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TMI Blog2022 (7) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaration is also sought to the effect that the impugned statement violates the provisions of Articles 14, 19 (1) (g), 265 and 300A of the Constitution. 1.1. In addition, thereto, a declaration is sought by the petitioner that it is entitled to the benefits available under section 124 of the 2019 Act and that the tax dues payable by it are limited to the amount that remains unpaid after setting off amounts already paid towards tax. 1.2. Consequential reliefs, such as issuance of a direction to quash the impugned statement and/or to have respondent no. 4 modify the said statement in accordance with the provisions of section 128 of the 2019 Act, read with rule 6(6) of the Sabka Vishwas (Legal Disputes Resolution) Scheme Rules, 2019 [hereafter referred to as "SVLDRS Rules"] have also been prayed for. 2. The long and short of several reliefs claimed by the petitioner is that it is not being allowed to adjust the amounts deposited by it towards service tax and cess [hereafter will be collectively referred to as "tax liability"] payable for the period spanning between 01.10.2016 and 30.06.2017 [hereafter referred to as the "relevant period".] 2.1. Concededly, the tax liability that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... designated committee in exercise of powers vested in it under section 126 of the 2019 Act, after a declaration is made of the tax dues in the form prescribed under section 125 (2) of the said Act. 4.5. Importantly, the proviso appended to section 126 (1) of the 2019 Act states that no verification shall be made in case the declarant has made voluntary disclosure of the amount of duty payable. 4.6. Thus, the scope and effect of this provision are at the heart of the dispute that has arisen between the parties before us. 4.7. Going further, once the aforementioned steps are taken, which include payment by the declarant of the estimated tax liability crystallized by the designated committee, a discharge certificate is issued under section 127(8) of the 2019 Act, which, in effect, ringfences the declarant against further liability including reopening of proceedings concerning the matter at hand and period in issue (See section 129 of the 2019 Act) 4.8. Importantly, where a declarant has made a voluntary disclosure of tax dues, and any material particular, furnished by the declarant, is found to be false within one year of the issuance of the discharge certificate, then, under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner, a request was made that its authorized representative be granted another opportunity to supplement what was stated therein. 6.5. The designated committee, evidently, did not agree with the petitioner's plea that the amounts that had been deposited towards its tax liability required adjustment against the estimated tax liability crystallized by it in the impugned statement. 6.6. The record, however, shows that the petitioner did not give up hope, and in fact, sought modification of the impugned statement issued by respondent no. 4, on the ground that there was an error apparent on the face of the record insofar as determination of tax liability was concerned; in this regard, the provisions of section 128 of the 2019 Act was invoked. The application filed in this context is dated 19.02.2020. It appears that respondent no. 4 had not passed any orders on the application for modification, till such time the petitioner had moved this Court. 7. The record shows that the instant writ petition came up for hearing before a coordinate bench of this Court on 13.03.2020, when, while issuing notice, the operation of the impugned statement was stayed, subject to the petitioner depositi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter deducting the dues already paid by the declarant, emerges on a perusal of paragraph 2 (iv) of the circular dated 25.09.2019 issued by respondent no. 2. Furthermore, the fact that the circular dated 25.09.2019 applies to all categories is established upon a plain reading of the circular dated 29.10.2019, which has also been issued by respondent no. 2. (See judgment dated 14.01.2021 passed in WPC 10843/2020 titled B-Earth and Spire v Union of India) (vii) The absence of a verification process concerning declarants who fall in the voluntary disclosure category cannot lead to a situation where amounts already deposited by such a declarant need not be adjusted towards the tax liability determined by the designated committee. Since a declarant falling under the voluntary disclosure category is bound by the declaration made in the prescribed form, misdeclaration would trigger consequences contemplated under section 129 (2) (c) of the 2019 Act, which includes prosecution. Therefore, the 2019 Act, in any event, provides for a post-facto verification and not, as is portrayed by the contesting respondents, that no verification is envisaged vis-a-vis declarants falling under the voluntar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the benefits under the scheme by adjusting amounts deposited towards tax liability before the scheme came into force. At this stage, the deposits made towards tax liability cannot be taken cognizance of for claiming benefits under the scheme. (iv) It is well established that in the event of an ambiguity in beneficial legislation, the provisions in issue should be interpreted in a manner that favours the revenue as against the assessee. (See judgement dated 30.07.2018 passed in Civil Appeal no. 3327/2007 in Commissioner of Customs (Import), Mumbai v M/s Dilip Kumar and Company & Ors. (2018) 9 SCC 1) Analysis and Reasons 11. A perusal of the record would show that the following facts are not in dispute: (i) Firstly, the petitioner is an eligible declarant under the voluntary disclosure category, as envisaged under section 125 of the 2019 Act. Subsection (1) of section 125 states that all persons shall be eligible to make a declaration under the scheme except those falling in categories stipulated in clauses (a) to (h). (ii) Secondly, the petitioner did make a declaration in the prescribed form [i.e., SVLDRS-1] on 27.12.2019 and it referred to the fact that Rs 62,87,113/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaration made concerning the 'amount of duty' set forth by the declarant in the prescribed form i.e., SVLDRS-1. The submission of the contesting respondents is that the petitioner cannot go beyond the purview of the scheme, and if the argument of the petitioner is accepted, that there is an ambiguity in the scheme, since it is akin to a beneficial legislation, the provisions of the scheme ought to be interpreted in a manner that favours the revenue, as against the declarant. 12.1. As noticed above, in support of this plea, reliance has been placed on behalf of the contesting respondents, on clause (d) of section 123, which defines the expression "tax dues" [in the context of a declarant falling in the voluntary disclosure category], as the total amount of duty indicated in the declaration. Therefore, the argument is that the scheme makes it explicitly clear on a bare reading of clause (e) of sub-section (1) of section 124 that no relief will be available concerning tax dues, where tax dues are payable by a declarant falling under the voluntary disclosure category unlike declarants falling under other categories. A quick perusal of section 124 (1) clauses (a) to (d) would show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ors. (2018) 9 SCC 1, Commissioner of Income Tax, Central, Calcutta v National Taj Traders AIR 1980 SC 485.) 13.2. With this foreground, let us examine the provisions of the 2019 Act in the backdrop of the facts obtaining in the instant case. 13.3. Section 123 of the 2019 Act which defines the expression "tax dues" vis-a-vis the scheme, insofar as the declarant falling in the voluntary disclosure category, reads thus: "(d) where the amount has been voluntarily disclosed by the declarant, then, the total amount of duty stated in the declaration." 13.4. The expression "tax dues" involves a combination of two words "tax" and "dues" - while the term/word "tax" is commonly understood as meaning imposition of a governmental charge on persons, properties, entities, and transactions to yield public revenue. The word "dues" would be something which is owed or payable (in the context of present matter, tax) constituting a debt2. Therefore, when the words tax and dues are read conjointly, it could only mean imposition of charge which is owed and payable and thus, by necessary implication, would exclude tax liability which is already discharged and/or paid. 13.5. Therefore, the expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 29.10.2019, which has been relied upon by the petitioner, in paragraph 2 (ii) states the following: "(ii) Under voluntary disclosure, the Scheme makes two exclusions: (a) not being subjected to an enquiry or investigation or audit; or (b) having already filed a return but not paid the duty declared therein [Section 125(f)(i) and (ii)]. Some of the formations have reported difficulty in verifying these conditions as the proceedings may have been initiated by another formation. Though the Scheme provides that no verification will be carried out in cases of voluntary disclosure, they felt that there may still be a requirement to determine the eligibility to avail the Scheme. It is clarified that such declarations may be accepted without recourse to determination of eligibility as the Scheme provides ample safeguards for taking suitable action in case of false declaration of any material particular [Section 129 (2) (c)]" 13.9. As noticed above, because the category concerning voluntary disclosure facially involves no contestation concerning tax dues, no tax relief is available to such declarants as envisaged under clause (a) to (d) of sub-section (1) of section 124 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation of Section 52, Sub-section (2)? The argument of the Revenue was and this argument found favour with the majority judges of the Full Bench that on a plain natural construction of the language of Section 52, sub-section (2), the only condition for attracting the applicability of that provision is that the fair market value of the capital asset transferred by the assessee as on the date of the transfer exceeds the full value of the consideration declared by the assessee in respect of the transfer by an amount of not less than 15 per cent of the value so declared. ....... It ignores several vital considerations which must always be borne in mind when we are interpreting a statutory provision. The task of interpretation of a statutory enactment is not a mechanical task. It is more than a mere reading of mathematical formulae because few words possess the precision of mathematical symbols. It is an attempt to discover the intent of the legislature from the language used by it and it must always be remembered that language is at best an imperfect instrument for the expression of human thought and as pointed out by Lord Denning, it would be idle to expect every statutory pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after referred to as 'CIT'], in this case, sought to reopen the assessment of the assesse for two assessment years on the ground that the assessments made by the assessing officer were erroneous as they were prejudicial to the interests of the revenue. The CIT by an ex parte order issued under section 33B of the 1922 Act, cancelled the assessments and directed the assessing officer who had jurisdiction in the matter to make fresh assessments in accordance with the law. The assessee carried the matter, in appeal, to the Income Tax Appellate Tribunal [in short 'Tribunal'.] The Tribunal repelled all contentions of the assessee, save and except the contention that the CIT had passed an order without adhering to the principles of natural justice. Consequently, the Tribunal allowed the appeals and vacated the order of the CIT, and furthermore, went on to remand the matter to him to dispose it after giving due opportunity to the assesssee. At the behest of the revenue, the Tribunal referred the questions of law for consideration by the Calcutta High Court. The High Court framed two questions of law, the first question concerned assumption of jurisdiction by the CIT under section 33B of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther construction available." Where to apply words literally would "defeat the obvious intention of the legislation and produce a wholly unreasonable result" we must "do some violence to the words" and so achieve that obvious intention and produce a rational construction, (Per Lord Reid in Luke v. I.R.C.-1968 AC 557 where at p. 577 he also observed: "this is not a new problem, though our standard of drafting is such that it rarely emerges. In the light of these principles we will have to construe Subsection (2)(b) with reference to the context and other clauses of Section 33B. 11. .... According to the construction contended for by the assessee and which found favour with the High Court the answer was in the affirmative because Sub-section (2)(b), on its literal construction, was absolute. In our view such literal construction would lead to a manifestly absurd result, because in a given case, like the present one, where the appellate authority (Tribunal) has found (a) the Income Tax Officer's order to be clearly erroneous as being prejudicial to the interests of the revenue and (b) the Commissioner's order unsustainable as being in violation of principles of natural justi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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