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2021 (8) TMI 446 - HC - Service TaxSabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - refusal to issue the Discharge Certificate in electronic form - whether redemption fine falls within the meaning of the word 'penalty' used in section 129 of the Scheme? - HELD THAT - Neither word has been defined under the Scheme or the Rules framed thereunder or the principal Act, namely the Central Excise Act, 1944. Indisputably, the redemption fine imposed on the petitioner was payable in lieu of confiscation . As to confiscation , historically, under the Roman Law, it was an act or desire of taking into hands of the Emperor and, to transfer it to the imperial treasury, the goods or the commodity forfeited. That principle appears to be existing in favour of the State, under the Central Excise Act, 1944 read with the Customs Act, 1962. Here, it may be noted that the powers of confiscation , though existing under the Customs Act, 1962, have been made applicable to the Central Excise Act, 1944 by virtue of notifications issued under section 12 of the Central Excise Act. Section 9 of that Act provides for penalties punishable with imprisonment, for specified offences. Plainly, same, or similar concept of confiscation exists both under the Customs Act, 1962 and the Central Excise Act, 1944. It allows the revenue authorities to seize and confiscate any goods found offending those legislations. Under both enactments, such confiscation is in addition to the other penalties prescribed against the person offending the laws in the transaction that may give rise to an act of confiscation - under both legislations, there is a right given to the offender to reclaim the title in the confiscated goods, subject to payment of an amount in addition to the other penalties that may have been imposed. That amount is known as the redemption fine , under both laws. The Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 provides for (legacy dispute) resolution upon payment of thirty to sixty percent of the disputed demand of tax dues. By virtue of section 123 of the Scheme, tax dues are the total disputed amount of duty only - the legislation seeks to reduce indirect tax legacy litigation, against positive payment of a part (according to the predetermined rates) of the disputed dues of tax. Remarkably, the Scheme requires the applicant/assessee to pay part of the disputed dues of tax even to obtain closure to any appeal filed by the revenue. Also, the legislation is not an amnesty scheme - to encourage voluntary disclosures of hitherto undisclosed, evaded taxes. Rather, by virtue of section 124 (1) (e) of the Scheme, it purposely denies any relief to persons who may have made a voluntary disclosure. Clearly, the Scheme is a reform legislation. It seeks to end old or pending indirect tax disputes, against payment of a substantial part of the disputed tax amount. The Scheme being a piece of reformative legislation, redemption fine that is a penalty in rem must clearly be shown to have been excluded from the meaning of the word penalty used in section 129 of the Scheme, before it may be inferred that a Discharge Certificate may be issued only upon payment of the redemption fine /penalty in rem. In absence of any provision to exclude redemption fine / penalty in rem from the benefits of the Discharge Certificate contained in section 129 of the Scheme, no such inference may be drawn, against the plain language and intent of the Scheme. In absence of any express exclusion created by the Scheme, redemption fine would always remain a penalty covered under the meaning of that word used in section 129 (1) (a) read with section 121 (u) of the Scheme. Thus, upon the petitioner being eligible under section 125 of the Scheme and upon payment of the entire amount due under section 124 of the Scheme and, in absence of any other objection being raised by the revenue, clearly, the petitioner is entitled to issue of the Discharge Certificate - the communication dated 20.12.2019 issued by the CBIC providing for payment of redemption fine in addition to the settlement amount paid under section 124 of the Scheme and further providing that the Discharge Certificate under the Scheme may not be issued unless that fine has been paid, is clearly contrary to the Scheme - petition allowed.
Issues Involved:
1. Whether 'redemption fine' is considered a 'penalty' under Section 129 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. 2. Whether the petitioner is entitled to a Discharge Certificate without paying the 'redemption fine'. 3. Validity of the communication dated 20.12.2019 by CBIC requiring payment of 'redemption fine' for the issuance of the Discharge Certificate. 4. Applicability of estoppel against the petitioner’s claim. Issue-wise Detailed Analysis: 1. Whether 'redemption fine' is considered a 'penalty' under Section 129 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019: The court examined the definitions and interpretations of 'penalty' and 'redemption fine' under the Central Excise Act, 1944, and the Scheme. It was determined that 'redemption fine' is a form of penalty in rem (against the goods) as opposed to a penalty in personam (against the person). The court referred to historical legal interpretations and Supreme Court judgments, concluding that 'redemption fine' falls within the ambit of 'penalty' under Section 129 of the Scheme. The court noted that both personal penalties and penalties in rem arising from a single transaction are part of the same dispute for a common period, thus 'redemption fine' should be considered a penalty under the Scheme. 2. Whether the petitioner is entitled to a Discharge Certificate without paying the 'redemption fine': The court found that the petitioner had paid the entire amount determined under Section 124 of the Scheme and was eligible under Section 125. The court held that the petitioner is entitled to the Discharge Certificate as the 'redemption fine' is included in the term 'penalty' under Section 129. The court emphasized the intent and object of the Scheme, which is to end legacy disputes and provide relief upon payment of a part of the disputed tax amount. The Scheme does not expressly exclude 'redemption fine' from the benefits of the Discharge Certificate. 3. Validity of the communication dated 20.12.2019 by CBIC requiring payment of 'redemption fine' for the issuance of the Discharge Certificate: The court found the communication dated 20.12.2019 by CBIC, which required payment of 'redemption fine' in addition to the settlement amount under Section 124, to be contrary to the Scheme. The court held that this communication is unenforceable against the petitioner. The court reasoned that the Scheme's language and intent do not support the exclusion of 'redemption fine' from the benefits of the Discharge Certificate. 4. Applicability of estoppel against the petitioner’s claim: The court dismissed the revenue's argument based on estoppel, stating that estoppel does not operate against a statute. The court cited Supreme Court judgments to support this view, emphasizing that statutory duties cannot be prevented by invoking estoppel. The court concluded that any concession made by the petitioner to deposit the 'redemption fine' would remain contrary to the express provision of law and therefore unenforceable. Conclusion: The court allowed the petition, quashing the order dated 17.11.2020 by the Designated Committee and the communication dated 20.12.2019 by CBIC. The court issued a Mandamus directing the respondent to issue the Discharge Certificate to the petitioner within two weeks from the date of service of the order. No order as to costs was made.
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