The Bombay High Court said that the declarants seeking benefit under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR) can not be put in worse condition after making declaration under the Scheme.
The three writ petitions have been filed by Jyoti Plastic Works Pvt. Ltd, Jai Plastics and N. D. Patel seeking a direction to the respondents authorities to substitute the estimated amount payable as mentioned in forms SVLDRS-2 and SVLDRS-3 with the tax dues less tax relief amounts mentioned in the applications (declarations) filed by the petitioners in form SVLDRS-1 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
The three petitioners were issued show cause-cum-demand notice from the office of Collector of Central Excise, Bombay on the allegation that petitioners had contravened provisions of the Central Excise Rules, 1944. In the show cause-cum-demand notice the amounts stated to be due against each of the three petitioners were mentioned.
It is stated that the Collector of Central Excise, Mumbai passed the order in original more or less confirming the demand raised in the show cause-cum-demand notice.
The petitioners preferred appeals against the said order in original before the Customs, Excise and Service Tax Appellate Tribunal, Mumbai (CESTAT) under section 35F of the Central Excise Act, 1944 wherein it was held that CESTAT set aside the order in original and remanded the matter back to the adjudicating authority to pass a fresh order on all the issues, thus, allowing the appeals to the extent of remand.
In the meanwhile, Central Government as part of Finance (No.2) Act, 2019 introduced an amnesty scheme called ‘Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019’ providing for settlement of legacy disputes relating to central excise and service tax by paying certain specified percentage of tax dues.
In terms of the scheme, petitioners filed declarations under the category ‘litigation’ and sub-category ‘show cause notice involving duty pending’. As per the declarations filed by the petitioners, disputed tax dues were mentioned as Rs.6 Lakhs, Rs.10 Lakhs and Rs.2 Lakhs as determined by the Commissioner in the order in original.
However, the Designated Committee constituted under the scheme issued form SVLDRS-2 stating that the estimated amount payable by the applicants (declarants) were Rs.66 Lakhs, Rs.21 Lakhs and Rs.6 Lakhs i.e. the amounts originally demanded in the show cause-cum-demand notice.
The division judge bench of Justice Ujjal Bhuyan and Justice Abhay Ahuja noted that the objective of the scheme, in a case of this nature, a reasonable and pragmatic approach has to be adopted so that a declarant can avail the benefits of the scheme. A declarant who seeks benefit under the scheme cannot be put in a worse off condition than he was before making declaration under the scheme. That would defeat the very purpose of the scheme.
The court clarified that payments made by the petitioners following issuance of forms SVLDRS-2 and SVLDRS-3 would be subject to outcome of the writ petitions and if the petitioners succeed, they would be entitled to the refund of excess payment made without having to institute separate proceedings.
Therefore, the court held that the tax dues in respect of each of the three petitioners shall be treated as Rs.6 Lakhs, Rs.10 Lakhs and Rs.2 Lakhs respectively, and payments made by the petitioners in excess shall be refunded to them within a period of 8 weeks.
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