SVLDRS - AS YOUR PERCEPTION IS, SO WILL YOUR ACTION BE

[jayaprakash gopinathan]

In the history of indirect taxation, the schemes envisaged to reduce litigation often created more litigation due to the FAQs and Circulars issued in the guise of explaining the schemes without appreciating the real legislative intention. Unlike the Kar Vivad Samadhan and Voluntary disclosure schemes, the present scheme is not presented by a lawyer. Even then the SVLDRS is not different. The thing to change is not the action of the executive authorities but their outlook which is defective.

This time under SVLDRS certain category of persons is denied the envisaged benefits vide Section 125 of the Finance Act, (No.2), 2019 which provides an eligibility criteria provision and excluded certain category of persons. The same is adopted in the SVLDRS 1 Form in the following manner through an “YES or NO” questionnaire format.

FORM SVLDRS 1

Kindly answer the following questions to determine whether you are eligblie to file SVLDRS 1 Form

S No	Eligibility Criteria	Yes/No
1	Have you been convicted for an offence for the matter for which this declaration is being made? [Note: If you answer YES to this question, you are ineligible to proceed further under the Scheme.]	Yes No
2	Have you filed an application in the Settlement Commission for the case for which this declaration is being made? [Note: If you answer YES to this question, you are ineligible to proceed further under the Scheme.]	Yes No
3	Are you seeking to make this declaration with respect to excisable goods set forth in the Fourth Schedule  to the Central Excise Act, 1944 (specified petroleum and tobacco products)? [Note: If you answer YES to this question, you are ineligible to proceed further under the Scheme.]	Yes No
4	Are you seeking to make this declaration with respect to a show cause notice of refund/erroneous refund? [Note: If you answer YES to this question, you are ineligible to proceed further under the Scheme.]	Yes No
5	Whether final hearing with regard to a matter in adjudication or appeal has taken place on or before 30.06.2019  for the matter for which this declaration is being made? [Note: If you answer YES to this question, you are ineligible to proceed further under the LITIGATION category.]	Yes No
6	Have you been subjected to any audit under the Central Excise Act,1944 or Chapter V of the Finance Act, 1994 in respect of the goods/services or both for which this declaration is being made? [Note: If you answer YES to this question, you are ineligible to proceed further under the VOLUNTARY DISCLOSURE category.]	Yes No
7	Have you received any written communication from a Central Excise Officer with regard to any audit to be conducted? [Note: If you answer YES to this question, you are ineligible to proceed further under the VOLUNTARY DISCLOSURE category.]	Yes No
8	Have you been subjected to any enquiry or investigation under the Central Excise Act,1944 or Chapter V of the Finance Act, 1994 in respect of the goods/services or both for which this declaration is being made by way of any of the following: (a) search of premises (b) issuance of  summons (c) requiring the production of accounts, documents or other evidence (d) recording of statements [Note: If you answer YES to this question, you are ineligible to proceed further under the VOLUNTARY  DISCLOSURE category.]	Yes No
9	Have you filed any return for the period for which declaration is being made showing the amount of duty to be payable but not having paid it? [Note: If you answer YES to this question, you are ineligible to proceed further under the VOLUNTARY DISCLOSURE category.]	Yes No
10	Have the tax dues with regard to the matter under enquiry, investigation or audit NOT been quantified on or before 30.06.2019? [Note: If you answer YES to this question, you are ineligible to proceed further under the INVESTIGATION, ENQUIRY OR AUDIT category.]	Yes No

Proceed

This paper brings forth the unique problem being faced by a group of assessees due to Section 125(1)(a) & c) of the Act. The righteousness of the exclusion provided therein from the scheme was questioned before the ld authorities through   papers published in different websites.   By virtue of the provisions of Section 125(1)(a) of the Act, if the final hearing in an appeal before an appellate authority is concluded but no order has been issued before 30.06.2019 the case will be outside the ambit of the scheme. Likewise as per Section 125(1) (c) of the Act, if the final hearing in Show Cause Notice is concluded but no order has been issued before 30.06.2019, the case will be outside the ambit of the scheme. These two issues are summarized in sl.no.5 of the above questionnaire.

5	Whether final hearing with regard to a matter in adjudication or appeal has taken place on or before 30.06.2019 for the matter for which this declaration is being made? [Note: If you answer YES to this question, you are ineligible to proceed further under the LITIGATION category.]

By virtue of the above Note, it is presumed and declared that an assessee cannot settle the case under Litigation category. It is pertinent to note that just because a hearing is over and an order is not issued within the stipulated period of one month or afterwards,  an assessee cannot conclude whether the hearing conducted was final or not. The assessee can only confirm the finality of the hearing process only on receipt of the order from the competent authority. Those who appear for hearings are aware about the numerous numbers of hearings conducted for a case due to change of the adjudicating and appellate authorities before issuance of the order by those who had heard the case.  

Be as it may, when an assessee while filling the SVLDRS 1 Form give an affirmative answer by clicking YES in the questionnaire for Sl. No. 5, it will not be a dead end to the assessee as in the case of sl.no.1 of the questionnaire,   which when clicked YES bar the assessee from proceeding further by showing the sign “ Dear tax payer since you have selected yes you are not eligible to  file SVLDRS Scheme . Kindly select ’No’ to proceed further.”The FAQ issued by CBIC immediately after announcement of the scheme placed all the 10 questions in same category and denied eligibility to opt the scheme.

FAQ on the subject matter was as follows:

Q 6: I have filed an appeal before the appellate forum [Commissioner (Appeals) /CESTAT] and such appeal has been heard finally on or before the 30th day of June, 2019. Am I eligible for the Scheme?

Ans. No, you are not eligible in view of section 125(1)(a). 

Q 9. I have been issued a SCN and the final hearing has taken place on or before 30.06.2019. Am I eligible for the Scheme?

Ans. No, you are not eligible as per section 125(1)(c).

The FAQ clarification shown above informs that the category specified above is excluded along with  some other categories in the questionnaire. However as per the questionnaire, for sl no 5, there is no absolute bar but only barred from opting the scheme under Litigation Category.  It may be due to the writing on the wall explained through papers published in this regard is a different matter. If these assessees are not permitted to file the declaration under litigation category where else they will file the declaration?

The four category enumerated in the SVLDRS 1 Form are Litigation, Arrears, Investigation, Enquiry or Audit & Voluntary Disclosure. Until the receipt of the order from the competent and relevant authority and expiry of the appeal period, the amount under dispute cannot be classified as an arrear and cannot file the declaration as an arrear as on 30.06.2019/1.7.2019. It will not fit into the category of Investigation, Enquiry or Audit or under Voluntary Disclosure.  Notwithstanding the exclusion provided due to the final hearing conundrum, they can only file the appeal under litigation since all the other three categories are totally strange and inappropriate to this class of assessee. If the intention was to exclude the above category of assessee under Sl No. 5 of SVLDRS 1 Form, noted above, from the scheme as explained in the FAQ, the assessee would have been barred from filing the declaration as in the case of Sl No.1 above when they click the YES button Whether the executive can force such assessee to opt the scheme under the Arrear category when the amount under dispute has not became an arrear at all is the million dollar question.  

It is understood that the designated committee is ascertaining the finality of the hearing from competent authorities and reject the application without even according an opportunity of explaining the reasons why the assessee opted the litigation category.  It appears again due to circulars. The denial of a right due to a conundrum created through interpretations by the executive without reciprocal support through the electronic format prepared and provided for filing the application in Form SVLDRS1 is nothing but harassment. Hon’ble Finance Minister may intervene and redress the grievance instead of forcing for judicial remedies.

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By G. Jayaprakash, Advocate