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TMI Blog2022 (2) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... lable. But, the petitioner did not file any appeal and chose to file declaration in form SVLDRS-1 as the Scheme, 2019 was operational. The intention was obvious. It was to off-load the baggage; it was to settle the dispute arising from it s past legacy of defaults, once and for all, so that it could make a new beginning under new GST regime. Adjudication of the show cause notice during the validity period of the Scheme, 2019 in this case is what transformed it into a case under arrears category which otherwise would have continued to be in litigation category. It would have been a different thing if show cause notice dated 24.4.2019 was not adjudicated upon during the validity period of the Scheme, 2019 - the action of the respondent in treating declaration filed by the petitioner as falling under litigation category instead of arrears category is contrary to the provisions of the Scheme and hence not permissible in law. On this count, the action of the department needs to be quashed and set aside. A separate case must be filed in respect of each of the four categories listed in clauses (a), (b), (c) and (d) of rule 3(2). It would also be clear that when a case is fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, a demand was placed upon the petitioner for payment of service tax dues and also the dues on account of improperly availed of Cenvat credit together with a demand for payment of penalty and interest as mentioned in the show cause notice. The show cause notice was issued to the petitioner on 24.4.2019. After hearing the petitioner, the show cause notice was adjudicated upon by the Commissioner of Central Tax and Central Excise, Nagpur-I Commissionerate vide order dated 29.12.2019 which the petitioner claims to have been received by him on 30.12.2019. 3. In the adjudication order, the original demand of service tax dues of ₹ 43,62,79,032/- was confirmed and demand arising from disallowing of Cenvat credit was toned down considerably. As per the adjudication order, after adjusting the amount already paid against the service tax liability of the petitioner, an amount of ₹ 65,22,938/- was found to be in arrears and recoverable from the petitioner. 4. While the adjudication of the show cause notice was pending, Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 (hereinafter called as Scheme, 2019 for short) came to be introduced and the relevant statutory pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first demand and not against the second demand. The petitioner felt that his case legitimately fell under the arrears category and not under litigation category and that it was not permissible for the respondent to consider two demands, one in respect of service tax dues and the other in respect of the dues arising from recovery of disallowed Cenvat credit, individually. But, in disregard of that, form SVLDRS-3 was issued to the petitioner. Aggrieved by it the petitioner has filed this petition. 7. The respondent, which is the designated Committee under the Scheme, 2019 for deciding the declarations under the Scheme, 2019, has opposed this petition by filing a reply. According to it, the classification of the petitioner under litigation category and not under arrears category has been rightly done by the department and, therefore, there is no scope for making any interference with the issuance of form SVLDRS-3. The reply emphasizes upon the definition of tax dues as given in Section 123(b) of the Finance Act, 2019 and provisions made under Section 124(a) of the Finance Act, 2019. The reply also states that any liability on account of wrong availment of Cenvat credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Act and demand of dues on account of recovery of disallowed Cenvat credit was under rule 14 of Cenvat Credit Rules, 2004, and these two enactments being different, the declaration filed by the petitioner could not have been considered by clubbing together these two different demands of tax dues, and that was only as per the provisions of Scheme 2019. He, therefore, submits that there is no substance in this petition. 11. Shri Bhattad, learned counsel further submits that in the case of Union of India V/s. Charak Fertilizers, 2003(154), E.L.T. 354, the Apex Court has held that if any benefit is sought under a Scheme like the KVSS, the party must fully comply with the provisions of the Scheme and if the requirements are not met, then, on principle of equity, Court cannot extend the benefit of that Scheme. Drawing support from this decision, learned counsel for the respondent submits, as the petitioner did not fulfill the requirements of the Scheme so as to consider his case as falling under arrears category and further to consider his case as if separate demands have merged into one, the petition must fail. 12. As stated earlier, the grievance of the petitioner is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing out of such notice which is pending as on the 30th day of June, 2019, and if the amount of duty is,- (i) rupees fifty lakhs or less, then, seventy per cent. of the tax dues; (ii) more than rupees fifty lakhs, then, fifty per cent. of the tax dues; (b) where the tax dues are relatable to a show cause notice for late fee or penalty only, and the amount of duty in the said notice has been paid or is nil, then, the entire amount of late fee or penalty; (c) where the tax dues are relatable to an amount in arrears and- (i) the amount of duty is, rupees fifty lakhs or less, then, sixty percent of the tax dues; (ii) the amount of duty is more than rupees fifty lakhs, then, forty percent of the tax dues; (iii) in a return under the indirect tax enactment, wherein the declarant has indicated an amount of duty as payable but not paid it and the duty amount indicated is,- (A) rupees fifty lakhs or less, then, sixty per cent. of the tax dues; (B) amount indicated is more than rupees fifty lakhs, then, forty percent. of the tax dues. 15. It would be clear from the provisions made in Sections 121 and 124 that the classification of the case de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree factors, when considered in their entirety would show that amount in arrears is an amount about which there is no dispute and which has been established in law or accepted by the declarant as recoverable from him for any of the reasons stated in sub-clauses (i) to (iii) of clause (c) of Section 121. 18. Thus, we find that there is a clearly discernible distinction between the reliefs available under Section 124(1)(a) and those under Section 124(1)(c). This distinction is between amount of duty not yet finalized as show cause notice is pending for some reasons on one hand and the amount of duty having attained finality for the reason of no appeal having been filed before the expiry of the limitation period or an order passed in appeal having attained finality or the declarant having admitted his tax liability in the return filed on or before 30th June, 2019 and not having paid it on the other. In other words, a litigation category case would be one wherein the amount of duty has not been confirmed and has not attained finality and whereas an arrears category case would be the one where the amount of duty has been confirmed and has attained finality. 19. The petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over. It is clarified that in such cases, the taxpayer can file a declaration under the Scheme, provided he gives in writing to the department that he will not file an appeal. This declaration shall be binding on the taxpayer. Circular No.1074, dated 12.12.2019. Para 2(viii) There may be cases where the show cause notice issued on or after 1-7-2019 and such cases are also not covered under any of the categories such as an enquiry or investigation or audit and tax dues having not been quantified on or before 30-6-2019. However, such cases become eligible under arrears category depending the fulfillment of other conditions such appeal period being over or appeal having attained finality or the person giving an undertaking that he will not file any further appeal in the matter (Member s D.O. letter F. No.267/78/19/CX.8, dated 30th October, 2019). Since the main objection behind the Scheme is to liquidate the legacy cases under Central Excise and Service Tax, it would be desirable that the taxpayer in the above mentioned cases are also given an opportunity to avail its benefits. Therefore, the field formations were asked to take stock of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate order having attained finality. This is also clear from above referred clarifications. These clarifications while explaining as to which case would fall under arrears category, we find, do not even whisper about the amount of duty which can be disputed or which is under dispute. They only underline that amount of duty which is the amount finally recoverable. These clarifications are only consistent with provisions made in Section 121(1)(c) and Section 124(1)(c) read with Section 125 of the Finance Act, 2019. 22. Discussion thus far made would show that a case could be put in litigation category if the amount of duty claimed by the department has not attained finality or has not been admitted by the declarant as recoverable from him and that a case can be placed in arrears category where the amount of duty has attained finality on account of appeal having been not filed before the expiry of the limitation period or the appellate order having attained finality or the amount of duty having been admitted by the declarant. This is the only possible conclusion which can be made upon careful reading of the aforestated provisions of the Scheme, 2019 together with clarificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o settle the dispute once and for all, and amnesty to past sins in a regulated manner. It enables a defaulter to off-load burden of his past by paying unpaid taxes with a view to starting afresh with a clean slate. On payment of the tax dues determined under the Scheme, certain benefits in the form of waiver of interest, fine, penalty and immunity from prosecution are conferred. The whole focus is on unloading of the baggage of pending litigation arising from disputes relating to pending liability to pay service tax and excise duty. With such a nature of the Scheme, 2019, which is remedial, a liberal interpretation of the provisions of the Scheme is required to be made. It is for the reason that settled canons of interpretation of statues tell us that a remedial or beneficial statute receives liberal and wider interpretation ( Union of India V/s. Prabhakaran Vijaya Kumar and others, (2008) 9 SCC 527). It would then mean that the words of such a statutory scheme must be so construed as to give the most complete remedy which the phraseology of the scheme will permit (See In re Hindu Women s Rights to Property Act, AIR 1941 PC 72 ) or otherwise, the purpose of the Scheme may not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unload this baggage of the pre-GST regime and allow business to move ahead. Therefore, a liberal interpretation has to be given to the scheme. This is the broad picture which the officials have to keep in mind while considering a declaration under the scheme seeking amnesty. The approach should be to ensure that the scheme is successful and therefore, a liberal view embedded with the principles of natural justice is called for 40. 40. In this connection we may refer to the maxim reformatio in peius. It is a latin phrase meaning a change towards the worse i.e., a change for the worse. As a legal expression it means that a lower court judgment is amended by a higher court into a worse one for those appealing it. In many jurisdictions, this practice is forbidden ensuring that an appellant cannot be placed in a worse position as a result of filing an appeal. When the above phrase is prefixed by the words no or prohibition , which would render the maxim as no reformatio in peius or prohibition of reformatio in peius, it would denote a principle of procedure as per which using a remedy available in law should not aggravate the situation of the person who avails the remedy. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute, for the reasons stated above, is already resolved by us holding that petitioner s declaration cannot be treated as falling under litigation category and that it is the one which is covered by arrears category proper. 28. The second dimension of the grievance is about not processing the declaration filed by the petitioner as single document and erroneously splitting it into two different demands of taxes, one in relation to service tax dues and the other in relation to recovery of disallowed Cenvat credit. According to learned counsel for the petitioner, this is against the provisions made in rule 3(2) of Rules, 2019 read with clarification appearing in paragraph 10(h) of Circular No.1071 dated 27.8.2019 issued by CBITC, which is disagreed to by learned counsel for the respondent. Learned counsel for the respondent submits that the demands of service tax and Cenvat credit raised upon the petitioner were referable to two different enactments, the first under the Finance Act, 1994 and the other under Cenvat Credit Rules and, therefore, they cannot be clubbed together to determine the tax dues, as if they are arising under the same statute. 29. Considering the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are clarified in the context of the various provisions of the Finance (No.2) Act, 2019 and Rules made thereunder: (a) . (b) .. (c) .. (d) . (e) .. (f) (g) . (h) Rule 3(2) of the Sabka Vishwas (Legacy dispute Resolution) Scheme Rules, 2019 provides that a separate declaration shall be filed for each case. Many a times a show cause notice covers multiple matters concerning duty liability. It is clarified that a declarant cannot opt to avail benefit of scheme in respect of selected matters. In other words, the declarant has to file a declaration for all the matters concerning duty liability covered under the show cause notice. 33. Thus, even on the second aspect of the challenge made in this petition, we find that the respondent has fallen in error in not treating the declaration filed by the petitioner as constituting one single case in the category of amount in arrears and by considering two demands in the show cause notice, one relating to service tax dues and the other in relation to recovery of disallowed Cenvat credit, separately and individually, something not permitted under Rules, 2019. On this count as well, we find t ..... 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