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2022 (7) TMI 425 - HC - Service TaxSVLDRS - Rejection of petitioner s rectification application preferred under Section 128 of the Finance Act, 2019 - nub of the problem which obtains in the instant case, concerns the amount that the petitioner could have been called upon to pay by the Designated Committee i.e., respondent no.3 - HELD THAT - Mr Lakshmikumaran is right; the reason being, that the Designated Committee cannot go beyond either the counters of the show-cause notice dated 07.01.2014 or the operative directions contained in the order-in-original dated 20.04.2015 - A careful perusal of the directions would show that the demand, as is contended by Mr Lakshmikumaran, is pegged at Rs. 16,61,78,084/-. CENVAT credit - Credit wrongly availed and utilised against payment of service tax liability - invocation of Rule 14 of CCR 2004 - HELD THAT - It is important to highlight that Rule 14 of the 2004 Rules is a recovery provision, which entitles the respondents to straightaway proceed to recover CENVAT credit which has been taken or utilised wrongly or has been erroneously refunded, along with interest - The intrinsic evidence, which, is available in this case, indicates that this amount i.e., the CENVAT credit which has been disallowed, is embedded in the demand of Rs. 16,61,78,084/-. The fact that the petitioner made a mistake in stating a higher amount concerning outstanding service tax demand, cannot result in an estoppel and thus impede the petitioner from seeking the requisite benefits under the Scheme and the provisions of the Act. The calculation presented by the petitioner on the principles articulated before us, is not disputed by the respondents/revenue - What the respondents/revenue dispute is that the demand cannot be limited to Rs. 16,61,78,084/-, as the amount which was disallowed by way of CENVAT credit i.e., Rs. 8,07,72,766/-, had to be added to the same. The impugned statement dated 24.12.2019 and the order dated 23.01.2020, passed in the rectification application, are set aside - Petition allowed.
Issues Involved:
1. Interpretation of the demand raised against the petitioner under the Finance Act, 2019. 2. Dispute regarding the amount payable by the petitioner under the Sabka Vishwas Scheme, 2019. 3. Calculation of the tax liability considering the disallowed CENVAT credit. 4. Application of Rule 14 of the CENVAT Credit Rules, 2004. 5. Validity of the rectification application rejection by the Designated Committee. Issue 1: Interpretation of the demand raised against the petitioner under the Finance Act, 2019: The petitioner contested the demand of Rs. 16,61,78,084/- raised against them under the Finance Act, 2019. The petitioner claimed entitlement to a 50% rebate under the Sabka Vishwas Scheme, reducing the payable amount to Rs. 8,30,89,042/-. The respondents argued that the petitioner should pay Rs. 5,95,38,784/-, considering the disallowed CENVAT credit of Rs. 8,07,72,766/-. Issue 2: Dispute regarding the amount payable by the petitioner under the Sabka Vishwas Scheme, 2019: The petitioner contended that they had already paid Rs. 6,39,36,641/- and should only pay the remaining Rs. 1,91,52,401/- towards tax. However, the respondents insisted on the higher amount of Rs. 5,95,38,784/-, emphasizing the disallowed CENVAT credit. Issue 3: Calculation of the tax liability considering the disallowed CENVAT credit: The respondents argued that the disallowed CENVAT credit of Rs. 8,07,72,766/- should be added to the demand amount. The petitioner claimed that this amount was already embedded in the demand of Rs. 16,61,78,084/-, citing the operative directions in the order-in-original dated 20.04.2015. Issue 4: Application of Rule 14 of the CENVAT Credit Rules, 2004: The respondents relied on Rule 14 of the CENVAT Credit Rules, 2004, to assert their right to recover the disallowed CENVAT credit along with interest. The court analyzed the provisions and their implications on the demand raised against the petitioner. Issue 5: Validity of the rectification application rejection by the Designated Committee: The court allowed the writ petition, setting aside the statement and order rejecting the rectification application. The Designated Committee was directed to issue a fresh statement considering the court's interpretation of the demand and the applicable provisions. The court found in favor of the petitioner's calculation of the tax liability and disposed of the petition accordingly.
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