2021 (2) TMI 814 - HC - Service Tax

Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - Procedural irregularity - Substantial right - Amnesty Scheme seeking waiver of interest and penalty - Rule 6A of the CESTAT (Procedure) Rules 1982 - HELD THAT - From the reading of the Rule it is evident that with respect of one order single appeal irrespective of number of show cause notices may be filed. The petitioners undisputedly had filed single appeal with respect to more than one show cause notices. Filing of appeal before Tribunal is a substantial right whereas filing of declaration under Amnesty Scheme is mere procedural formality as declaration is maintainable if eligibility conditions are complied with which are enumerated under Section 123 to 125 of the Finance Act 2019. Indubitably the petitioners are complying with all the eligibility conditions. Thus the Petitioners cannot be denied the relief claimed. The intention of legislature cannot be gone into if language is plain and unambiguous especially in taxation matters. The scheme in question is not a piece of taxation legislation instead it is a piece of beneficial legislation for Union as well dealers/assessee. The Government is getting revenue without litigation and assessee is getting immunity from partial tax liability as well as interest and penalty thus there is win-win situation for both sides. The Amnesty Scheme was launched to minimize litigation and respondent seems to unnecessarily dragging the matter. The hyper technical approach of the officials/authorities is contrary to the intent and purport of the beneficial scheme and the mandate of the Parliament. The Finance Act has excluded various categories of persons from the scheme and it is undisputed that petitioners fall within category of eligible persons. It is settled law even under taxation that if a person is eligible to one or another benefit he should not be denied said benefit on procedural or technical grounds. The requirement of strict compliance of conditions is necessary to ascertain eligibility however procedural formalities need not to be strictly complied with. Filing of one or more declarations has been prescribed by Rules whereas conditions of eligibility have been prescribed by Finance Act 2019. The filing of separate declaration is not even condition whereas it is sort of procedure. Once an assessee complies with conditions prescribed by Finance Act 2019 and no prejudice is caused to the revenue by filing of single declaration instead of multiple there is no reason to deny benefit on the ground of non-compliance of any condition which is purely procedural in nature. In the present case no prejudice has been or would be caused to the Revenue and if at all severe prejudice would be caused to the petitioner in case his prayer is not accepted in the light of the object of the Amnesty Scheme by permitting adoption of hyper technical approach. Petition allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Rejection of declarations under Amnesty Scheme due to filing of a single declaration for multiple show cause notices.
2. Interpretation of Rule 3(2) of SVLDR Rules, 2019, and its application to the pending appeal.
3. Applicability of Rule 6A of CESTAT (Procedure) Rules, 1982, in filing a single appeal for multiple show cause notices.
4. The beneficial nature of the Amnesty Scheme and its interpretation.
5. Procedural versus substantive compliance in the context of the Amnesty Scheme.

Detailed Analysis:

1. Rejection of Declarations under Amnesty Scheme:
The petitioners sought the quashing of orders rejecting their declarations under the Amnesty Scheme. The Designated Committee rejected the declarations on the ground that the petitioners filed a single declaration for multiple show cause notices, contrary to Rule 3(2) of the SVLDR Rules, 2019, which mandates separate declarations for each show cause notice.

2. Interpretation of Rule 3(2) of SVLDR Rules, 2019:
The petitioners argued that under Rule 6A of the CESTAT (Procedure) Rules, 1982, a single appeal is maintainable irrespective of the number of show cause notices if a common order is passed. The Court found that the issue was not res integra and referred to a previous judgment where it was held that a single declaration is justified if a consolidated order is passed for multiple show cause notices. The Court noted that the language of Rule 3(2) requires separate declarations for each 'case,' but in this instance, a single appeal was filed against a consolidated order, thus justifying a single declaration.

3. Applicability of Rule 6A of CESTAT (Procedure) Rules, 1982:
The Court highlighted that under Rule 6A, a single appeal can be filed against a common order dealing with multiple show cause notices. The petitioners had filed a single appeal against a common order, which was a substantial right. Filing a declaration under the Amnesty Scheme was seen as a procedural formality, and the petitioners complied with all eligibility conditions under Sections 123 to 125 of the Finance Act, 2019.

4. Beneficial Nature of the Amnesty Scheme:
The Court emphasized that the Amnesty Scheme is a piece of beneficial legislation aimed at reducing litigation and realizing outstanding dues. The scheme is not a piece of taxation legislation but a beneficial one for both the Union and the assessees. The hyper-technical approach of the authorities was contrary to the scheme's intent and purpose. The Court reiterated that procedural formalities should not deny the benefit if the substantive conditions are met.

5. Procedural versus Substantive Compliance:
The Court noted that strict compliance is necessary to ascertain eligibility, but procedural formalities need not be strictly complied with. Filing separate declarations is a procedural requirement, not a condition of eligibility. The Court cited a Supreme Court judgment stating that actions should not be invalidated on trivial procedural grounds unless substantial prejudice is shown. In this case, no prejudice was caused to the revenue by filing a single declaration, and denying the benefit would cause severe prejudice to the petitioners.

Conclusion:
The Court allowed the petitions, quashing the impugned orders and directing the respondents to issue discharge certificates subject to compliance with other conditions within four weeks. The judgment underscores the importance of interpreting beneficial legislation in a manner that furthers its purpose and avoids a hyper-technical approach that could undermine its objectives.