, the court quashed the rejection of the application and directed the Respondent to accept the declaration under KVSS, subject to further proceedings.

In conclusion, the High Court's judgment delves into the legal intricacies surrounding the rejection of the petitioner's application under KVSS and the interpretation of the pendency of the reference application under the Central Excise Act for acceptance under the scheme. The court's detailed analysis, citing relevant legal provisions and precedents, ensures a just and fair resolution in favor of the petitioner, emphasizing the importance of procedural adherence and equitable treatment in tax matters.