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TMI Blog2022 (6) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in M/S. CODE ENGINEERS PRIVATE LIMITED THROUGH ITS DIRECTOR MR. ABIRAAJ RAJAN VERSUS UNION OF INDIA AND OTHERS [ 2021 (2) TMI 10 - BOMBAY HIGH COURT ] the crucial word is verify used in Section 126(1) of the Finance Act and Sub Rule (1) of Rule 6 of the Rules. The obligation of respondent no.3 is to verify the truth or truthfulness of the declaration made by petitioner. In our view, that would also include verification of petitioner s statement in the declaration that it has paid Rs.8,73,19,575/- including Rs.5,37,25,305/- by reversal of credit in service tax returns filed for the period April 2015 to September 2015. Mr. Mundra, as stated earlier, submitted that petitioner had given proof and details to respondent no.3 during the personal hearing. If that was the case, respondent no.3 ought to have verified the truthfulness of petitioner s statement whether the amount of Rs.5,37,25,305/- by reversal of credit in service tax returns was correct. By verifying this truthfulness would not, amount to disposing or hearing the appeal filed by petitioner on merits. Respondent no.3 should not take such pedantic approach and should keep in mind the purpose behind introducing the sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner, has been paid. If such credit has been given, there will be no further amount payable by petitioner and in fact there will be surplus amount with the Government, which Government need not refund by virtue of Section 124 of the Finance Act. The amount which according to petitioner that had to be adjusted was about Rs.5,37,25,305/-. 4. Before petitioner filed the declaration under the scheme, respondent No.5, who is Assistant Commissioner of CGST and Central Excise, by a letter dated 19th March 2015 had raised objections regarding non payment of service tax on brokerage received from foreign clients / foreign institutional investors for the period 1st July 2012 to 30th September 2014 and non reversal of CENVAT credit attributable to exempt activity of trading of securities, as per the provisions under Rule 6 of the Credit Rules. In response to the objections, petitioner paid tax Rs.6,86,85,255/- (Rs.1,49,59,950/- in cash and the balance of Rs.5,37,25,305/- by reversal of credit in Service tax returns filed for the period April 2015 to September 2015). Thus, according to petitioner it paid tax of Rs.6,86,85,255/- towards reversal of credit attributable to exempted service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied legal disputes pending disposal as on 30th June 2019. Section 124 of the Finance act 2019 also provides that every declarant under the scheme shall be entitled to a relief equal to 50% of the total tax dues and waiver of interest and penalty in an appeal pending as on 30th June 2019, where the amount of duty demand is in excess of Rs.50 Lakhs. 7. Section 124(2) of the Finance Act 2019 provides that any amount paid as pre-deposit at any stage of the appellate proceedings under the Indirect Tax enactment or as deposit during enquiry, investigations or audit shall be deducted while computing the total amount payable by the declarant. Respondent no.2, which is Central Board of Indirect Taxes and Customs, issued a circular dated 12th December 2019 by which, it clarified that even such amounts paid after issuance of show cause notice but before adjudication should be adjusted / deducted when issuing the statement indicating the amount payable by the declarant. Respondent no.2, prior thereto, had issued circular dated 27th August 2019, in which it clarified that in certain matters, tax may have been paid by utilising the input credit, and the matter is under dispute. In such cases, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to petitioner, in which petitioner explained as to how it was entitled to credit of Rs.8,73,19,575/- but petitioner s submissions were not accepted. The reasons according to respondent no.3 was as under: 1. The proceedings of SVLDRS do not envisage setting aside of any finding already recorded by the adjudicating authority. The adjudicating authority in para 39.8 already rejected adjustment of CENVAT credit claimed to be made in their CENVAT credit register. This finding can be set aside only in appeal / denovo adjudication. 2. Interest cannot be adjusted against the duty dues. Pre-deposits is always of duty involved in term of section 35 F of Central Excise Act, 1944 in cases, where duty and penalty / interest is disputed. 10. According to Mr. Mundra, as per the scheme and the circulars issued, respondent no.3 was expected to find whether the particulars as submitted by petitioner in the declaration was correct and respondent no.3 should have also examined the records available with the department and not simply dismissed petitioner s submissions by saying that whether petitioner is entitled to the credit can be examined only in the appeal / denovo adjudication. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lish the truth or truthfulness of statement made in the declaration. Paragraphs 32 to 38 of Code Engineers Pvt Ltd. (Supra) reads as under: 32. From a careful analysis of the above, it is quite evident that the scheme has been introduced primarily for liquidation of past disputes pertaining to central excise and service tax so that trade and industry can move ahead so also the tax administration which can then fully focus on the smooth implementation of goods and services tax (GST). Basic thrust is to unload the baggage of pending litigations centering around service tax and excise duty which stood subsumed in GST. As an incentive those making the declaration and paying the declared tax verified and determined in terms of the scheme would be entitled to certain benefits in the form of reduced tax liability, waiver of interest, fine, penalty and immunity from prosecution. This is a beneficial scheme for settlement of legacy disputes. Therefore, the officials while considering declarations made under the scheme must have the broad picture in mind. The approach should be to ensure that the scheme is successful and, therefore, a liberal view embedded with the principles of nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used in a legislation must take their colour from the context in which they appear. For ascertaining the true meaning of words and expressions used in a legislation, it is therefore necessary that the legislation must be read or understood as a whole. 38. We have already analyzed the object and purport of the scheme by adverting to the speech of the Hon ble Finance Minister, statement of objects and reasons and circular of the Board dated 27.08.2019. From the above, it is evident that the central focus of the scheme is settlement of legacy disputes by giving incentives to the declarant subject to eligibility. The designated committee, therefore, has to perform its duty of verifying correctness of the declaration keeping the above objective in mind. The verification required to be carried out by the designated committee is certainly not an adjudicatory exercise or an appellate exercise. Viewed in the above context and keeping in mind the object of the scheme, verification of a declaration by the designated committee cannot be confined to the show cause-cum-demand notice or to the order-in-original. Mandate of the designated committee is to verify correctness of the declaration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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