2019 (12) TMI 1217 - HC - Central Excise

Rejection of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - cases involving confiscation and redemption fine - Designated Committee has held that the cases involving confiscation and redemption fine have not been covered under the Scheme and, therefore, the declarations cannot be accepted and no relief can be granted to the petitioners under the Scheme - HELD THAT - On a plain reading of clauses (a) to (h) of section 125 of the Finance Act, it is abundantly clear that persons whose cases involve confiscation and fine in lieu of confiscation are not placed in the categories of persons who are not eligible to make declarations under the Scheme. Thus, persons who have been ordered to pay fine in lieu of confiscation or to whom show cause notices proposing confiscation of goods have been issued, have not been declared to be ineligible to make a declaration under the Scheme - while clause (a) of subsection (1) of section 129 of the Finance Act provides that the declarant shall not be liable to pay further duty, interest or penalty, it does not expressly provide that the declarant shall not be liable to pay fine/redemption fine; which is why the present controversy has arisen. It may be noted that while under the Scheme no express provision has been made discharging the declarant from the liability to pay fine, the Directorate General of Taxpayer Service, Central Board of Indirect Taxes and Customs has issued FAQs, flyers and press notes wherein it is specifically stated that the most attractive aspect of the Scheme is that it provides substantial relief in the tax dues for all categories of cases as well as full waiver of interest, fine and penalty. In all these cases, there would be no other liability of interest, fine or penalty. There is also complete amnesty from prosecution. It is not the case of the Board that declarations involving redemption fine cannot be accepted. This court, however, is prima facie of the view that the stand of the Board that in case where redemption fine is imposed and quantified, discharge certificate can only be issued after settlement of redemption fine, is not in consonance with the Scheme which contemplates putting an end to the matter - this court is of the view that the matter requires consideration. Hence issue Rule, returnable on 23rd January, 2020. This court is further of the view that a prima facie case has been made out for grant of interim relief inasmuch as if the interim relief as prayed for is not granted, the petitioners would not be in a position to file fresh declarations before the last day for filing declarations under the Scheme, which may either create an irreversible situation or unnecessary complications. Having regard to the fact that if all similarly situated declarants were to approach this court, the same would needlessly lead to multiplicity of proceedings, the court is of the view that the benefit of this order may be granted to even those declarants who have not approached this court, subject to the declarants filing an undertaking before the Designated Committee that in case the outcome of the present petition is against the petitioners, they would pay the redemption fine, failing which, the discharge certificate shall be revoked.

Summary

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, specifically whether it includes redemption fine or fine under section 9 of the Central Excise Act.
3. Eligibility of declarants under the Scheme and conditions for issuing discharge certificates.

Issue-Wise Detailed Analysis:

1. Applicability of the Scheme to Cases Involving Confiscation and Redemption Fine:
The petitioners challenged the rejection of their declarations under the Scheme by the Designated Committee, which argued that the Scheme does not cover cases involving confiscation and redemption fine. The petitioners contended that the Scheme should apply to such cases because section 125 of the Finance Act does not explicitly exclude them. The court noted that section 125 allows "all persons" to make declarations except for specific exclusions, none of which mention confiscation and redemption fine. The court observed that the Board's FAQs, press notes, and flyers suggest that the Scheme provides relief in tax dues for all categories of cases, including waiver of interest, fine, and penalty. Thus, the court found that the legislature did not intend to exclude cases involving confiscation and redemption fine from the Scheme.

2. Interpretation of "Fine" Under the Scheme:
The petitioners argued that the waiver of fine under the Scheme should include redemption fine, not just the fine under section 9 of the Central Excise Act. They pointed out that the Board's communications and clarifications imply that waiver of fine is allowed under the Scheme. The court noted that section 9 of the Central Excise Act pertains to fines imposed upon conviction for offenses, which are excluded from the Scheme under section 125(b) of the Finance Act. Therefore, the court concluded that the fine referred to in the Scheme must be redemption fine, as it is the only other fine contemplated under the Central Excise Act. The court also highlighted that the Board's communication dated 20th December 2019, acknowledged that waiver of fine is allowed under the Scheme, but distinguished it from redemption fine, which the court found inconsistent with the Scheme's intent.

3. Eligibility of Declarants and Conditions for Issuing Discharge Certificates:
The court examined the eligibility criteria under section 125 of the Finance Act and found that persons with cases involving confiscation and redemption fine are not excluded from making declarations under the Scheme. The court also reviewed section 129 of the Finance Act, which provides that a discharge certificate is conclusive as to the matter and time period stated therein, and the declarant shall not be liable to pay further duty, interest, or penalty. The court noted that while the Scheme does not explicitly mention fine/redemption fine, the Board's communications implied that waiver of fine is included. The court found that the Designated Committee's rejection of the petitioners' declarations was not in consonance with the Scheme, which aims to provide a complete resolution of the matter.

Conclusion and Interim Relief:
The court concluded that the matter requires further consideration and issued a rule returnable on 23rd January 2020. The court granted interim relief by staying the impugned orders and allowing the petitioners to file fresh declarations under the Scheme without payment of redemption fine, subject to the final outcome of the petition. The court also extended the benefit of this order to similarly situated declarants who have not approached the court, provided they file an undertaking to pay the redemption fine if the final outcome is against the petitioners.