Bombay High Court
Chinar Shipping And ... vs The Union Of India And 3 Ors on 18 March, 2021
Bench: S.P. Deshmukh, Abhay Ahuja
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VPH
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) No. 4156 OF 2020
M/s. Chinar Shipping & Infrastructure )
(India) Pvt. Ltd. (Chinar for short), )
situated at 315, Bharat Chambers, 52, )
Baroda Street, Carnac Bunder, )
P. D' mello Road, Mumbai 400 009 ... Petitioner
Vs.
1. Union of India, Ministry of Finance, )
Department of Revenue, South Block )
New Delhi )
2, Joint Director DGGI, Zonal unit Mumbai )
having his office N.T.C House, III floor )
15, N. M. Road Ballard Estate, )
Mumbai 400001 )
3. The Commissioner CGST & Central )
Excise, Mumbai Central Commissionerate
having his office at GST Bhavan, 115, )
Maharshi Karve Road, Opp. Churchgate )
Station, Mumbai 400 020. )
4. The Designated Committee, constituted )
under Section 126 of the Finance (No. 2)
Act, 2019, having its GST Bhavan, 115 )
Maharshi Karve Road, Opp. Churchgate )
Station, Mumbai 400 002. ... Respondents
***
Mr. Shreyas Shrivastava a/w Saurabh Mashelkar, for the
Petitioner.
Mr. Karan Adik a/w Ms. Maya Majumdar, for Respondents.
***
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CORAM : SUNIL P. DESHMUKH &
ABHAY AHUJA, JJ.
DATE : MARCH 18, 2021
ORAL JUDGMENT [PER : SUNIL P. DESHMUKH, J.]
1. Heard. Rule. Rule made returnable forthwith.
Learned counsel Mr. Karan Adik waives notice for the
respondents. Heard finally by consent of parties.
2. Petitioner is before us questioning propriety and
validity of the statement in form SVLDRS-3 bearing No.
L190220SV300289 dated 19th February, 2020 (Exhibit "O")
praying to issue a writ/order setting aside the same with a
further direction to allow declaration of petitioner in form
SLVDRS-1 bearing ARN No. LD2812190003159 dated 28 th
December, 2019 (Exhibit "J").
3. A few facts in the background leading to present
petition may be necessary to be referred to in order to have
proper perspective of the matter.
4. The petitioner company is engaged in providing
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services 'Business Auxiliary Services' and is registered with
respondents under Service Tax Rules, 1994, and under Central
Excise Goods and Services Tax Act, 2017 (for short "CGST Act")
with effect from 1st July, 2017.
5. The petitioner purports to refer to that service tax
liability could not be discharged on time, the company being in
severe financial crises, internal disputes and other difficulties,
while petitioner had provided taxable services to various clients.
In the circumstances, proceeding at the instance of department
led to a notice to petitioner to show cause as to why income, as
reflected in profit and loss account for the financial years 2012-
13, 2013-14, 2014-15 and 2015-16 should not be treated as
taxable service and why service tax amounting to
Rs.9,27,39,338/- be demanded and recovered under provisions
of Section 66 read with the proviso to section 73(1) of the
Finance Act, 1994 read with Rule 6 of the Service Tax Rules,
1994 for the period from January, 2013 to March, 2016 and as to
why the amount of Rs. 1,83,35,195/- be not appropriated
against service tax liabilities. The notice had been responded to
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and petitioner claims to have shown that service tax to the tune
of Rs.2,43,04,283/- had been paid. As the situation had
worsened, National Company Law Tribunal had appointed an
independent Chairperson to handle all financial transactions.
According to the petitioner, it has paid service tax of Rs.
2,62,21,678/-. However, due to ongoing disputes, necessary
documents / challans could not be traced and produced.
6. While aforesaid proceedings were in progress, a
scheme referred to as "Sabka Vishwas (Legacy Dispute
Resolution) Scheme, 2019 (for short "SVLDRS") had been
introduced with effect from 1st September, 2019. A notification
dated 21st August, 2019 had been issued, framing " Sabka
Vishwas (Legacy Dispute Resolution) Rules, 2019".
7. Chapter V of the Finance Act comprising sections 120
to 135 formulates the scheme providing for declaration of tax
dues and payments by eligible persons and immunity from
penalty, interest, prosecution etc. Section 123 under chapter V
refers to tax dues to mean, inter alia, under clause (b) where a
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show-cause notice under any of the indirect tax enactments has
been received by the declarant on or before 30th June, 2019, then
the amount of duty, stated to be payable by declarant in the
notice. Section 124 of the scheme is in respect of reliefs available
to a declarant Section 124(2) of the scheme provides for, inter
alia, deduction of pre-deposited amount or amount paid during
inquiry, investigation or audit, further providing in case of pre-
deposit or deposit exceeding the amount payable by declarant, as
indicated in the statement issued by the designated committee,
the declarant shall not be entitled to any refund. Section 125
declares that all persons shall be eligible to make a declaration,
except from categories referred to thereunder. It further
prescribes that a declaration under sub-section (1) shall be made
on such electronic form, as may be prescribed (Form SVLDRS-I
under the rules). Section 126 (1) requires designated committee
to verify correctness of declaration made under Section 125.
8. Section 127 prescribes, inter alia, that where amount
payable by a declarant as estimated by the designated committee
exceeds amount declared by the declarant, then the designated
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committee shall issue in electronic form an estimate payable by
the declarant. Sub-section (3) of Section 127 requires
designated committee to give an opportunity of being heard to
the declarant, if he so desires, before issuing statement
indicating the amount payable by the declarant. It further
provides for sufficient cause, accommodation of an adjournment.
After hearing the declarant, as provided under Section 127(4) a
statement in electronic form indicating the amount payable by
declarant shall be issued. The provision also requires the
declarant to pay the amount payable as indicated in the
statement issued by the designated committee. On payment
being made, and on production of proof of withdrawal of appeal,
the committee is supposed to issue a discharge certificate in
electronic form within thirty days thereafter.
9. The scheme appears to have been introduced seeking
release of locked up indirect tax revenue demands under
litigation from assessees or otherwise as a measure for
liquidation of past litigation, inter alia, of Central Excise and
Service Tax as well as to have disclosure of unpaid tax by persons
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eligible under the same for declaration.
10. While the scheme initially did not provide for
amounts paid after issuance of show-cause notice before
adjudication which were not appropriated during pendency of
adjudication, such deposits are also deductible when issuing the
statement indicating amount payable by the declarant pursuant
to a Circular No. 1074/4/2019-CX.8 dated 12 th December, 2019
had been issued.
11. Petitioner with a view to avail benefit of the scheme,
applied online under Litigation Category under sub-category
show-cause notice involving Duty Pending making a declaration
in Form SVLDRS-1 dated 28 th December, 2019. In the
declaration, the petitioner had referred to show-cause notice
amount of Rs.9,27,39,336/-, predeposit amount as
Rs.2,62,21,678/-, and revenue dues payable as per the scheme
to be Rs. 2,01,47,991/-.
12. Respondent No. 4 had issued an estimate in Form
SVLDRS-2 dated 22.1.2020 stating that amount payable by
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petitioner is Rs.2,93,40,631/- considering predeposit amount of
Rs.1,83,35,195/-. The petitioners were advised to submit Form-
2A in case of disagreement and a date and time of personal
hearing if desired. In response, petitioner filed Form No.
SVLDRS-2A dated 27.1.2019, disagreeing with the estimate
under SVLDR-2, stating that the amount deposited is
Rs.2,62,21,678/- and that they had challans reflecting the same.
The petitioner had also with an intention to pay the
dues for discharge of service tax liability under under Sabka
Vishwas scheme had approached the assistant director DGGSTI
Zonal Unit with a view to de-freeze its bank account.
13. It appears that a declaration in Form No. SVLDRS-3
was issued on 19th February, 2020 by Respondent No. 4, referring
to the amount payable by the Petitioner is Rs. 2,93,40,631/-.
14. It is contended that the petitioners had requested for
hearing, however, no communication had been received at their
end for quite a long time and while the petitioners searched on
the official website, they came to know that SLVDRS 2B was
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issued on 31st January, 2020, fixing hearing on 6th February,
2020. According to the Petitioner, SVLDRS-2B Form cannot be
downloaded. It is submitted that its intimation had not been
received at the end of petitioners either on the registered 'email
id' or on registered mobile via 'SMS'. While this had been
realized subsequent to 6th February, 2020, petitioner had made a
personal representation before officers of Respondent No. 4
explaining its position and requesting to adjust amounts of
deposits, as referred to by the petitioner, having regard to the
circular dated 12th December, 2019. However, the same was not
to any avail.
15. In the circumstances, petitioners tried to have
correspondence with Respondent No. 4. A request had also been
made to Respondent No. 3 to intervene to have restoration of the
matter. Requests were made on 29th June, 2019 and 9th July,
2020. However, those were not responded to. The petitioner
lodged their grievance on 25th July, 2020 to Central Board of
Indirect Taxes and Customs at the grievance portal of respondent
No. 1, which had been forwarded to respondent No. 3. The same
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is shown to have been closed on 24th August, 2020 with the
remark that petitioner had neither attended hearing fixed for
24th January, 2020 and 6th February, 2020, nor had submitted any
proof of payment to the office and based on the records available
with the office, the designated committee No. 1 had issued Form
No. SVLDRS-3. It is in these circumstances, the Petitioner is
before us.
16. Learned counsel Mr. Mashelkar submits that while
the petitioner desired personal hearing in support of declaration
in Form SVLDRS - 1 over disagreement on the estimated amount
in SVLDDRS-2, no hearing was afforded and the respondents
purports to refer to and rely the electronic medium. He submits
that even going by the same and as was depicted on the portal
website communication to the official address of the petitioner,
intimation of hearing ought to have been given to the petitioner
either on 'email id' or by 'SMS' on the registered mobile phone.
As to why the communications were not issued on 'email id' or
for that matter on the mobile phone is not coming forth. He,
therefore, submits that SVLDR-3 declaration is patently illegal as
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the petitioners have lost an opportunity of personal hearing,
explaining / supporting claim of the payments, as referred to in
the declaration. The impugned order is, thus, infirm, passed in
violation of noble principles of natural justice and the same
deserves to be set aside. It is contended that a hyper technical
approach is being adopted.
17. The learned counsel for the petitioner purports to
refer to and rely on a decisions of a division bench ( of whichone
of us Abhay Ahuja, J. as a member) of this court dated 25th
September, 2020 in the case of Capgemini Technology Services
India Ltd. Vs. Union of India1; and Thought Blurb Vs. Union of
India & Ors. dated 27th October, 2020 in Writ Petition No. 871 of
2020 wherein rejection of petitioners' declaration communicated
under Sabka Vishwas Scheme, 2019 had been set aside.
Petitioner also refers to a decision of Gujrat High Court in the
case of Vaghjibhai Bishnoi Vs. Income Tax Officer2
18. The petition is being resisted on behalf of the
1 Writ Petition (St.) No. 5629 of 2020, dated 25.9.2020.
2 Special Civil Application No. 6726 of 2013 dated 9.7.2013
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respondents. It is being referred to that it is a lame excuse to
claim that the petitioner had not been given notice of personal
hearing through email or SMS. It is contended that notification
regarding issuance of SVLDRS-2B is system generated service
and while petitioner had received SVLDRS-2, it is difficult to
believe that SVLDRS-2B form had not reached the petitioner. It
is being contended that petitioner has not specifically come out
as to when it came to know about SLVDRS-2B form.
19. It is submitted that the designated committee had
issued SLVDRS-2B on 31st January, 2020 and had been made
available on the portal which could have been accessed by the
petitioner. While the Petitioner had received SLVDRS-2, SLVDRS-
2B form ought to have been received by him. It is contended
that SLVDRS-3 had been issued after due verification and
considering the details. It would not be correct to say that no
opportunity was afforded to the petitioner. The petitioner had
failed to attend hearing on 24th January, 2020 and 6th February,
2020 and had not submitted payment receipts and having regard
to records available, designated committee had issued SLVDRS-3
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determining the amount payable as Rs. 2,93,40,631/-
20. It is submitted that petitioner has declared that
notice amount as only Rs. 9,27,39,338/- (wrongly excluding the
Education Cess and Secondary and Higher Education Cess).
While the petitioner had opted for the Sabka Vishwas Scheme,
the designated committee had correctly estimated tax dues on
verification and consideration of facts, as has been referred to in
the show-cause notice. It has also been referred to that an
amount of Rs.1,83,35,195/- would be required to be
appropriated against the service tax dues for the period from
January, 2013 to March, 2016. The decision has been taken by
following due procedure under the Sabka Vishwas scheme.
Petitioner was given due opportunity of personal hearing. But,
the Petitioner did not attend first hearing on 24.1.2020, and had
requested for adjournment and accordingly personal hearing was
fixed on 6th February, 2020 by issuing SVLDRS Form 2B.
However, Petitioner once again failed to attend the hearing on
that date.
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21. The situation emerges there is no dispute on that
petitioner is eligible person to claim benefit of Sabka Vishwas
scheme and had accordingly had made a declaration in Form
SVLDRS-1, as provided. The same was responded to by issuing
SVLDRS-2 by the designated committee. While the estimate
under SVLDRS-2 exceeded the amount declared by the
petitioner, it will entail an opportunity to petitioner on its
disagreement over the estimated amount before issuing
statement SVLDRS-3 indicating the amount payable by the
declarant. The scheme also provides for an accommodation of
adjournment for hearing. Statement with regard to amount
payable has been issued in Form SVLDRS-3 on 19th February,
2020. It is the case of the petitioner that communications are
required to be made either on 'email id' or via 'SMS' on
registered mobile/phone. While petitioner asserts the same,
there is no definitive response on the same. It does not appear
to be certain that communications had ever been issued to
petitioner on 'email id' or via SMS on the registered
mobile/phone. It may have to be referred to that there is no
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specific record made available about the same.
22. It would be pertinent to refer to the decision of
Gujrat High Court in the case of Vaghjibhai Bishnoi (supra)
wherein it is observed that the objective of computerization
programme is to improve efficiency and effectiveness of tax
administration; to provide management with reliable and
accurate information with certainty in its accuracy.
23. Decisions in Capgemini Technology Services (supra)
and Thought Blurb Vs. Union of India & Ors. 3 put emphasis on
object underlying framing of scheme. The division bench
deciding the matters has emphasised that the scheme has been
formulated with a view to put an end to past disputes pertaining,
inter alia, Central Excise and Service Tax etc., and to have
disclosure of unpaid tax and realisation of locked up revenue.
The scheme has been brought in to have amicable resolution of
disputes securing interest of revenue and start the new GST
regime and to give benefit to eligible persons participating in the
scheme of waiver of interest, fine, penalty, immunity from
3 Writ Petition No. 871 of 2020, dated 27th October, 2020.
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prosecution. It has been observed that non compliance of
principles of natural justice would impeach the decision making
process rendering the decision invalid in law. It has also been
observed that basic thrust of the scheme is to unload the baggage
of pending litigations of indirect tax as well as excise duty and
service tax, with a view to minimise load of pre-GST regime and
to keep pace of business. The division bench has also referred to
a decision of Delhi High Court in the case of Vaishali Sharma Vs.
Union of India4 holding that a liberal interpretation has to be
given to the scheme as its intent is to unload the baggage
relating to legacy disputes under central excise and service tax. It
has been observed to the effect that before insisting on payment
of excess amount or higher amount, the designated committee is
required to give an opportunity of hearing to the declarants.
24. It could not be out of place to refer to a decision of
Karnataka High Court in the case of Kiran Borewells Vs. Union of
India5 wherein the impugned order was set aside finding that
decision had been taken without providing an opportunity of
4 MANU/DE/1529/2020
5 2019 SCC OnLine Kar 2655
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hearing to the petitioner, adversely affecting the petitioner. It
has been observed that in order passed by the authority
adversely affecting rights of the parties should be in adherence
to the principles of natural justice. This was a case in respect of
SVLDRS.
25. In case of Chaque Jour HR Services Vs. Union of
India6, Delhi High Court, while application under SVLDRS had
been rejected by the authority on the premise that the disputed
amount was not quantified and communicated prior to
30.6.2019 finding that the impugned order has been passed
without hearing petitioner had set aside the impugned order and
the matter was remanded to competent authority to hear the
petitioner before passing order.
26. Having regard to foregoing discussion and decisions,
we deem it appropriate that petitioner may have an opportunity
of hearing. We therefore, consider it appropriate to set aside the
impugned statement SVLDRS-3 dated 19th February, 2020.
6 2020 (372) E.L.T. 522 (Del.)
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27. In the result, impugned declaration in the form of
SVLDRS-3 issued by respondent No. 4 on 19 th February, 2020 is
set aside restoring the proceedings before the authority. The
concerned authority to give an opportunity of hearing to
petitioner and decide the matter petitioner pursuant to Sabka
Vishwas scheme.
28. Rule is made absolute in the aforesaid terms and
accordingly writ petition is disposed of.
Sd/- Sd/-
[ABHAY AHUJA, J.] [SUNIL P. DESHMUKH, J.]
Vinayak Halemath
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