2021 (9) TMI 154 - HC - Central Excise

Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - error in the issuance of either of the two forms SVLDRS-2 or not - It is the case of the petitioners that in the proceeding before the Designated Committee (under the Scheme) respondent no.3 was a member and simultaneously he was the Adjudicating Authority under the Act with respect to the Show Cause Notice dated 05.06.2015 (upon remand) - HELD THAT - The Scheme does not contain any express provision to stay a pending adjudication proceeding by way of a legal effect/fiction arising from any declaration filed thereunder. Second neither the petitioners nor the revenue challenged the earlier order of the Tribunal dated 15.05.2019 and there was no specific stay order operating against the same in any proceeding. The computation of the EAP under Litigation i.e. pending adjudication case category would be substantially lower than that computed under the Arrears category. There is a complete absence of any statutory intent to allow for change of case category from Litigation to Arrears or to redetermine of the tax dues and EAP upon an adjudication order coming into existence during the pendency of proceedings under the Scheme. Therefore once the petitioner had (rightly) filed the (first) declaration on 10.10.2019 under the case category Litigation determination of the EAP amount would be governed accordingly. It cannot be changed thereafter. In absence of any statutory risk to the adjudication proceedings being hit by any rule of limitation those proceedings should necessarily have been kept in abeyance till the conclusion of the proceedings under the Scheme. We cannot contemplate what useful purpose could be served by continuing and concluding the adjudication proceeding during the pendency of the proceedings arising upon filing of the (first) declaration on SVLDRS-1 under the Scheme on 30.10.2019. In fact by their conduct the authorities under the Act could not have defeated the object of an otherwise valid proceedings under the Scheme. In absence of any consequence of abatement etc. being prescribed either by the Scheme or the Rules the time limit of sixty (60) days under section 127(4) (127(4) After hearing the declarant a statement in electronic form indicating the amount payable by the declarant shall be issued within a period of sixty days from the date of receipt of the declaration.) of the Scheme is purely directory. The statutory authority/Designated Committee having failed to act within time contemplated under the Scheme it cannot escape its obligation to issue the appropriate final demand of EAP on form SVLDRS-3. The Designated Committee also took on record written objections/arguments filed by the petitioners dated 09.12.2019 and 26.12.2019 and it also appears to have heard the matter at some length. However it did not discharge its statutory obligation and it did not respond to the same as mandated under section 127(4) (127(4) After hearing the declarant a statement in electronic form indicating the amount payable by the declarant shall be issued within a period of sixty days from the date of receipt of the declaration.) of the Scheme. Having failed to issue the revised EAP demand on form SVLDRS-3 the (first) declaration of SVLDRS-1 (filed by the petitioners on 30.10.2019) is still pending. Since the matter is still pending before the Designated Committee we are not required to answer the question of determination of the EAP at this stage. The writ petition is allowed in part with a direction upon the Designated Committee to necessarily consider the written objections/arguments filed by the petitioners dated 09.12.2019 and 26.12.2019 in response to the SVLDRS-2 dated 04.12.2019 and to issue the appropriate final demand of net EAP on form SVLDRS-3 to the petitioners within a period of thirty (30) days from the date of communication of this order.

Summary

Issues Involved:
1. Challenge to the estimate furnished under Form SVLDRS-2.
2. Validity of the adjudication order passed during the pendency of proceedings under the Scheme.
3. Determination of the correct Estimate Amount Payable (EAP).
4. Validity of the second declaration filed under the Scheme.

Issue-wise Detailed Analysis:

1. Challenge to the estimate furnished under Form SVLDRS-2:
The petitioners challenged the estimate furnished on Form SVLDRS-2 dated 04.12.2019, under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, arguing that the EAP should have been computed at Rs. 15,37,816.00 against the total disputed tax dues of Rs. 80,75,626/- after adjusting the pre-deposited amount of Rs. 25,00,000/-. The Designated Committee had computed the EAP at Rs. 70,11,055.50 based on the proposed excise duty liability of Rs. 1,40,22,111/- from the Show Cause Notice dated 05.06.2015. The petitioners filed written objections/arguments dated 09.12.2019 and 26.12.2019, which were not addressed by the Designated Committee.

2. Validity of the adjudication order passed during the pendency of proceedings under the Scheme:
The adjudication order dated 30.12.2019, confirming the disputed duty liability at Rs. 80,75,626/- and dropping the duty liability of Rs. 59,46,648/-, was passed during the pendency of proceedings under the Scheme. The court noted that the Scheme does not contain any express provision to stay pending adjudication proceedings due to a declaration filed under it. However, the adjudication proceedings should have been kept in abeyance until the conclusion of the proceedings under the Scheme to avoid defeating the object of the Scheme, which aims to end legacy disputes.

3. Determination of the correct Estimate Amount Payable (EAP):
The court emphasized that the computation of the EAP under the case category 'Litigation' would be substantially lower than that computed under the 'Arrears' category. The Designated Committee should have issued the final demand of EAP on Form SVLDRS-3 after considering the written objections/arguments filed by the petitioners. The failure to issue the mandatory final demand on SVLDRS-3 meant that the proceedings under the (first) declaration filed on 30.10.2019 were still pending.

4. Validity of the second declaration filed under the Scheme:
The second declaration filed on 31.12.2019, arising from the adjudication order dated 30.12.2019, was deemed non-est and not maintainable in law. The cut-off date of 30.06.2019 for filing a declaration with respect to any order that may have been passed upon conclusion of adjudication proceedings was not met. Therefore, the second declaration had no legal effect, and the demand of EAP dated 17.01.2020 raised thereon was without jurisdiction.

Conclusion:
The writ petition was allowed in part. The Designated Committee was directed to consider the written objections/arguments filed by the petitioners and issue the appropriate final demand of net EAP on Form SVLDRS-3 within thirty days. The challenge to the adjudication order dated 30.12.2019 was not entertained at this stage. No order as to costs.