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2020 (9) TMI 257 - HC - Central ExciseApplicability of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to the cases involving confiscation and redemption fine - Rejection of the declaration made by the petitioners by the Designated Committee formed under SVLDRS HELD THAT - The Coordinate Bench of this Court has done analysis in detail of the provisions of the Scheme in para 6 to 9 of the order dated 24.12.2019 and has also discussed the frequently asked questions (FAQs) and flyers issued by the Central Board of Indirect Taxes as well as the letter dated 20.12.2019 in para-10 to 12 to form a prima-facie opinion that when the Board has issued FAQs, press notes and flyers stating that the scheme grants waiver of interest, fine and penalty, then the scheme would be relatable to redemption fine also, because there is no other fine which is contemplated under the Act coupled with the fact that Section 125 of the Finance Act, 2019 does not exclude the categories of cases involving confiscation / fine in lieu of confiscation. In view of the Scheme as was introduced by Chapter-V of the Finance Act, 2019 comprising of Sections 120 to 135, flyers issued by the Central Board of Indirect Taxes and Customs and press note dated 22.08.2019 issued by the Ministry of Finance, Government of India, the intent and purpose of the Scheme appears to reduce litigation by giving a window to the taxpayers to pay the tax and end the litigation. The object of the Scheme was to provide one time measure for putting an end to past disputes of central excise and service tax and to provide the opportunity of voluntary disclosure to non complying taxpayers. Section 121(c) of the Scheme defines the amount in arrears which means the amount of duty which is recoverable as arrears of duty under the indirect tax enactment, on account of adjudication by the competent authority or on account of admitted tax liability but not paid. Section 121 (h) of the Scheme provides that declarant means a person who is eligible to make a declaration and files such declaration under Section 125. Though, there is no express provision in the Scheme with regard to providing immunity from payment of fine, the respondent authorities have specifically stated in FAQs, press notes and flyers that the Scheme provides for full waiver of interest, fine and penalty. In the facts of the case, there in no other fine which is envisaged under the indirect tax enactment. At this juncture, the contention raised on behalf of the respondents that the fine would mean the fine to be levied by the competent Court under Section 9 of the Central Excise Act and not fine as referred to be the redemption fine under Section 34 of the Act cannot be accepted considering overall intent and object of the Scheme, and we therefore, concur with the prima-facie opinion of the Coordinate Bench - Coordinate Bench expressed in para-10 of the order that in terms of the FAQs, press notes and flyers issued by the Board, the Scheme provides substantial relief in the tax dues for all categories of cases as well as full waiver of interest, fine and penalty. Thus, having regard to the fact that (i) section 125 of the Finance Act says that all persons shall be eligible to make declaration under the Scheme except for the categories specifically enumerated therein; and (ii) under section 125 of the Finance Act, cases involving confiscation and fine in lieu of confiscation (redemption fine) are not excluded from the benefit of the Scheme, and (iii) according to the Board, the Scheme provides relief in tax dues for all categories of cases; prima facie it appears that the legislature did not have the intention of excluding cases involving confiscation and fine in lieu of confiscation from the purview of the Scheme. 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 Rule-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 central excise duty under Rule-25 of the Central Excise Rules, 2002 would be an amount in arrears as defined in Section 121 (c) of the Scheme along with the amount of duty which is recoverable as arrears of duty under indirect tax enactment - the interpretation made by the Board in the communication dated 20.12.2019 in order to consider the declaration made by the declarant, the payment of redemption fine is prerequisite, is not tenable in law, because as per Section 125 of the Scheme a declarant cannot be made ineligible to file a declaration for non-payment of redemption fine. Moreover, 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. The Supreme Court in the case of KP VARGHESE VERSUS INCOME-TAX OFFICER, ERNAKULAM, AND ANOTHER 1981 (9) TMI 1 - SUPREME COURT has laid down that the Rule of construction by reference to the principle of contemporanea exposition est optima et fortissima in lege which is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous. Therefore, when the Central Board of Indirect Taxes has issued FAQs, press notes and flyers by way of explaining the scheme providing waiver of interest, penalty and fine and immunity from prosecution, then case involving confiscation / redemption fine cannot be excluded under the Scheme, as such explanation by the Board provides legitimate aid in the constructions and interpretations of the provision of the Scheme. The declaration filed by the petitioners and other similarly situated persons are required to be considered by the designated committee without payment of redemption fine by the declarant. The impugned orders passed by the designated committee are therefore quashed and set aside - Petition allowed.
Issues Involved:
1. Applicability of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to cases involving confiscation and redemption fine. 2. Interpretation of "fine" under the Scheme and whether it includes redemption fine. 3. Validity of the Designated Committee's rejection of declarations involving confiscation and redemption fine. 4. Legal implications of FAQs, press notes, and flyers issued by the Central Board of Indirect Taxes and Customs (CBIC) under the Scheme. Issue-wise Detailed Analysis: 1. Applicability of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to cases involving confiscation and redemption fine: The petitioners challenged the rejection of their declarations under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, arguing that the Scheme should apply to cases involving confiscation and redemption fine. The Court noted that Section 125 of the Finance Act, 2019 does not exclude cases involving confiscation and redemption fine from the Scheme. The Court observed that the Scheme's objective is to reduce litigation and provide relief from tax dues, including interest, penalty, and fine. Therefore, cases involving confiscation and redemption fine should be eligible under the Scheme. 2. Interpretation of "fine" under the Scheme and whether it includes redemption fine: The Court examined whether the term "fine" in the Scheme includes redemption fine. The Designated Committee had rejected the declarations on the ground that the Scheme does not provide for waiver of redemption fine. However, the Court referred to FAQs, press notes, and flyers issued by the CBIC, which stated that the Scheme provides full waiver of interest, penalty, and fine. The Court concluded that the term "fine" in the Scheme should be interpreted to include redemption fine, as it is the only other fine contemplated under the Central Excise Act, 1944. The Court held that the Scheme's intent is to provide relief from all liabilities, including redemption fine. 3. Validity of the Designated Committee's rejection of declarations involving confiscation and redemption fine: The Court found that the Designated Committee's rejection of the declarations was not justified. The Committee had rejected the declarations on the basis that the Scheme does not cover cases involving confiscation and redemption fine. However, the Court held that the Scheme does not exclude such cases, and the declarations should be accepted. The Court directed the respondents to permit the petitioners to file fresh declarations under the Scheme without payment of redemption fine and process them accordingly. 4. Legal implications of FAQs, press notes, and flyers issued by the Central Board of Indirect Taxes and Customs (CBIC) under the Scheme: The Court emphasized the importance of FAQs, press notes, and flyers issued by the CBIC in interpreting the Scheme. The Court referred to the Supreme Court's decision in K.P. Varghese v. Income-tax Officer, which held that administrative interpretations and explanations are relevant in construing statutory provisions. The Court noted that the CBIC's communications clearly stated that the Scheme provides waiver of interest, penalty, and fine. Therefore, the Court held that the Designated Committee should consider these communications while interpreting the Scheme and accepting declarations involving confiscation and redemption fine. Conclusion: The Court allowed the petition, quashing the impugned orders of the Designated Committee. It directed the respondents to accept fresh declarations under the Scheme without requiring payment of redemption fine. The Court also extended the benefit of its order to similarly situated declarants who had not approached the Court, to avoid multiplicity of proceedings. The Court emphasized that the Scheme's objective is to provide comprehensive relief from all liabilities, including redemption fine, and directed the issuance of discharge certificates under Section 129 of the Finance Act, 2019.
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