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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 ..... 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. 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 - therefore, the expression total amount of duty in clause (d) of section 123 of the 2019 Act, in our opinion, could only mean the total amount of outstanding duty payable by a declarant making voluntary disclosure, as it could never have been intended by the legislature that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance Act 1994 [hereafter referred to as 1994 Act ] and the provisions contained in Chapter V of the Finance Act 2019 [hereafter referred to as 2019 Act .] Besides this, a declaration 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.4. The estimated tax liability statement [as in the instant case] is issued by the designated committee in the exercise of powers under section 127 of the 2019 Act. A verification is made by the 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 declara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing held on 27.01.2020, as also in the written submissions dated 07.02.2020 filed with respondent no. 3/Principal Commissioner, Central Goods and Service Tax (CGST). In the written submissions preferred by the petitioner, 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 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility qua the relevant period. Such an interpretation deserves to be rejected. (See State of Haryana v Hindustan Construction Co. Ltd. (2017) 9 SCC 463.) (vi) The tax dues under section 123 of the 2019 Act can only be the net amount ascertainable after 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectness of the declaration by the declarant under section 125 in such manner as may be prescribed: Provided that no such verification shall be made in case where a voluntary disclosure of an amount of duty has been made by the declarant (iii) The petitioner cannot be allowed to avail of 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 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the scheme kicked in i.e., 01.09.2019, amounts towards tax liability, which included the relevant period, the contesting respondents i.e., respondent nos. 2 to 4, refused to take cognizance of the same, as the designated committee under the proviso appended to sub-section (1) of section 126 is not empowered to verify the 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to be construed strictly, but once it is found that the assessee falls within the four corners of the exemption notification, it should be given full play i.e., interpreted liberally (See K.P. Verghese v Income Tax Officer, Ernakulam and Anr. (1981) 4 SCC 173, Commissioner of Customs (Import), Mumbai v Dilip Kumar and Company and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless proved wrong. In case, material particulars contained are found to be false, the consequences provided in section 129(2) (c) of the 2019 Act get triggered vis- -vis a declarant falling under the voluntary disclosure category, which includes the institution of proceedings under the applicable indirect tax enactment. In this context, the circular dated 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer to take into account the fair market value of the property, if in his opinion, the difference between a fair market value and the full value of the consideration declared by the assessee, was not less than fifteen percent. It is in this context that the following apposite observations were made by the Court: 5. Now on these provisions the question arises what is the true 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue would lead to a wholly unreasonable result which could never have been intended by the legislature. .. 14.2. Likewise, the Supreme Court in the case of National Taj Traders (supra) adopted a similar approach. This was a case where the court was required to interpret the provisions of section 33B of the Income Tax Act, 1922 [in short 1922 Act ], the Commissioner of Income Tax [hereafter 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 va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision makes a consistent enactment of the whole statute. This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the Legislature. An intention to produce an, unreasonable result , said Danckwerts L.J. in Artemiou v. Procopiou [1966] 1 Q.B. 878 is not to be imputed to a statute if there is some other 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 absol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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