2023 (2) TMI 667 - HC - Service Tax

Rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that the matter involves redemption of fine and this fine was in lieu of confiscation of goods which had not been proposed for relief in the said scheme as the said scheme only relates to the matters involving demand of duty, interest and penalty - time limitation. HELD THAT - Reference can be made to an order passed by the Hon'ble Supreme Court in IN RE COGNIZANCE FOR EXTENSION OF LIMITATION 2022 (1) TMI 385 - SC ORDER had extended the period of limitation which was to expire during the period between 15.03.2020 till 28.02.2022 and all persons will have a limitation period of 90 days from 01.03.2022 - During the period of COVID-19, Reserve Bank of India had also issued notification dated 27.03.2020 (Annexure P-9) whereby Reserve Bank of India had granted moratorium of three months on all payments due from March 1, 2020 to May 31, 2020. In the same background, the Government of India had announced relief for the MSME under COVID times which has been placed on record by the petitioner as Annexure P-1 Learned counsel for the petitioner has further submitted that keeping in view the ordinance dated 31.03.2020 issued by the Ministry of Law and Justice to provide relaxation in the provisions of certain Acts in view of the spread of pandemic COVID-19, the Ministry of Finance had also made rules to amend the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by which payment was to be made on or before 30.06.2020 (Annexure P-8). The petitioner is ready to abide by the orders of the designated committee and would pay the redemption fine as well if his case is considered again. Time Limitation - HELD THAT - Since, the object of the SVLDR Scheme was to reduce litigation and the said Scheme is for the benefit of small tax payers, hence, for all intents and purposes, delay can be condoned by the Court as observed by the Supreme Court in the case of CENTAUR PHARMACEUTICALS PVT. LTD. ANR. VERSUS STANFORD LABORATORIES PVT. LTD. 2022 (1) TMI 1269 - SUPREME COURT that suo motu order extending limitation period on account of COVID-19 would also include the period which can be condoned in exercise of the statutory discretion. It is further observed that since the designated committee had wrongly rejected the case of the petitioner, there was no occasion for the petitioner to file a fresh application within the stipulated time and, hence, his case cannot be rejected on the ground of limitation. The matter is remanded back to designated committee to consider the case of the petitioner(s) as per the SVLDR Scheme and redetermine payable including redemption fee/fine under the SVLDR Scheme by passing fresh order - Petition allowed by way of remand.

Summary

Issues involved:
1. Rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2. Interpretation of the SVLDR Scheme regarding redemption fine.
3. Delay in filing the writ petition.
4. Extension of time under the SVLDR Scheme due to COVID-19.

Issue 1: Rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The petitioner sought a writ of certiorari to set aside orders of the Designated Committee under the SVLDR Scheme rejecting their application. The rejection was based on the ground that the scheme only covers matters involving demand of duty, interest, and penalty, excluding redemption fine. The petitioner argued that the redemption fine should be considered under the scheme based on interpretations from judgments like the one from the High Court of Gujarat. The petitioner's application was rejected despite the judgment's clarification that cases involving redemption fine cannot be excluded from the scheme.

Issue 2: Interpretation of the SVLDR Scheme regarding redemption fine:
The petitioner referred to judgments from the High Court of Gujarat and Allahabad High Court, emphasizing that redemption fine should be included in the SVLDR Scheme. The petitioner highlighted that the Central Board of Indirect Taxes and Customs had clarified full waiver of interest, fine, and penalty under the scheme, indicating that cases involving redemption fine should not be excluded. The petitioner's argument was supported by the dismissal of a Special Leave to Appeal against the Gujarat High Court judgment, reinforcing the inclusion of redemption fine in the scheme.

Issue 3: Delay in filing the writ petition:
The respondents argued that the writ petition was filed after a considerable delay from the date of the rejection order, making it liable for dismissal. However, the petitioner contended that the delay should be condoned considering the object of the SVLDR Scheme to reduce litigation and assist small taxpayers. The petitioner's prompt action upon receiving the rejection order and the extension of limitation period due to COVID-19 were cited to justify the delay in filing the petition.

Issue 4: Extension of time under the SVLDR Scheme due to COVID-19:
The petitioner, registered under the MSME Act, sought an extension of time under the SVLDR Scheme, citing notifications and relaxations provided during the COVID-19 period. The petitioner expressed readiness to comply with the scheme's requirements, including payment of redemption fine if the case is reconsidered. The petitioner's request for an extension was supported by the Ministry of Finance's rules amending the SVLDR Scheme to allow payments until 30.06.2020, indicating flexibility during extraordinary circumstances.

In conclusion, the High Court allowed the writ petitions, setting aside the Designated Committee's orders and remanding the matter back for reconsideration under the SVLDR Scheme. The court emphasized the importance of including redemption fine in the scheme based on legal interpretations and the scheme's objective to assist small taxpayers. The court granted a six-month period for the petitioner to deposit the assessed amount, considering the unique circumstances and the need for a fair resolution under the scheme.