2024 (12) TMI 89 - HC - Service Tax

Inclusion of CENVAT credit in the determination of tax dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - CENVAT credit only availed but not utilised - HELD THAT - The Petitioners contentions that the CENVAT credit in this case was only availed but not utilised were raised but rejected in the O-I-O dated 4 February 2019. The expression tax dues for the purposes of the Scheme is to be determined in terms of clause 123. This clause inter alia provides that where a single appeal arising out of an order is pending as of 30 June 2019 before the Appellate Forum, the total amount of duty which is being disputed in the appeal shall be the tax dues. Clause 2(d) of the said Scheme defines amount of duty to mean the amount of Central Excise Duty, the Service Tax and the Cess payable under the indirect tax enactment. On a conjoint reading of the provisions of the Scheme and considering the finding that this was not a case of the credit being availed but not utilised, we cannot fault the calculations made by the Designated Committee and communicated to the Petitioners. The entire argument before us proceeded on the without-prejudice premise that the credit may have been wrongly availed, but the same was never utilised. This premise, at least for the purposes of determining the amount payable under the Scheme, is not correct. If the Petitioners make a representation in the above terms, the Respondents may dispose of it expeditiously and in accordance with the law. The Respondents would also consider the objective of introducing such a Scheme and advert to the peculiarities of the Petitioners case. If the Petitioners make a representation in the above terms, the concerned Respondent are directed to dispose of such representation in accordance with the law and its merits within a reasonable period - petition dismissed.

Summary

Issues Involved:

1. Validity of the inclusion of CENVAT credit in the determination of tax dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019.
2. Compliance with the payment requirements under the Scheme.
3. Jurisdiction of the court to adjudicate on the merits of the determination and the Order-in-Original (O-I-O).
4. Potential relief or reconsideration by the Respondents if the Petitioners make a representation.

Issue-wise Detailed Analysis:

1. Validity of the Inclusion of CENVAT Credit:

The primary contention of the Petitioners was that the CENVAT credit of Rs. 1,03,16,150/- was availed but not utilized, and therefore should not have been included in the determination of tax dues under the Scheme. The Petitioners argued that this amount should have been reversed rather than included as tax dues. The Respondents, however, countered that the credit was both availed and utilized, as established in the O-I-O dated 4 February 2019. The court noted that this issue was already addressed in the O-I-O, where it was determined that the Petitioners failed to provide necessary documentation to disprove the allegations of wrong availment and utilization of CENVAT credit. Therefore, the inclusion of this amount in the tax dues was deemed appropriate under the Scheme.

2. Compliance with the Payment Requirements:

The Petitioners were required to deposit Rs. 38,21,796/- to avail of the benefits under the Scheme, calculated based on the total disputed tax dues of Rs. 4,80,00,050/-. Despite extensions due to the COVID-19 pandemic, the Petitioners did not make this payment within the stipulated or extended period. The court found no grounds to interfere with the Respondents' decision as the Petitioners did not comply with the Scheme's requirements.

3. Jurisdiction of the Court:

The Petitioners sought the court's intervention to adjudicate on the merits of the determination, including the O-I-O. However, the court emphasized that it could not undertake such an exercise, as the Petitioners had already filed an appeal before the CESTAT, which was pending adjudication. The court clarified that the Scheme required the Petitioners to proceed based on the total amount of duty disputed in the appeal, which included the CENVAT credit amount. Consequently, the court could not exclude the credit amount from the tax dues for the purposes of the Scheme.

4. Potential Relief or Reconsideration:

The Petitioners expressed willingness to pay the determined amount along with interest and requested the Respondents to consider granting Amnesty under the Scheme. The court directed that if the Petitioners make a representation in this regard, the Respondents should dispose of it expeditiously and in accordance with the law, considering the objectives of the Scheme and the peculiarities of the Petitioners' case. The court dismissed the petition but left open the possibility for the Petitioners to seek reconsideration from the Respondents.

Conclusion:

The court dismissed the petition, upholding the determination of tax dues by the Designated Committee under the Scheme, and emphasized the necessity for the Petitioners to comply with the payment requirements. The court also allowed for the possibility of reconsideration by the Respondents if the Petitioners make a formal representation, highlighting the importance of adhering to procedural requirements under the Scheme.