2022 (3) TMI 322 - HC - Central Excise

Issuance of a writ of declaration to confirm the correctness of the Form SVLDRS 1 dated December 12, 2019 - impugned order dismissed the writ petition solely on the ground that the appellant had approached the Court after expiry of the scheme, which expired on 30th June, 2020 - non-application of mind - HELD THAT - The appellant had exercised the opportunity provided under Rule 6 (4) of the said Rules. Sub Rule (4) of Rule 6 provides for making a written submission, which was exercised by the appellant. The proviso to Rule 6(4) provides that if no such agreement or disagreement is indicated till the date of personal hearing and the declarant does not appear before the Designated Committee for personal hearing, the Committee shall decide the matter based on available records. Thus, even in cases where an ex parte decision is taken, the Committee shall decide the matter based on available records. In the instant case, the appellant had filed electronically Form SVLDRS 2A indicating the disagreement and requesting for rectification of the defect. The appellant also sought for permission to file written submission, which was granted. In the written submission, the appellant had pointed out that opportunity of personal hearing was granted on 20th January, 2020. Further, the appellant had mentioned that the Tribunal had directed deposit of ₹ 20 lakhs within a period of eight weeks from the date of the order, and the direction was complied with. The copy of the order passed by the Tribunal was enclosed as exhibit 1. Further, the appellant enclosed the copies of the challan evidencing payment of pre-deposit of ₹ 20 lakhs, which was enclosed as exhibit 2 - the appellant submitted that it had paid pre-deposit amount of ₹ 20 lakhs and produced the copy of the challans evidencing payment of the pre-deposit, requested to issue Form SVLDRS 3 by reckoning the said predeposit amount. The Form SVLDRS 2A indicates that all the exhibits were uploaded along with the said Form. If such is the scheme of the Act and the Rules and if the authority has to take a decision based on the records produced by the appellant / assessee, it goes without saying that an order with reasons is required to be passed. Probably, the electronic Form SVLDRS 3 does not specifically provide a column but however, we find from the said statutory form, there is a column indicated as remarks . If for some reason the Designated committee was of the opinion that the pre-deposit amount of ₹ 20 lakhs cannot be reckoned (which cannot be done by the Designated Committee as the statute provides for the same), the Designated Committee was bound to give reasons in the remarks column while issuing Form SVLDRS 3 - the decision of the Designated Committee has to be held to be devoid of reasons and outcome of total non-application of mind. The order passed in the writ petition is set aside. Consequently, the writ petition is allowed - Form SVLDRS 3 is set aside and the Designated Committee is directed to reckon the pre-deposit of ₹ 20 lakhs made by the appellant pursuant to the directions issued by the Tribunal and issue fresh Form SVLDRS 3 - appeal allowed.

Summary

Issues Involved:
1. Non-appearance of respondents and appointment of counsel.
2. Dismissal of writ petition due to expiry of the scheme.
3. Eligibility and submission under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
4. Discrepancy in the pre-deposit amount in Form SVLDRS 2 and 3.
5. Non-communication of reasons for rejection of pre-deposit.
6. Object and interpretation of the scheme.
7. Circulars and instructions issued by the department.
8. Rectification of errors by the Designated Committee.
9. Functioning of the Designated Committee post scheme expiry.

Detailed Analysis:

1. Non-appearance of respondents and appointment of counsel:
In the initial proceedings, despite the call, none appeared on behalf of the respondents. The court directed Mr. Bhaskar Prasad Banerjee, who usually represents the respondents, to appear in the instant appeal and regularize his appointment.

2. Dismissal of writ petition due to expiry of the scheme:
The intra-Court appeal was filed against the order dated 4th October 2021, where the writ petition was dismissed solely because the appellant approached the Court after the scheme expired on 30th June 2020. The appellant questioned the correctness of this dismissal.

3. Eligibility and submission under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The appellant filed a declaration under the scheme on 12th December 2019. The appeal was pending before the Tribunal, making the appellant eligible to file a declaration. The appellant mentioned a pre-deposit of ?20 lakhs and indicated tax due as ?10,98,015/-.

4. Discrepancy in the pre-deposit amount in Form SVLDRS 2 and 3:
The Designated Committee issued Form SVLDRS 2 indicating the pre-deposit amount as “0” (zero). The appellant filed an application under Section 127 of the Act, pointing out the error and requesting rectification. Despite this, Form SVLDRS 3 was issued again showing the pre-deposit amount as “0” (zero).

5. Non-communication of reasons for rejection of pre-deposit:
The appellant was not communicated any written orders explaining why the pre-deposit amount continued to be reflected as “0”. The appellant submitted a representation on 19th February 2020, pointing out the error, but received a notice of demand dated 26th July 2021 without any prior communication of rejection.

6. Object and interpretation of the scheme:
The court emphasized that the object of the scheme was to encourage settlement of disputes and should be given a purposive interpretation. Arbitrary and unreasonable actions by authorities that violate Article 14 of the Constitution can be remedied by the court under Article 226.

7. Circulars and instructions issued by the department:
The court referred to Circular No.1072/05/2019-CX and C.B.I. & C. Instruction No.1/2021-CX, which clarified the application of pre-deposits and manual processing of declarations. The Designated Committee failed to consider these circulars, leading to non-application of mind.

8. Rectification of errors by the Designated Committee:
The court noted that Section 127 empowers the Designated Committee to rectify errors within 30 days of issuing a statement. The appellant had exercised the opportunity to indicate disagreement and file written submissions, which were not duly considered by the Committee.

9. Functioning of the Designated Committee post scheme expiry:
The court rejected the revenue's argument that the Designated Committee became functus officio after the scheme expired. The Committee's function to decide claims starts upon an application being made, and the appellant's representation was submitted well before the scheme's closure.

Conclusion:
The appeal was allowed, setting aside the writ petition's dismissal and the Form SVLDRS 3 issued by the Designated Committee. The Committee was directed to reconsider the pre-deposit of ?20 lakhs and issue a fresh Form SVLDRS 3 within six weeks. The demand dated 26th July 2021 was also set aside, and reasonable time was to be granted to the appellant for any due payment post issuance of the fresh Form SVLDRS 3.