Kerala High Court
Arctic Cooling Solutions India ... vs Union Of India on 17 March, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR.JUSTICE GOPINATH P.
WEDNESDAY, THE 17TH DAY OF MARCH 2021/26TH PHALGUNA, 1942
W.A.No.53 OF 2021
AGAINST THE JUDGMENT DATED 06.07.2020 IN W.P(C).NO.13255/2020(F)
OF HIGH COURT OF KERALA
APPELLANT/PETITIONER:
ARCTIC COOLING SOLUTIONS INDIA PVT LTD
63/447, E KRISHNA ARCADE, NEAR BSNL, GANDHINAGAR,
KOCHI-682 017, REPRESENTED BY ITS' MANAGING DIRECTOR.
BY ADVS.SRI.A.KUMAR
SHRI.JOB ABRAHAM
SRI.AJAY V.ANAND
RESPONDENTS/RESPONDENTS:
1 UNION OF INDIA
REPRESENTED BY FINANCE SECRETARY,
NORTH BLOCK, NEW DELHI-110 001
2 THE PRINCIPAL COMMISSIONER OF CENTRAL TAX AND CENTRAL
EXCISE, OFFICE OF THE PRINCIPAL COMMISSIONER,
CENTRAL REVENUE BUILDING, I.S. PRESS ROAD,
KOCHI-682 018
3 THE DESIGNATED COMMITTEE-II,
SABKA VISWAS (LEGACY DISPUTES RESOLUTION) SCHEME
(SVLDRS), KOCHI COMMISSIONERATE, OFFICE OF THE
PRINCIPAL COMMISSIONER, CENTRAL REVENUE BUILDING,
I.S.PRESS ROAD, KOCHI-682 018
4 THE JOINT COMMISSIONER OF CENTRAL TAX AND CENTRAL
EXCISE, OFFICE OF THE PRINCIPAL COMMISSIONER,
CENTRAL REVENUE BUILDING, I.S. PRESS ROAD,
KOCHI-682 018
R1 BY ADV. P.R.AJITH KUMAR, CGC
R2-4 BY ADV. SRI.SREELAL N.WARRIER (B/O)
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
17.03.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.A.No.53/2021 :: 2 ::
JUDGMENT
A.K. Jayasankaran Nambiar, J.
The petitioner in W.P.(C).No.13255/2020 is the appellant
before us, aggrieved by the judgment dated 6.7.2020 of the
learned Single Judge in the writ petition. The brief facts necessary
for disposal of the Writ Appeal are as follows:
2. The writ petitioner company has filed declarations, as
evidenced by Exts.P5, P6 and P7, in Form SVLDRS-01 on
31.12.2019 claiming the benefit of the Sabka Vishwas (Legacy
Dispute Resolution) Scheme, 2019 [hereinafter referred to as the
'Scheme']. The said Scheme contemplates the disclosure by an
assessee of unpaid taxes pertaining to previous years, for the
purposes of claiming tax relief as also relief from interest and
penalty that can be levied/imposed on the assessee under the
respective tax legislation. In the instant case, in the declarations
filed by the petitioner, it had shown payment of certain amounts by
way of tax during the assessment periods 2016-17 (April to
September), 2016-17 (October-March) and 2017-18 (April-June).
W.A.No.53/2021 :: 3 ::
The declarations also contained a statement by the petitioner that
returns had been filed in Form ST3 during the relevant period, and
the figures relating to outstanding tax dues wherever applicable
had been taken from the returns. It would appear that the
declarations were processed by the designated Committee
consisting of Joint Commissioner and Assistant Commissioner of
Service Tax, and accepted by the Department, which proceeded to
issue statements estimating the amounts payable by the petitioner
in Form SVLDRS-03 dated 28.2.2020. The said statements are
produced in the writ petition as Exts.P8 to P10. Thereafter, the
petitioner was served with Exts.P12 to P14 rectification orders,
purportedly rectifying the earlier orders that accepted the
declarations filed by the appellant for the purposes of the Scheme.
In the said orders, the stand of the Department was essentially
that it had subsequently come to the notice of the Department that
the petitioner had not actually filed returns during the relevant
period in the electronic format, which was necessary, and hence,
the tax relief extended to the petitioner, through the acceptance of
the declarations, was erroneous. The orders indicated that
inasmuch as the petitioner had not filed returns during the
relevant period, the declarations could only be seen as "voluntary
disclosure" for the purposes of the Scheme, and the petitioner was
obliged to pay the entire tax amount outstanding as per the
W.A.No.53/2021 :: 4 ::
declarations, and would only get the benefit of waiver of penalty,
interest, late fees etc. In the writ petition, the petitioner impugned
the said rectification orders inter alia on the contention that the
rectification orders had been passed beyond the time limit
prescribed for the same under the Scheme. A further point that
was urged in the writ petition was that the rectification orders had
been passed without affording an opportunity of hearing to the
petitioner, and without following the procedure contemplated
under the Scheme for rectifying orders earlier passed by the
Department.
3. The learned Single Judge, who considered the matter,
found force in the contention of the learned Standing Counsel for
the Department that, inasmuch as the petitioner had not filed
returns during the relevant period, the declarations had to be seen
as false for the purposes of Section 129 of the Finance Act, 2019,
which incorporated the Scheme. In particular, it was contended by
the Department that where a voluntary disclosure was found to be
false in respect of any material particular furnished in the
declarations, then it had to be presumed that no such declaration
was ever made, and the recovery proceedings under the applicable
indirect tax enactment had to be instituted. The learned Single
Judge therefore proceeded to dismiss the writ petition as devoid of
W.A.No.53/2021 :: 5 ::
merit.
4. Before us, it is the contention of Sri.A.Kumar, the learned
counsel for the appellant that the rectification orders were all
passed beyond the time prescribed under the scheme for passing
such orders and further, that they were passed without complying
with the procedural formalities that had to be adhered to while
passing such orders. The aspect of violation of natural justice is
also highlighted by pointing out that the appellant was not heard
prior to the passing of the rectification orders.
5. On a query from the Bench with regard to whether or not
returns had actually been filed during the relevant period, as
stated in the declarations filed by the appellant, the appellant, as
also the respondents, have filed affidavits clarifying that although
the appellant may have attempted to upload returns pertaining to
the relevant period in the website of the Department, such
attempts did not fructify, and the appellant was not able to proceed
beyond the stage of preparing a draft of the returns. As a result,
the returns were never uploaded onto the system. Based on the
the material made available before us at the time of hearing we are
also convinced that the inability to upload the returns cannot be
attributed to any defect in the system maintained by the
W.A.No.53/2021 :: 6 ::
Department. We have therefore to proceed on the assumption that
no returns had been filed by the appellant during the relevant
period, and the statements to the contrary, in the declarations,
were factually incorrect. We may also observe, at this stage, that
although the appellant has an alternate contention that he had
filed the returns during the relevant period manually, the same
may not be of any significance, since, the manual filing of a return
is not an acceptable mode of filing return under the provisions of
the Statute, as amended in 2011.
6. Once it is accepted that the declarations filed by the
appellant were factually incorrect in respect of the material
particulars furnished therein, the provisions of Section 129(2)(c) of
the Finance Act, 2019 would have to be seen as empowering the
Department to treat the declarations as never made, and to initiate
proceedings for recovery of the tax amounts as per the provisions
of the Finance Act, 1994, as amended, governing the levy and
collection of Service Tax. The Department, however, has not
chosen to deny the petitioner the benefit of the scheme, but has
merely suggested a category change in respect of the declarations
filed by the appellant. While the appellant had declared that the
particulars of outstanding tax were based on returns filed without
payment of the tax, the Department treated the declarations as
W.A.No.53/2021 :: 7 ::
"voluntary disclosures". The effect of this category change is that
the appellant will be entitled only to the benefits of waiver of
interest, penalty, late fees etc. but will be obliged to pay the entire
tax amount declared by it in the declarations, by virtue of the
provisions of Section 124(1)(e) of the Finance Act, 2019. The
rectification orders passed by the Department therefore continue
to extend the benefit of the Scheme to the appellant, albeit on
terms different from what he had sought. We find that the stand of
the Department is in fact beneficial to the appellant especially
since the Department had the option of treating the petitioner's
declarations as 'never made', and thereby denying it the benefits
under the scheme and initiating proceedings for recovery of the
tax amount, together with penalty and interest in accordance with
the statutory provisions.
7. As regards the contention of the learned counsel for the
appellant that the rectification orders were passed beyond the time
prescribed under the statutory provisions, and further, that the
procedural formalities required to be complied with prior to
passing of such orders had not been adhered to by the
respondents, we find that even if we were to accept the said
contention and find the rectification orders to be vitiated on
account of a jurisdictional error, we need not interfere with the
W.A.No.53/2021 :: 8 ::
said orders if we find that justice has nevertheless been done in
the case.
8. The learned counsel for the appellant, would next rely on
the judgment of a learned single judge of the Madras High Court in
GT Holidays Private Limited v. Designated Committee, Sabka
Vishwas Legacy Disputes Resolution and Another - [2020
SCC OnLine Mad 6240], where the court while dealing with a
writ petition questioning the legality of a rectification order passed
by the Department, refused to consider the Department's counter
argument regarding the entitlement of the assessee to the benefit
of the Scheme itself. With all due respect to the learned judge, we
find ourselves unable to agree with the view taken, more so in the
context of interpretation of provisions that offer amnesty to an
assessee from the rigours of a fiscal statute. In matters of
taxation, beneficial provisions have to be interpreted strictly in
favour of the Department and against the assessee, unlike taxing
provisions where the interpretation favours the assessee. Further,
as already noted above, we find that, while under Section 129 of
the Finance Act, the Department could have treated the
declarations filed by the appellant as 'never made', for the
purposes of the Scheme, it has not chosen to do so, thereby
granting the appellant the benefit of the Scheme to the extent
W.A.No.53/2021 :: 9 ::
applicable. We therefore see no reason to interfere with the
judgment of the learned Single Judge impugned in this appeal.
9. Before parting with this case, we might observe that in
Ext.P12 rectification order pertaining to the period 2016-17 (April
- September), the Department has shown an amount of
Rs.9,94,359/- as payable by the appellant under the Scheme. Going
through the details furnished before us by the parties in the course
of these proceedings, we find that an amount of Rs.11,18,763/- has
already been paid by the appellant towards tax during the said
period. This would mean that, as against the outstanding tax
amount declared as Rs.9,94,359/-, the appellant has, in fact, paid
an amount of Rs.1,24,404/- in excess during the relevant period,
which he cannot, at any rate, claim as refund going by the
provisions of the Scheme. We deem it appropriate to clarify that
the appellant shall be seen as having discharged his tax liability of
Rs.9,94,359/- during the said period, and the limited relief that can
be granted to the appellant under the Scheme, for the said period,
is the waiver of interest, penalty, late fees etc. as applicable. As
regards Ext.P14 rectification order, which pertains to the period
2017-18 (April - June), while requiring the appellant to pay the tax
amounts mentioned therein, the Department shall give credit to
the amount of Rs.2,93,254.80 paid by the appellant on 18.3.2020,
W.A.No.53/2021 :: 10 ::
pursuant to the initial acceptance of his declaration by the
Department.
10. The appellant shall make the payments required under
the Scheme within 30 days from the date of receipt of a copy of
this judgment, and on the appellant making the said payment, the
Department shall proceed to finalize the proceedings and issue the
discharge certificate to the petitioner. The scheme shall be treated
as in force for the limited purpose of finalising the proceedings as
above.
The Writ Appeal is disposed as above.
Sd/-
A.K.JAYASANKARAN NAMBIAR
JUDGE
Sd/-
GOPINATH P.
JUDGE
prp/17/3/21
W.A.No.53/2021 :: 11 ::
APPENDIX
PETITIONER'S EXHIBITS:
ANNEXURE A TRUE COPY OF CHALLANS AS PROOF OF PAYMENT OF
SERVICE TAX.
ANNEXURE B TRUE COPY OF THE TABLE SHOWING THE TAXABLE
VALUE, ACTUAL AMOUNT OF SERVICE TAX DUES FOR
THE RETURN PERIOD IN DISPUTE AND THE DETAILS
OF PAYMENT.
ANNEXURE C TRUE COPY OF THE CIRCULAR NO.1069/2/2019/2019
CX DATED 08.05.2019 ISSUED BY THE CBIC.
RESPONDENTS EXHIBITS: NIL.
//TRUE COPY//
P.S. TO JUDGE
