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ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.944 OF 2020
M. Ramzan & Co., having their Office ) .Petitioner at 1-2, Majid Ali Mansion, Bhardawadi )
Lane, S. V. Road, Andheri (W), )
Mumbai – 400 058. )
Vs.
JUDGMENT
1. The Union of India ).Respondents through the Revenue Secretary, ) Department of Revenue, Minstry ) of Finance, having his office at ) 128-A, North Block, ) New Delhi. ) )
2. The Designated Committee ) comprising of the Commissioner ) and Joint Commissioner, ) Mumbai ) West Commissionerate, Mahavir Jain ) Vidyalaya, 1st floor, C. D. Burfiwala Road) (Juhu Lane), Andheri(West), ) )
3. The Commissioner of CGST & Central ) Excise Mumbai West Commissionerate, ) Mahavir Jain Vidyalaya, C. D. Burfiwala ) Road (Juhu Lane), Andheri (West) ) Ms. Manasi Patil i/b Cen-Ex Services, Advocate, for Petitioner. Mr. Pradeep S. Jetly, Senior Advocate a/w Ms. Ruju R. Thakker, for Respondents. CORAM: SUNIL P. DESHMUKH & ABHAY AHUJA, JJ. DATE: 22 JUNE, 2021 1 of 14 ( THROUGH VIDEO CONFERENCING ) JUDGMENT ( PER SUNIL P. DESHMUKH, J. )
1. Rule. Rule is made returnable forthwith. Heard learned Counsel appearing for the parties finally, by consent.
2. The Petitioner’s case is that it had been engaged in providing works contract services and had been holding registration under Service Tax Law. Based on certain investigation, a show cause notice dated 20.04.2012 had been issued to Petitioner proposing recovery of service tax to the tune of Rs. 3,78,88,322/- alongwith interest and to impose penalties with reference to allegations levelled therein.
3. Ms. Manasi Patil, learned counsel for the petitioner submits that in the ensued proceedings before adjudicating authority, certain amounts were deposited on various dates aggregating to Rs. 32,12,000/- towards service tax demanded under the show cause notice purporting to give its particulars in a table in paragraph 5 of the Petition, and purporting to support the same by 2 of 14 copies of corresponding challans annexed to the Writ Petition. It is contended that in the proceedings, the Commissioner had been apprised of deposit of amount of Rs. 32,12,000/- towards the outstanding demanded amount, supporting the same with the challans.
4. During the aforesaid proceedings, the Finance ( No. 2) Act, 2019 was enacted / introducing “Sabka Vishwas (Dispute Resolution) Scheme, 2019” (SVLDRS) for resolution of pending tax disputes under Central Excise and Service Tax Laws as on 30.06.2019. To avail of the benefit of the scheme, it had been imperative that the dispute ought to be pending as on 30.06.2019 at any stage with a further rider that where a final hearing in the matter had taken place, those cases were not to be eligible for the scheme.
5. In Petitioner’s case, Order-in-Original had been passed on 09.07.2019 by the Commissioner without deduction of the amount of Rs. 32,12,000/- confirming the demanded amount alongwith interest and penalties. 3 of 14
6. Since final hearing in Petitioner’s case before the Commissioner had taken place on 14.05.2019 and order had been awaited, as such, there was a restraint on the Petitioner from opting for the benefit of the scheme.
7. Later on, Central Board of Indirect Taxes & Customs under its circular bearing No. 1074/07/2019-CX dated 12.12.2019 clarified, inter alia, that in the cases which were heard on or before 30.06.2019 and order has been passed after 30.06.2019, such assessees would also be able to opt for the benefit of the scheme subject to condition that they would apply under the category “arrears” and pay 60% of the disputed tax dues with an undertaking that the order would not be challenged further.
8. Learned counsel for the Petitioner submits that, in view of aforesaid circular, Petitioner had opted for the Sabka Vishwas dispute resolution scheme (SVLDRS) and had filed necessary declaration in Form SVLDRS-1 showing tax arrears of Rs. 3,78,88,322/- and pre-deposit of duty as Rs. 2,73,00,045/- and tax dues (after tax relief) were shown as Rs. 63,52,966.20/-, with 4 of 14 the pre-deposit comprising the amount of Rs. 32,12,000/- paid by the Petitioner from time to time in the proceedings after show cause notice. The Petitioner had communicated to the Commissioner of CGST, Mumbai that they have opted for settlement under SVLDRS scheme under the category “arrears” against the order dated 09.07.2019 passed by the Commissioner and that they would not file any proceedings against said order.
9. The Designated Committee, however, issued under Section 127 of the Finance (No.2) Act, 2019 Form SVLDRS-2 on 22.02.2020 showing estimated amount payable at Rs. 82,80,167/instead of Rs. 63,52,966.20/- as contained in Form SVLDRS-1 declaration filed by the Petitioner.
10. The Petitioner did not agree with the estimate of tax payable of Rs. 82,80,167/- as communicated by the Designated Committee without considering and giving effect to payment of Rs. 32,12,000/- during proceedings and had uploaded its written submissions / reasons for disagreement in Form SVLDRS-2A on 24.02.2020. Pursuant to the scheme, personal hearing had been scheduled. 5 of 14
11. During the personal hearing on 24.02.2020 before the Designated Committee, the Petitioner, amongst others, had also informed that an amount of Rs. 32,12,000/- had been deposited by them towards service tax demand after receipt of show cause notice and the same had not been considered by the Commissioner while passing the order despite reference to the same in the order and copies of challans and as such, had requested to consider said deposit of Rs. 32,12,000/- while arriving at the estimated tax payable under the SVLDRS scheme. Such request has also been communicated in writing under a letter dated 26.02.2020. Yet, the Designated Committee again issued statement under Section 127 of the Finance (No.2) Act, 2019 in Form SVLDRS-3 showing the estimated amount of Rs. 82,80,167/- without taking into account and giving effect to the deposit of Rs. 32,12,000/- paid after receipt of show cause notice.
12. Learned counsel for the Petitioner draws our attention to the circular No. 1074/07/2019-CX dated 12.12.2019 and particularly to para 2(ii) clarifying thus:- 6 of 14 “Section 124(2) provides for adjustment of any amount paid as pre-deposit at any stage of appellate proceedings or as deposit during enquiry, investigation or audit. However, an amount paid after issuance of show cause notice but before adjudication are not mentioned therein. Further, these amounts gets appropriated/adjusted at the time of adjudication. There may be situations where such deposits may have been made but could not be appropriated due to pendency of adjudication proceedings. With a view to facilitate the taxpayer, as well as to recognise and appropriate these deposits as revenue, it is clarified that such deposits can be deducted/adjusted when issuing the statement indicating the amount payable by the declarant.”
13. Learned counsel for the Petitioner submits that despite the aforesaid factual position, deposit of Rs. 32,12,000/- having been made after the show cause notice and before adjudication and the aforesaid circular, the same has been ignored by the adjudicating authority - the Commissioner, as well as the Designated Committee, and has not received its due ending up erroneously double tax liability is being foisted compelling the Petitioner to twice pay the tax arrears to the tune of Rs. 32,12,000/-. The impugned Form SVLDRS-3 is arbitrary and discriminatory and is untenable. Ms Patil, learned counsel, 7 of 14 therefore, urges to allow the Petition and quash and set aside the Form SVLDRS-3 and to direct the authorities to re-consider the declaration in Form SVLDRS-1 after taking into consideration and adjusting deposit of Rs. 32,12,000/- and issue a fresh statement of tax payable in Form SVLDRS-3.
14. Learned counsel for the Respondents submits that the adjudication authority has considered that the Petitioner has not submitted any evidence / working of service tax liability establishing payment of service tax for the relevant period and in the absence of the evidence, it is not possible to correlate the payment made during the financial year towards the service tax liability demanded under the subject show cause notice and thus, deposit of Rs. 32,12,000/- was not deducted. The Petition is also sought to be resisted referring to para 2(ii) of the circular dated 12.12.2019. When adjudicating authority had not considered appropriation of the amount in its order, the Petitioner’s case would not get covered under the provisions of the circular dated 12.12.2019. There is adjudication order and claimed deposit is not appropriated against the demand notice. It is difficult to go beyond the order passed in adjudication. The Petition is also sought to be 8 of 14 resisted contending that there is an alternate remedy available in appeal.
15. It may have to be taken into account under the SVLDRS scheme, inter alia, comprising section 124 in respect of reliefs available to a declarant, provides for deduction of pre-deposited amount or amount paid during enquiry, investigation or audit with a rider that, if the amount deposits exceeds the amount payable by the declarant, he will not be entitled to refund. Petitioner purports to view the proceedings accordingly and is urging for deduction of Rs. 32,12,000/- claimed to have been deposited during the proceedings.
16. It would be pertinent to note that in the affidavit-in-reply, in paragraph 9, it has been specifically referred to by respondents that during the verification of the SVLDRS application of the Petitioner, copies of challans of the amounts claimed to have been paid by the tax payer were called for from the Petitioner and were so submitted under their letter dated 10.01.2020 claiming pre-deposit of Rs. 2,73,00,045/- and tax relief of Rs. 63,52,966.20/-. On going through the Departmental AIO, 9 of 14 service tax module database, it was observed that Rs. 1,90,88,045/were paid as per AIO data base records. The respondent No. 3’s office – the Commissioner of CGST & Central Excise had submitted verification report dated 20.02.2020 to the SVLDRS Committee stating the factual position that as per challans submitted by the Petitioner, the total service tax amount paid was Rs. 2,73,00,045/and as per AIO-ST module data, the payment for the subject period was Rs. 1,90,88,045/-. Thus, the SVLDRS Committee issued SVLDRS-2 dated 22.02.2020 for estimated payable amount of Rs. 82,80,167/- and finally issued SVLDRS-3 on 26.02.2020 for payment of the said amount.
17. It has further been referred to paragraph 10.[5] of the affidavit-in-reply with reference to the claim of the Petitioner about deposit aggregating to Rs. 32,12,000/- on various dates towards demanded service tax in the show cause notice, copy of letter dated 14.05.2019 to the jurisdictional superintendent had not been received in the jurisdictional office i. e. Division-VII but in another Division-IV, Sales Tax-II and as such, the same is not being available with the respondent No. 3’s office. 10 of 14
18. From the aforesaid, the position appears to be that the payment of Rs. 32,12,000/- during the proceedings after show cause notice from time to time has not been denied at all nor is there any allegation that the challans are non-existent or forged. It is claimed by the petitioner that challans in respect of payment aggregating to Rs. 32,12,000/- were produced before the adjudicating authority and the same had also been communicated to the designated authority and further that the department is wary of that and the office of respondent No. 3 had submitted a verification report dated 20.02.2020 stating the factual position as per challans submitted by the petitioner, the total service tax paid was Rs. 2,73,00,045/-. The payment under challans to the department and its appropriation at the end of the department has not been referred to anywhere on behalf of the department nor it is the case that the challans depicting payment were not produced before any of the authorities.
19. In the circumstances, a decision of this court ( authored by my brother, Hon’ble Mr. Justice Abhay Ahuja ) in the case of BMW India Financial Services Pvt. Ltd. Vs. Union of India & ors, 11 of 14 reported in 2020(43) G.S.T.L.326, in a situation closely similar to the one involved in the matter can be advantageously taken into account. In said case, while petitioner’s TRAN-1 was admittedly filed in time and the claim of the Petitioner was eligible in law, it had been considered that the same cannot be rejected for a fault not attributable to the petitioner. It had been observed that the whole object of digitization is to convenience the tax payers and not to harass them and the actions which tend to decline eligible assessees, the benefit otherwise accrued, for the faults not attributable to them would be wholly unfair and unjust.
20. On the whole, the approach of the authorities appears to be rather hypertechnical, as electronic data base does not disclose the payment despite challans being produced by the petitioner and further that the communication by the petitioner is to some other jurisdictional superintendent’s office and not to the concerned one shows an apathetic approach and in the process, SVLDRS-3 ostensibly appears to tend to recover Rs. 32,12,000/again, a matter which would require verification. It is not a case at all that the payment is denied or the challans of payment are not available. There is no explanation with regard to the appropriation 12 of 14 or receipt of amounts under challans. In such a case, while there is a report on record stating that going by the challans, the total amount paid by the petitioner towards service tax was Rs. 2,73,00,045/- comprising the amount of Rs. 32,12,000/-, the matter will have to be properly verified at the end of the respondents which would be necessary and pertinent. The authorities are not expected to go-about hypertechnically and/or unmindful of claims of assessees based on material while determining the estimated amount of payment in the matter. The whole process under the scheme is with a view to augment expeditious disposal of the case and is not for the purpose of declining and denying legitimate claims. We are not impressed by listless approach on behalf of the respondents. The department should verify factual position and pass appropriate orders.
21. In view of the above, we set aside the impugned order and direct Respondent No. 2 to re-consider the petitioner’s SVLDRS- 1 and after verifying the claim of Rs. 32,12,000/- having been paid towards the service tax referred to in the show cause notice issue revised SVLDRS-3. 13 of 14
22. The Petition is allowed in the above terms. Rule made absolute in aforesaid terms. No order as to costs. (ABHAY AHUJA, J.) (SUNIL P. DESHMUKH, J.)