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TMI Blog2023 (1) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... oner is a public trust registered under the Societies Registration Act, 1860 and is a non profit institution registered under Service Tax Law since 12 August 2003 and is subsequently also registered under GST Law from 1 July 2017 and is engaged in providing various services such as holding entertainment events, renting out auditoriums, sponsorship etc., some of which services were/are liable to service tax/GST and some were exempt and some were partly taxable and partly exempt. 3. Pursuant to Excise Audit (EA 2000), audit of the records of the Petitioner for the financial years 2013-2014 to 2017-2018 (upto June 2017), conducted by the audit Group of the Service Tax Department during the month of November, 2018 and December, 2018, a Show Cause Notice dated 14 February 2019 was issued by the Principal Commissioner, CGST, Audit-I, Mumbai demanding a sum of Rs. 2,93,47,926/- as service tax for alleged wrong availment of CENVAT credit by the Petitioner alongwith applicable interest and penalty under Section 78 of Chapter V of the Finance Act, 1994. 4. After the issuance of the Show Cause Notice, Final Audit Report dated 5 July 2018 was issued to Petitioner by the Deputy Commissioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake a declaration. The Scheme shall be enforced by the Central Government from a date to be notified. It provides that eligible persons shall declare the tax due and pay the same in accordance with the provisions of the Scheme. It further provides for certain immunities including penalty interest or any other proceedings under the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994 to those persons who pay the declared tax dues." 10. The relevant Sections of the Finance Act, 2019 which deal with SVLDRS are also set out as under:- "Chapter V of the Finance dealing with the SVLDR Scheme, inter alia, provides for the relief available under the Scheme, declaration to be made under the Scheme, verification of declaration by Designated Committee, issue of statement by Designated Committee, rectification of errors, issue of Discharge Certificate by Designated Committee, power to make rules, power to issue orders, instructions, etc. The relevant sections of the Scheme are quoted as under:- 124 : -Relief available under Scheme:- (1) Subject to the conditions specified in sub-section (2) the relief available to a declarant under this Scheme shall be calculated as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e forum and such appeal has been heard finally on or before the 30th day of June, 2019; (b) who have been convicted for any offence punishable under any provision of the indirect tax enactment for the matter for which he intends to file a declaration; (c) who have been issued a show cause notice, under indirect tax enactment and the final hearing has taken place on or before the 30th day of June, 2019; (d) who have been issued a show cause notice under indirect tax enactment for an erroneous refund or refund; (e) who have been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before the 30th day of June, 2019; (f) a person making a voluntary disclosure,- (i) after being subjected to any enquiry or investigation or audit; or (ii) having filed a return under the indirect tax enactment, wherein he has indicated an amount of duty as payable, but has not paid it; (g) who have filed an application in the Settlement Commission for settlement of a case; (h) persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other provisions of any law for the time being in force, such appeal or reference or reply shall be deemed to have been withdrawn. (7) Where the declarant has filed a writ petition or appeal or reference before any High Court or the Supreme Court against any order in respect of the tax dues, the declarant shall file an application before such High Court or the Supreme Court for withdrawing such writ petition, appeal or reference and after withdrawal of such writ petition, appeal or reference with the leave of the Court, he shall furnish proof of such withdrawal to the designated committee, in such manner as may be prescribed, along with the proof of payment referred to in sub-section (5). (8) On payment of the amount indicated in the statement of the designated committee and production of proof of withdrawal of appeal, wherever applicable, the designated committee shall issue a discharge certificate in electronic form, within thirty days of the said payment and production of proof. 128. Rectification of errors. Within thirty days of the date of issue of a statement indicating the amount payable by the declarant, the designated committee may modify its order only to corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing thereto; (d) the form and manner of making the payment by the declarant and the intimation regarding the withdrawal of appeal; (e) the form and manner of the discharge certificate which may be granted to the declarant; (f) the manner in which the instructions may be issued and published; (g) any other matter which is to be, or may be, prescribed, or in respect of which provision is to be made, by rules. (3) The Central Government shall cause every rule made under this Scheme to be laid, as soon as may be after it is made, before each House of Parliament, while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule. 132. Power to issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erification by designated committee and issue of estimate, etc.- (1) The declaration made under section 125, except when it relates to a case of voluntary disclosure of an amount of duty shall be verified by the designated committee based on the particulars furnished by the declarant as well as the records available with the Department. (2) The statement under sub-sections (1) and (4) of section 127, as the case may be, shall be issued by the designated committee electronically, on or before the 31st day of May, 2020 in Form SVLDRS-3 setting forth therein the particulars of the amount payable: Provided that no such statement shall be issued in a case where the amount payable, as determined by the designated committee is nil and there is no appeal pending in a High Court or the Supreme Court. (3) Where the amount estimated to be payable by the declarant exceeds the amount declared by the declarant, then, the designated committee shall issue electronically, on or before the 1st day of May, 2020 in Form SVLDRS-2, an estimate of the amount payable by the declarant along with a notice of opportunity for personal hearing. (4) If the declarant wants to indicate agreement or disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that as a one time measure for liquidation of past disputes of Central Excise and Service Tax, the SVLDR Scheme has been issued by the Central Government. The SVLDR Scheme has also been issued to ensure disclosure of unpaid taxes by an eligible person. This appears to have been necessitated as the levy of Central Excise and Service Tax has now been subsumed in the new GST Regime. From a reading of the statement of object and reasons, it is quite evident that the scheme conceived as a one time measure, has the twin objectives of liquidation of past disputes pertaining to central excise and service tax on the one hand and disclosure of unpaid taxes on the other hand. Both are equally important : amicable resolution of tax disputes and interest of revenue. As an incentive, those making the declaration and paying the declared tax verified as determined in terms of the scheme would be entitled to certain benefits in the form waiver of interest, fine, penalty and immunity from prosecution. This is the broad picture the concerned authorities are to keep in mind while dealing with a claim under the scheme. 12. Petitioner filed its online declaration in Form SVLDRS-1 on 27 December 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis that sum of Rs. 40,28,670/- paid by Petitioner was not eligible for deduction under Section 124(2) as in the opinion of the Designated Committee, deduction under that Section is only allowable for payments of tax under Accounting Code No.00441480 for "Tax Receipts", which was a amount aggregating to Rs. 1,09,06,948/- and not for payments aggregating to Rs. 40,28,670/- made under the Accounting Code No. 00441481 for "Other Receipts (Interest)" from out of the total amount aggregating to Rs. 1,49,35,618/- paid by Petitioner before issuance of the Show Cause Notice. 17. Petitioner is aggrieved that despite the language in Section 124(2) of the Finance Act, 2019, which refers to "any amount paid" as deposit or pre-deposit to be deducted when issuing the statement indicating the amount payable by the declarant, the Designated Committee has gone ahead and not given credit for the amount of interest already paid by Petitioner prior to the issuance of Show Cause Notice by the department. 18. Learned Counsel refers to the following decisions in support of his contentions:- 1. Schlumberger Solutions Private Limited Vs. Commissioner Central GST and Others. 2021(12) TMI 184-Pun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de interest at all. The contention of the Petitioner to include the interest as paid under the head of duty is illogical and beyond the purview of the Scheme. 12. I further say and submit that as per Section 124 (2), the scheme allows adjustment of sums already paid as under:- a. Amount paid as pre-deposit at any stage of appellate proceedings. b. Deposit during inquiry, investigation or audit. Hence, the elements for "pre-deposit and "deposit" has to be common i.e. it cannot be a situation that for the purpose of "pre-deposit", interest is not taken into account but while computing "deposit" one should include the interest component. From the construction of the clause above, it is apparent that legislature wanted to keep "pre-deposit" and "deposit" at the same footing and therefore the manner of computation of both needs to be identical. Accordingly, one need to appreciate the manner of terms pre-deposit in the Scheme/Service tax law. 13. I say that the term pre-deposit has not been defined in the scheme. In terms of Section 121 (u), the words and expressions used in this scheme, but not defined shall be adopted. The said sub section is reproduced below:- "all other w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- "A bare reading of Section 124 (2) reveals that the relief calculated under Section 124(1) is subject to the condition that any amount paid during the enquiry, investigation or audit has to be deducted when issuing the statement indicating the amount payable by the declarant. The bare provision talks of 'any amount paid', the same does not distinguish between the amounts paid under different heads. It clearly envisages two kinds of deductions firstly any pre-deposit made at any stage of appellate proceedings under the indirect tax enactment and secondly, any deposit made during enquiry, investigation or audit. Both these species of 'pre-deposit' need to be deducted while finalizing the computation. Amount deposited by the petitioner falls in the second category. The provision only talks of amount irrespective of whether it has been paid as tax or interest or penalty. Thus, the view taken by the Designated Committee cannot be sustained. There is another side to the story. Had the petitioner remitted the entire amount paid by him towards tax, the respondents would have given credit of entire amount and his interest liability would have been waived off as well. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not denied. In such circumstances, the objection raised by the Revenue appears to be hyper-technical to say the least. (iv) Accounting methodology cannot, and must not dictate or stand in the way of substantive relief that is otherwise available to an assessee. Accounting standards and methods are only formulated to aid proper recording of transactions and have limited relevance in deciding upon a substantive issue, such as the present. Useful reference may be made to the judgment of the Supreme Court in Kedarnath Jute Mfg. Co. Ltd vs Commissioner Of Income Tax (82 ITR 363) to the effect that accounting entries are hardly relevant to arrive at the true nature of a transaction and will not be decisive or conclusive in deciding a substantive issue. (v) Moreover, the object of the scheme should not be lost sight of, as the scheme has itself been formulated for the smooth settlement of disputes. Interpretation of the provisions thereof should be to carry forward the object rather than to frustrate the same, giving rise to more litigation." (emphasis supplied) 26. This Court in the case of Eureka Fabricators Pvt. Ltd. (supra) has while interpreting Section 124(2) in the context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tronically out of which a sum of Rs.1,09,06,948/- was deposited under the Accounting Code 00441480 as tax receipts and Rs.40,28,670/- was deposited under Accounting Code 00441481 towards interest under other receipts. That, during the pendency of the show cause notice, Petitioner had also requested for change of Accounting Code in respect of the interest amount to the Accounting Code relevant to tax receipts which request was also pending when the SVLDR Scheme was notified pursuant to which the Petitioner filed a declaration in Form SVLDRS-1 to avail of the scheme. The Designated Committee has issued form SVLDRS-3 without adjusting the amount of interest as tax dues, the reason being that "any amount paid" referred to in Section 124(2) referred to the tax dues as contained in Section 123(b) of the Finance Act which refers to the amount of duty as defined in Section 121(d). No doubt, Section 123(b) defines tax dues that refers to a show cause notice to be the amount of duty stated to be payable by the declarant in the said notice and that amount of duty defined in Section 121(d) means the amount of central excise duty, service tax and the cess payable under the indirect tax enactmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settled by atleast three High Courts, this litigation was clearly avoidable. 29. Therefore, the issue is not whether the elements of predeposit and deposit are common but the issue is whether interest component deposited by the Petitioner can be treated to be "any amount paid". With respect to submissions with regard to Section 121(u) of the Finance Act and Section 35F of the Central Excise Act are concerned, that in our view are not germane for the issue at hand, although there is no quarrel with the provisions as it is. With respect to the submission that since the government has allowed waiver of entire interest payable in terms of Central Excise / Service Tax Act it would be illogical to provide for deduction of interest paid from the principal amount of duty / tax required to be paid, as already observed above, the phrase "any amount paid" in Section 124(2) does not discriminate between the amount of tax, duty or interest or penalty and would include the same, considering the beneficent nature of the legislation. 30. In view of the above discussion and the law laid down by three High Courts of our country including this Court, where "any amount paid" in Section 124 (2) has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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