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TMI Blog2024 (9) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... THAT:- On perusal of the provisions of the scheme, it is clear that the petitioner would not be eligible to make a declaration as per Section 125 (1) (e) as the audit in case of the petitioner was initiated prior to 30.06.2019 and the amount of duty involved in the audit was not quantified on 30.06.2019. The question of applicability of Section 123 determining the Tax Dues for the purpose of the Scheme would arise only if the petitioner was eligible to make declaration under the Scheme, however the petitioner falls in exception in clause (e) of section 125 (1) of the Act as the petitioner was subjected to audit and amount of duty involved in audit was not quantified on or before 30.06.2019. Therefore, the respondent authorities have rightly rejected 27 declarations filed by the petitioner at the threshold relying upon the final audit report issued after 30.06.2019. Reliance placed by the petitioner on the decision of Honorable Kerala High Court in case of Hi-Lite Projects Private Limited Vs. The Joint Commissioner, Central Tax and Central Excise [ 2020 (9) TMI 1069 - KERALA HIGH COURT] would not be applicable as the petitioner is found to be ineligible to make a declaration as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Petitioner(s) No. 1 : Mr. Jainish P Shah (7033). For the Respondent(s) No. 1 : Advocate Notice Served. For the Respondent(s) No. 2,4 : Mr PY Divyeshvar (2482). For the Respondent(s) No. 3 : Notice Served. ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Heard learned advocate Mr. Prasannan Namboodiri with learned advocate Mr. Jainish Shah for the petitioner and learned advocate Mr. P.Y. Divyeshvar for the respondent nos. 2 and 4. 2. Rule returnable forthwith. Learned advocate Mr. P.Y. Divyeshvar waives service of notice of rule on behalf of respondent nos. 2 and 3. 3. By these petitions under Article 227 of the Constitution of India, the petitioner has challenged the following orders as under: Special Civil Application No. 11604 of 2020 is with regard to the rejection of the 27 Forms of SVLDRS 1 filed by the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2015, (for short SVLDRS ). The second petition being Special Civil Application No. 11043 of 2023 is filed by the petitioner challenging the order passed by the Appellate authority dated 16.03.2021 confirming the sanction/ rejection of refund of the petitioner by adjusting outstanding arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.2019. On rejection of the 28 declarations, the petitioner for the third time filed 27 online applications/ declaration in Form SVLDRS-1 on 15.01.2020 declaring a total service tax liability of Rs. 34,42,240/- as 'arrears of tax' as per the ST-3 returns for the period from April 2015 to June 2015, which were shown as service tax liability by the petitioner but not paid till 30.06.2019. 4.8. The respondent no. 3-Designated Committee rejected 27 declarations in Form SVLDRS-1 filed by the petitioner with remark for rejection in the said application declaration form as under: The audit of the unit was conducted in the months of May and June, 2019. The Final Audit report was issued after 30.06.2019 wherein certain amounts were quantified. The jurisdictional Assistant Commissioner had adjusted the amount quantified in the FAR from the pending refund of the declarant in the month of September,2019 as the amount quantified in the FAR was admitted by the declarant as mentioned in the FAR. Therefore, there are no arrears pending against the declarant. 4.9. Being aggrieved the petitioner has preferred Special Civil Application no. 11604 of 2020 with following prayers: (a) Your Lord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e adjusted Rs. 42,10,947/- against the outstanding dues and passed an order-in-original dated 23.09.2019 adjusting/ appropriating the entire refund amount to which the petitioner was eligible towards refund of input tax credit on export made by the petitioner of various taxable goods to different countries under the letter of undertaking (LUT) without payment of integrated tax after realising the export proceeds. 4.13. The petitioner being aggrieved by the order-in-original dated 23.09.2019 filed appeal before the Joint Commissioner of CGST and Central Excise Appeal, Surat, challenging the adjustments/ appropriation of the refund amount demanded in the audit report. 4.14. The appellate authority by order dated 16.03.2021 rejected the appeal filed by the petitioner confirming the order-in-original appropriating the refund amount towards outstanding dues as per the amount of service tax quantified in the audit report observing as under: The adjudicating authority has rightly deducted the refund amount under Section 54 (10). The relevant portion of the Section 54 (10) are: 10) Where any refund is due under sub-section (3) to a registered person who has defaulted in furnishing any retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted that contrary to the legislative intention, the respondent authorities have acted in a high-handed manner by appropriating the refund claim of the petitioner for the input tax credit under the Section 16 of the IGST Act against the amount of service tax quantified in the audit report without issuing any show-cause notice or providing any opportunity of hearing to the petitioner. 5.4. It was submitted that when the petitioner is entitled to the benefit of the SVLDRS being benevolent Scheme for reducing the litigation, the respondent authorities could not have acted contrary to the interest of the petitioner by appropriating the refund and there by depriving the petitioner from the benefit of the Scheme. It was submitted that in the letter dated 19.07.2019, the petitioner has categorically stated that the petitioner would be entitled to get benefit of the SVLDRS if eligible and with that condition the petitioner had agreed for voluntary payment of the tax dues to be determined on completion of audit. 5.5. Learned advocate Mr. Namboodiri referred to the Circular dated 26.09.2019 issued by the Central Board of Indirect Taxes and Customs (for short CBIC ) in relation to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein and the declarant shall not be liable to pay any further duty, interest or penalty with respect to the matter and time period covered in the declaration. In some cases, during subsequent investigation, it is discovered that the taxpayer has declared and paid lesser duty in the returns filed. Therefore, on conclusion of investigation etc., a show cause notice is issued demanding the differential duty. It may be noted that 'matter' under Section 129 means a case for which the taxpayer intends to file a declaration under the. Scheme. In the instant case, a 'return filed but duty not paid' is a separate matter and the SCN issued for 'differential amount' is a separate matter. 5.8. Reliance was also placed on the decision of the Honorable Kerala High Court at Ernakulam in case of Hi-Lite Projects Private Limited Vs. The Joint Commissioner, Central Tax and Central Excise in Writ Petition(C) No. 14135 of 2020(N) to submit that the Hon ble Kerala High Court has in the facts of the case relying upon para 10(g) of the Circular held that the quantification as defined under Section 2(r) would include duty payable admitted by the person during inquiry, investigatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as filed 27 declarations on 15.01.2020 and the same were rejected on 08.02.2020 as final audit report (FAR) was issued after 30.06.2019 and the amount quantified in the FAR was adjusted by the Jurisdictional Assistant Commissioner from the pending refund of the party in the month of September-2019 as the amount quantified in FAR was admitted by the party. As a result, there were no arrears pending against the declarant as on date of filing of declaration. 8. With reference to para-7 (a) of the petition, it is submitted that whatever is stated in this para is a matter of record whereby the Petitioner has narrated his version of facts. I say that the same being the facts at this stage the answering respondent is not offering any comments at this stage however the same is subject to verification and the answering respondent reserve it's liberty to reply to the same in future. With reference to para-7(b) of the petition, it is submitted that the petitioner declared their liability in ST-3 returns of for the period from F.Y. 2014-15 to 2017-18. It is pertinent here to note that effective from May 14, 2015, new sub-section (1B) has been inserted in Section 73 of the Finance Act to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1994. 6.2. With regard to the refund claim made by the petitioner and appropriation of the same by passing an order-in-original rejecting such claim and appropriating the amount of refund towards the amount quantified in audit report, it was submitted that the Adjudicating Authority as well as the Appellate Authority has rightly rejected the refund claim of the petitioner on the ground that the petitioner has admitted liability of tax and had filed an undertaking for voluntary payment of the same by letter dated 19.07.2019 during the course of the audit proceeding subject to eligibility of the Scheme. It was submitted that as the petitioner was not eligible for the Scheme, the respondent authority was justified in appropriating the amount quantified in audit report as outstanding dues payable by the petitioner under the service tax for the period from April 2015 to June 2017. 7. In rejoinder learned advocate Mr. Namboodiri for the petitioner submitted that the respondent authorities were not justified in adjusting or appropriating the amount of refund towards the amount quantified in the audit report without issuing any show-cause notice. Learned advocate Mr. Namboodiri referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 16 of the IGST Act read with Section 54 of the CGST Act read with Rule 89 of the CGST Rules 2017? 9. With regard to the eligibility of the petitioner to make declaration under SVLDRS-3, following provisions of the Scheme are relevant and therefore the same are reproduced herein below: 121. In this Scheme, unless the context otherwise requires, (c) amount in arrears means the amount of duty which is recoverable as arrears of duty under the indirect tax enactment, on account of (i) no appeal having been filed by the declarant against an order or an order in appeal before expiry of the period of time for filing appeal; or (ii) an order in appeal relating to the declarant attaining finality; or (iii) the declarant having filed a return under the indirect tax enactment on or before the 30th day of June, 2019, wherein he has admitted a tax liability but not paid it; 123.(c) where an enquiry or investigation or audit is pending against the declarant, the amount of duty payable under any of the indirect tax enactment which has been quantified on or before the 30th day of June, 2019; (d) where the amount has been voluntarily disclosed by the declarant, then, the total amount of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) The composition and functioning of the designated committee shall be such as may be prescribed. 127.(1) Where the amount estimated to be payable by the declarant, as estimated by the designated committee, equals the amount declared by the declarant, then, the designated committee shall issue in electronic form, a statement, indicating the amount payable by the declarant, within a period of sixty days from the date of receipt of the said declaration. 128.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 correct an arithmetical error or clerical error, which is apparent on the face of record, on such error being pointed out by the declarant or suo motu, by the designated committee. 10. On perusal of the above provisions it is clear that the petitioner would not be eligible to make a declaration as per Section 125 (1) (e) as the audit in case of the petitioner was initiated prior to 30.06.2019 and the amount of duty involved in the audit was not quantified on 30.06.2019. 11. Section 123 (1) (c) provides that the petitioner would be entitled to quantify the amount of tax dues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid: Provided that the [Central Excise Officer] may determine the amount of short payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the [Central Excise Officer] shall proceed to recover such amount in the manner specified in this section, and the period of one year referred to in sub-section (1) shall be counted from the date of receipt of such information of payment. Explanation.-1. For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer], but for this sub-section. Explanation.- 2. the removal of doubts, it is hereby ..... X X X X Extracts X X X X X X X X Extracts X X X X
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