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TMI Blog2024 (2) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... payers in respect of whom investigations have not been concluded; it expressly includes taxpayers in respect of whom investigation, enquiry or audit is pending. This court held that in cases where an inquiry, audit or investigation is pending, the quantification of the tax dues can be ascertained from the written communication. It is not necessary that the written communication, in which the amount of duty payable is quantified must emanate from the concerned tax department. The said amount of tax dues can be ascertained from the written communication emanating from the taxpayer as well subject to the same being part of the record. The unilateral communication, which is disputed and is not accepted by the department, however, cannot be considered as quantification of tax due. On 15.03.2019, the petitioner had provided the computation sheet which quantified the tax dues payable by the petitioner for the concerned period. In terms of the law laid down by this Court, the said communication qualifies as written communication quantifying the tax dues, albeit emanating from the petitioner. There is no material dispute as to this quantification. The Revenue has, in fact, accepted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sriram and Mr. Krishnan V., Advs. Mr. Harpreet Singh, SSC with Ms. Suhani Mathur, Mr. Jatin Kumar Gaur and Mr. Gurpreet Singh Gulati, Advs. JUDGMENT AMIT MAHAJAN, J 1. Aggrieved by the rejection of the application filed by the petitioner on 16.12.2019, claiming the benefit of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, enacted by the Finance Act, No. 2 2019 (hereafter the Scheme ), in regard to the period April, 2014 to June, 2019, the petitioner has filed the present writ petition praying as under: (i) to issue appropriate writ in the nature of mandamus striking down and setting aside e-mail communication dated 27.01.2020, informing rejection of application filed under Sabka Vishwas Scheme and Form SVLDRS-1 generated on-line on 28.01.2020 informing the grounds of rejection; (ii) consequently, to direct the respondents to consider the SVLDRS-1 filed vide ARN No LD 1612190001379 dated 16.12.2019 as legally proper and acceptable under the scheme; (iii) to grant costs of this petition to the petitioner herein, and (iii) to pass such other order, or orders, as may be deemed fit and proper in the interests of justice. Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Finance Act (No. 2), 2019 introduced the Scheme. By virtue of Section 120(1) of the Finance Act (No. 2), 2019, the Scheme was captioned the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Scheme came into effect from 01.09.2019. 8. The Scheme is comprehensive and covers various enactments as specified in Section 122 of the Finance Act (No. 2), 2019 including the Act. 9. In addition, the Central Board of Indirect Taxes and Customs (CBIC) has also issued circulars in exercise of its powers under Section 133 of the Finance Act (No. 2), 2019 for the administration of the Scheme. 10. On 16.12.2019, the petitioner preferred three applications under Scheme for the period April 2012 to June, 2017. Whereas, the two applications for the period April, 2012 to March, 2013 and April, 2013 to March, 2014 were filed in the category of cases where Show Cause Notices were pending, the application for the period April, 2014 to June, 2017 was filed in the category of investigation, inquiry or audit . The two applications in the category of pending Show Cause Notice were accepted but the application under the category investigation, inquiry or audit was rejected. This has led ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377;25.13 crores. He submitted that minor difference in the amount claimed by the department due to a calculation error. He further submitted that the issuance of Show Cause Notice subsequently does not render the petitioner ineligible to ava the Scheme. In this regard, he relied upon a circular dated 12.12.2019, issued by the department which states as under: 2. The references received by the Board have been examined, and the issues raised therein are clarified in the context of the various provisions of the Finance (No. 2) Act, 2019 and Rules made there-under, as follows: .. (v) For the purpose of eligibility under the Scheme in some of the categories such as litigation, audit/enquiry/investigation etc., the relevant date is 30-6-2019. However, it may so happen that the facts of a case may change subsequently. For instance, in a case under audit/ investigation/enquiry where the tax dues have been quantified on or before 30.6.2019, a show cause notice is issued after 30-6-2019. Similarly, a case, which was under appeal as on 30-6-2019, may attain finality in view of appeal period being over etc. It is clarified that the eligibility with respect to a category in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation was in progress and only a tentative amount was conveyed to the bank vide letter dated 06.03.2019 in order to safeguard the interest of revenue. He further submitted that the petitioner had claimed an amount of ₹25,95,55,528/- as the quantified tax dues in SVLDRS-1, which neither matches the amount conveyed to the bank (₹23.74 crores) the nor the amount of ₹24,29,49,314/- mentioned in the Show Cause Notice dated 30.06.2020. He relied upon the judgment passed by this Court in the case of Karan Singh v. Designated Committee, SVLDRS Anr. : W.P.(C) No. 2408/2021: 2021 SCC OnLine Del 3353 decided on 22.02.2021 , and contended that the quantification of the amount as defined under the provisions of the Scheme in the Finance (No. 2) Act, 2019 only means the duty liability, which has been determined by the department. The duty as on 30.06.2019 had not been determined in the case of the petitioner. He further submitted that there is no provision in the Finance Act, 2019 which provides for an opportunity of being heard. Reasons and Conclusion 19. The only question to be addressed in the present petition is whether the service tax payable by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00. Illustration 2: The show cause notice to a declarant was for an amount of duty of Rs. 1000 and an amount of penalty of Rs. 100. The order was for an amount of duty of Rs. 900 and penalty of Rs. 90. The declarant files an appeal against this order. The amount of duty which is being disputed is Rs. 900 and hence tax dues are Rs. 900. Illustration 3: The show cause notice to a declarant was for an amount of duty of Rs. 1000 and an amount of penalty of Rs. 100. The order was for an amount of duty of Rs. 900 and penalty of Rs. 90. The declarant files an appeal against this order of determination. The departmental appeal is for an amount of duty of Rs. 100 and penalty of Rs. 10. The amount of duty which is being disputed is Rs. 900 plus Rs. 100 i.e Rs. 1000 and hence tax dues are Rs. 1000. Illustration 4: The show cause notice to a declarant was for an amount of duty of Rs. 1000. The order was for an amount of duty of Rs. 1000. The declarant files an appeal against this order of determination. The first appellate authority reduced the amount of duty to Rs. 900. The declarant files a second appeal. The amount of duty which is being disputed is Rs. 900 and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (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 Central Excise Act, 1944. 28. It is apparent from the above that the legislative intent in enacting Chapter V of the Finance Act (No. 2), 2019 (the Scheme) was to maximize the sweep of the Scheme. It was to cover all situations where tax was payable except those cases, which were expressly excluded. 29. Clause (c) of Section 123 of the Finance Act (No. 2), 2019, which covers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the duty payable by the taxpayer. Clearly, in cases where the Department is proceeding on the basis of certain quantification, although not mentioned in any written communication issued by the Department but admitted by the taxpayer in writing; the same would satisfy the definition of the term quantified under Section 121(r) of the Finance Act (No. 2), 2019. 33. The circulars issued by the CBIC, in exercise of the powers under Section 133 of the Finance Act (No. 2), 2019 for administration of the Scheme, also support the aforesaid interpretation. In this regard, it is relevant to refer to the Circular dated 27.08.2019 (Circular No. 1071/4/2019-CX.8) issued by the CBIC to explain the provisions of the Scheme. The CBIC had explained that there are two components of the Scheme Dispute Resolution and Amnesty. Whereas the Dispute Resolution component is aimed at liquidating the legacy cases locked up in litigations in various forums; the Amnesty component is intended to give an opportunity to those who have failed to correctly discharge their liability to pay the tax dues. Further, it was stated that the scope of discretion is kept to the minimum. Paragraph 9 of the said Cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SCN) for demand of duty/tax or one or more pending appeals arising out of such notice where the final hearing has not taken place as on 30.06.2019. (b) Who has been issued SCN for penalty and late fee only and where the final hearing has not taken place as on 30.06.2019. (c) Who has recoverable arrears pending. d) Who has cases under investigation and audit where the duty/tax involved has been quantified and communicated to him or admitted by him in a statement on or before 30th June, 2019. (e) Who wants to make a voluntary disclosure. Q 45. With respect to cases under enquiry, investigation or audit what is meant by written communication quantifying demand? Ans: Written communication will include a letter intimating duty/tax demand or duty/tax liability admitted by the person during enquiry, investigation or audit or audit report etc. [emphasis added] 37. Mr. Hossain, the learned counsel for the Revenue, had contended that tax duties could not be considered as quantified unless determined by the concerned authority. He had also referred to the decisions of the Co-ordinate Benches of this Court in Chaque Jour HR Services Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Union of India (supra) is of no assistance to the Revenue in the facts and circumstances of this case. There is no cavil with the proposition that admission of part of dues would not qualify as tax dues for the purpose of Section 123(c) of the Finance Act (No. 2), 2019; under Section 123(c) tax dues would mean the entire amount of duty payable under indirect tax enactment as quantified. 42. In K.N. Rai (Proprietorship firm) through Kirit Kedarnath Rai v. Union of India Ors.: 2021 SCC OnLine Bom 15 , a Division Bench of the Bombay High Court had rejected the Revenue s contention that the tax dues had not been quantified as the same had not been determined by the Department. In that case, the statement of the proprietor of the petitioner (Sh. Kirit Kedarnath Rai) was recorded by the Senior Intelligence Officer. The Bombay High Court found that the questions posed and the responses of the assessee clearly indicated quantification of the tax dues. The relevant extract of the statement of the proprietor of the petitioner in that case, as referred to by the Bombay High Court, is set out below: 17. Q.20. Please peruse a work-sheet (Annexure-A) wherein the Service Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of duty payable under the indirect tax enactment. It is clarified that such written communication will include a letter intimating duty demand; or duty liability admitted by the person during enquiry, investigation or audit; or audit report etc. 48. Thus as per the above clarification, written communication in terms of section 121(r) will include a letter intimating duty demand or duty liability admitted by the person during enquiry, investigation or audit etc. This has been also explained in the form of frequently asked questions (FAQs) prepared by the department on 24th December, 2019. 49. Reverting back to the facts of the present case, we find that on the one hand there is a letter of respondent No. 3 to the petitioner quantifying the service tax liability for the period 1st April, 2016 to 31st March, 2017 at Rs. 47,44,937.00 which quantification is before the cut off date of 30th June, 2019 and on the other hand for the second period i.e. from 1st April, 2017 to 30th June, 2017 there is a letter dated 18th June, 2019 of the petitioner addressed to respondent No. 3 admitting service tax liability for an amount of Rs. 10,74,011.00 which again is before the cut off d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted Committee Sabka Vishwas Legacy Dispute Resolution Scheme Anr. (supra) must also be read in their context. The Court had explained that the amount mentioned in the communication issued by the taxpayer could not alone be the measure for interpretation of the concept of quantification. The duty liability would also require to be determined by the Department. However, the said observations cannot be read to mean a final determination by the Department or a determination that is reflected in any written communication issued by the Department. It would suffice that the Department does not contest the tax dues as quantified by the taxpayer in its communication. As noted above, Section 123(c) of the Finance Act (No. 2), 2019 is only applicable where enquiry, audit or investigation is pending. There is no question of final determination by the Department prior to conclusion of the said proceedings. Thus, the Revenue s contention that the expression quantified under Section 121(r) of the Finance Act (No. 2), 2019 would necessarily mean the duty as finally determined by the Department for the purpose of Section 123(c) of the Finance Act (No. 2), 2019 is unmerited. 20. This court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m whom money is due or may become due to such person, or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government either forthwith upon the money becoming due or being held or at or within the time specified in the notice, not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount; (ii) every person to whom a notice is issued under this section shall be bound to comply with such notice, and in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary; (iii) in a case where the person to whom a notice under this section is sent, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be an assessee in default in respect of the amount specified in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the respondents that tax dues quantified by the petitioner in its communication cannot be considered as quantified tax dues for the purposes of the Scheme because the investigations continued till the issuance of the show cause notice dated 09.08.2019. According to the respondents, the tax dues could be considered as quantified only on completion of the investigation and on the concerned officer, issuing the show cause notice or any communication quantifying the amount due. 22. The contentions advanced by the respondent are not merited. Tax dues as quantified in any communication emanating from the the tax payer, would qualify as tax dues if there is no dispute regarding the same. The Scheme also covers cases where investigations, enquiries and audit are pending. 23. The Scheme was introduced by the enactment of the Finance Act No. 2 of 2019 (hereafter the Act ). Chapter V of the Act (Sections 120 to 135) provided the statutory framework for the Scheme. Section 122 of the Act specified various enactments, which were covered under the Scheme. 24. The principal object of the Scheme was to put an end to the disputes in order to enable the assessees to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the expiry of period of six months from the date of the order. Section 73C of the Act is set out below: 73C. Provisional attachment to protect revenue in certain cases. (1) Where, during the pendency of any proceeding under section 73 or section 73A, the Central Excise Officer is of the opinion that for the purpose of protecting the interests of revenue, it is necessary so to do, he may, with the previous approval of the Commissioner of Central Excise, by order in writing, attach provisionally any property belonging to the person on whom notice is served under sub-section (1) of section 73 or sub-section (3) of section 73A, as the case may be, in such manner as may be prescribed. (2) Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under sub-section (1): Provided that the Chief Commissioner of Central Excise may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years. 26. A bare perusal of Section 73C of the Act makes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax payable CENVAT Credit Utilized Net tax liability (1) (2) (3) (4 = 2+3) (5) (6=4.5) 2014-15 62621242 4869849 67491091 23215992 44275099 As per Annexure-A 2015-16 61239325 10508130 71747455 18765332 52982123 2016-17 77481580 14170053 91651633 16422483 75229150 2017-18 (upto) 30.06.17) 16486112 3988220 20474332 4289750 16184582 Total 217828259 33536252 251364511 62693557 188670954 From the above, it appears that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Bench of Bombay High Court in the case of Thought Blurb v. Union of India Ors.: 2020 SCC OnLine Bom 11719, had examined the legislative intent of the Scheme and had held that a summary rejection of an application without affording an opportunity of being heard would fall foul of the principles of natural justice. It was held as under: 50. We have already discussed that under sub-sections (2) and (3) of Section 127 in a case where the amount estimated by the Designated Committee exceeds the amount declared by the declarant, then an intimation has to be given to the declarant in the specified form about the estimate determined by the Designated Committee which is required to be paid by the declarant. However, before insisting on payment of the excess amount or the higher amount the Designated Committee is required to give an opportunity of hearing to the declarant. In a situation when the amount estimated by the Designated Committee is in excess of the amount declared by the declarant an opportunity of hearing is required to be given by the Designated Committee to the declarant, then it would be in complete defiance of logic and contrary to the very object of the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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