United Ocean Ship Management Pvt. ... vs Union Of India And 2 Ors
2021 Latest Caselaw 8250 Bom

                                                                    6-WP 944-2020.odt


             IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                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.

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      )
                     st
         Vidyalaya, 1 floor, C. D. Burfiwala Road)
         (Juhu Lane), Andheri(West),             )
         Mumbai - 400 058.                       )
                                                 )
3.       The Commissioner of CGST & Central )
         Excise Mumbai West Commissionerate, )
         Mahavir Jain Vidyalaya, C. D. Burfiwala )
         Road (Juhu Lane), Andheri (West)        )
         Mumbai - 400 058.                       )

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



     ::: Uploaded on - 05/07/2021                     ::: Downloaded on - 17/09/2021 15:40:10 :::
                                                               6-WP 944-2020.odt



                        ( 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

6-WP 944-2020.odt

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-WP 944-2020.odt

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

6-WP 944-2020.odt

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

6-WP 944-2020.odt

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

6-WP 944-2020.odt

"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

6-WP 944-2020.odt

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

6-WP 944-2020.odt

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

6-WP 944-2020.odt

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

6-WP 944-2020.odt

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

6-WP 944-2020.odt

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

6-WP 944-2020.odt

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

6-WP 944-2020.odt

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.)




                                                                        14 of 14