Madras High Court
M/S Sav Constructions vs 5 The Superintendent Of Cgst And ... on 18 July, 2023
W.P.(MD)No.25380 of 2022
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 18.07.2023
CORAM
THE HONOURABLE MRS.JUSTICE S.SRIMATHY
W.P.(MD)No. 25380 of 2022
and
W.M.P(MD)No. 19462 of 2022
M/s Sav Constructions
Rep by its Managing Partner M.Aravind,
No. 885, Radhapuram Main Road,
Vadakkankulam-627
116, Tirunelveli District. ... Petitioner
Vs
1 The Commissioner of CGST And Central Excise,
No 4, Lalbahadur Shastri Road,
C.R.Building, Bibikulam,
Madurai-625 002.
2 The Designated Authority
Service Tax Voluntary Compliance
Encouragement Scheme, O/o. the Commissioner
of CGST And Central Excise,
C.R.Building,
Bibikulam,
Madurai-625 002.
1/13
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
3 The Assistant Commissioner of
CGST And Central Excise,
Tirunelveli Division,
C.R.Building, Tractor Street,
NGO 'A' Colony,
Tirunelveli-627 002.
4 . The Superintendent of Central Excise,
Service Tax Range, Tirunelveli.
5 The Superintendent of CGST And Central Excise,
Nagercoil Range,
48/1-4, Sivaraj Building 1st Floor,
Tower Junction,
Nagercoil-629 001 ... Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of India for
issuance of Writ of Certiorarified Mandamus, calling for records in
O.C.No. 685/2022 (DIN 20220859XO000000BF22) dated 23.08.2022 issued by
5th respondent and quash the same as arbitrary illegal and against the principles
of natural justice and consequently direct the 1st respondent to consider the
representation, dated 11.10.2022 and to review the case in terms of section 110 of
the Finance Act 2013 under Service Tax Voluntary Compliance Encouragement
Scheme after verification of records.
For Petitioner : Mr. S.Karunakar
For Respondents : Mr. R.Nandhakumar,
Senior Standing Counsel, assisted by
M/s.S.Ragaventhre,
Junior Standing Counsel
2/13
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
ORDER
This writ petition is filed for Writ of Certiorarified Mandamus, to
quash the impugned order, dated 23.08.2022 issued by 5th respondent and
consequently direct the 1st respondent to consider the representation, dated
11.10.2022 and to review the case in terms of section 110 of the Finance Act
2013.
2. Heard Mr. S.Karunakar, the Learned Counsel appearing for the
petitioner and Mr. R.Nandhakumar, the Learned Senior Standing Counsel,
assisted by M/s.S.Ragaventhre, Junior Standing Counsel appearing for the
respondents and perused the material documents placed on record.
3. The petitioner is running a firm carrying out various civil
construction work under works contract service. The petitioner was registered
assessee under the erstwhile Service Tax holding Registration No. ABEFS4315
DSD001 and subsequently migrated to the regime of GST. The petitioner availed
the benefits of “Service Tax Voluntary Compliance Encouragement Scheme”
granted under the Finance Act, 2013, which is an amnesty scheme for waiver of
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
Interest and Penalty and the said scheme imposes certain conditions. One of the
conditions is that the declarant shall pay an amount equal to 50% of the declared
tax under the Scheme, on or before 31.12.2013 and the balance 50% shall be paid
on or before 30.06.2014. Further concession was granted, if the assessee is not
able to pay the same, the same shall be paid on or before 31.12.2014, however, it
carries interest.
4. In the present case, the petitioner has declared 57,89,270/- and the
petitioner had made payment as follows:
S. No. Date of Amount paid Remarks
payment
1 20.12.2013 25,00,000/- 50% of tax liability paid
2 31.12.2013 4,00,000/- before 31.12.2013
3 26.06.2014 15,00,000/- Paid before 30.06.2014
4 21.02.2015 13,89,270/- Paid after due date
31.12.2014
Total 59,87,270/-
It is an admitted fact that the petitioner has paid 50% of Tax liability within the
due date of 31.12.2013. The petitioner is liable to pay the balance amount on or
before 30.06.2014. However, the petitioner had paid a sum of Rs.15 lakhs on
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
26.06.2014. The petitioner has to pay the balance of Rs.13,89,270/- on or before
30.06.2014 in order to avoid interest. Even the petitioner was not able to pay
along with interest on or before 31.12.2014. But the petitioner had paid the
balance amount of Rs.13,89,270/- on 21.02.2015 and was instructed to pay the
interest for the belated amount. However, the Office of the Accountant General
(Audit) directed the respondents to recover the interest for the entire tax liability
of Rs.57,89,270/-. In turn the respondents directed the petitioner to pay the
interest for the entire tax liability of Rs.57,89,270/-. Hence, the petitioner is
aggrieved.
5. The contention of the respondents is that once the declarant
violated the conditions of the scheme he is not entitled to the benefits of the
scheme. Hence the petitioner is bound to pay interest to the entire tax liability to
the tune of Rs.59,87,270/- and not only for the belated payment 13,89,270/-.
Under section 108 of the Finance Act, 2013 it states that the declarant, upon
payment of the tax dues declared by them under 107(1) and the interest payable
under the provisions to sub section 107(4), should get immunity for penalty,
interest or any other proceedings under Finance Act. Hence it is construed that the
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
petitioner fails to pay the declared tax dues or part thereof along with interest on
or before 31.12.2014 and hence the petitioner would not be eligible to the
immunity. In C&AG Report No.22 of 2016, Board has accepted the view that
immunity under the provisions of section 108 of the Finance Act, 2013 would be
extended only to such declarant who make payment of tax dues declares in
accordance with the provision of section 107 of the Finance Act, 2013. Moreover,
the Amnesty Scheme should be strictly interpreted and the time limit specified
have to be strictly adhered to. The scheme partakes the nature of settlement, from
the terms of settlement neither party can be permitted to resile as held by Kerala
High Court in Kasmisons Builders Pvt Ltd. Vs Assistant Commissioner of Service
Tax. Hence the respondents prayed to dismiss the writ petition.
6. The petitioner relies on Section 110 of the Finance Act, 2013 (17
of 2013) and the same is extracted hereunder:
“110: Where the declarant fails to pay the tax dues,
either fully or in part, as declared by him, such dues along
with interest thereon shall be recovered under the provisions
of Section 87 of the Chapter”.
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
The section states “fails to pay tax dues, either fully or in part, such dues
along interest shall be recovered”. The respondents interpret it “fully tax
liability”. This Court is of the considered opinion that on the comprehensive
reading of the section would clearly indicate the phrase “such dues” would
definitely mean the unpaid portion only. Since only the unpaid portion alone can
be considered as “dues”. The respondents are adding words which is not found in
the section. If the interpretation of the respondents is taken, then the same would
attract the principle of “Casus Omissus”. Therefore, the section states interest in
leviable for the unpaid portion alone.
7. Moreover in tax laws if two interpretations are possible then the
one which is advantageous to the assessee ought to be applied as held by the
Hon’ble Three Judges Bench of Supreme Court vide its judgment dated
27.05.1997 in the case of Commissioner of Income Tax Bombay etc. Vs. Podar
Cement Pvt. Ltd. etc. and the relevant portion is extracted hereunder:
“At this juncture, we can also refer to the judgment cited by Mr. Syali
regarding updating construction of the words used in the statute. In State
(Through CBI/New Delhi) v. S.J. Choudhary, [1996] 2 SCC 428, this Court has
quoted the following passage with approval in support of updating construction”.
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
"Statutory Interpretation by Francis Bcnnion, 2nd Edn., Section 288
with the heading "Presumption that updating construction to be given" states
one of the rules thus : (p.617)
"x x x x x x x (2) It is presumed that Parliament intends the court to
apply to an ongoing Act a construction that continuously updates its wording
to allow for changes since the Act was initially framed (an updating construc-
tion). While it remains law, it is to be treated as always speaking. This means
that in its application on any date, the language of the Act, though necessari-
ly embedded in its own time, is nevertheless to be construed in accordance
with the need to treat it as current law.
"x x x x x x x In the comments that follow it is pointed out that an on-
going Act is taken to be always speaking. It is also, further, stated thus : (pp.
618-19) "In construing an ongoing Act, the interpreter is to presume that Par-
liament intended the Act to be applied at any future time in such a way as to
give effect to the true original intention. Accordingly the interpreter is to
make allowances for any relevant changes that have occurred, since the Act's
passing, in law, social conditions, technology, the meaning of words, and oth-
er matters. Just as the US Constitution is regarded as 'a living Constitution',
so an ongoing British Act is regarded as 'a living Act'. That today's construc-
tion involves the supposition that Parliament was catering long ago for a
state of affairs that did not than exist is no argument against that construc-
tion. Parliament, in the wording of an enactment, is expected to anticipate
temporal development. The drafter will try to foresee the future, and allow for
it in the wording.
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
"x x x x x x x An enactment of former days is thus to be read today, in
the light of dynamic processing received over the years, with such modifica-
tion of the current meaning of its language as will now give effect to the orig-
inal legislative intention. The reality and effect of dynamic processing pro-
vides the gradual adjustment. It is constituted by judicial interpretation, year
in the year out. It also comprises processing by executive officials."
Applying the above principle also, the view taken by the High Courts
of Patna, Punjab and Haryana, etc. can be supported.
Assuming that there are two possible interpretations on Section 22 of
the Act, which is akin to a charging Section, it is well settled, that the one
which is favourable to the assessee has to be preferred. Even on that princi-
ple the view taken by the High Courts of Patna, Punjab and Haryana, etc. has
to be preferred rather than the contrary view taken by the High Courts of
Delhi and Andhra Pradesh.
Accordingly, we hold that the views taken by the High Courts of Alla-
habad, Patna, Rajasthan, Punjab and Haryana are the correct views. The
contrary view taken by the Delhi High Court is not correct.”
In the present case, even if two interpretations are possible then the one which is
favourable to the assessee has to be preferred. Therefore, on this ground also the
petitioner is entitled to relief.
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
8. Generally, the respondents levy interest for the unpaid portion of
the tax liability. Even as per tax laws, when the portion of the tax liability is paid
the respondents cannot levy interest for the entire tax liability. If the respondents
are allowed to levy interest for the entire tax liability, when the portion of the tax
is paid, then the same is without any authority of law.
9. Even in normal commercial parlance any person is entitled to
interest for the unpaid portion only. In the present case, the petitioner has paid
90% of the tax liability, but failed to pay the balance amount, then the petitioner
is liable to pay interest for the balance amount alone.
10. Therefore, this Court is of the considered opinion that the interest
cannot be levied for the entire amount of Rs.57,89,270/-. This impugned order,
dated 23.08.2022 is hereby quashed. Consequently, the respondents shall
recalculate the interest portion for the amount of Rs.13,89,270/- and recover the
same. Once the petitioner has paid the interest for the balance amount of Rs.
13,89,270/-, the respondents shall release the attachment of bank account.
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
11. With these observations and directions, this Writ Petition is
allowed. No Costs. Consequently, connected miscellaneous petitions are closed.
Index : Yes / No 18.07.2023
Internet : Yes
ksa
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
To
1 The Commissioner of CGST And Central Excise,
No 4, Lalbahadur Shastri Road,
C.R.Building, Bibikulam,
Madurai-625 002.
2 The Designated Authority
Service Tax Voluntary Compliance
Encouragement Scheme, O/o. the Commissioner
of CGST And Central Excise,
C.R.Building,
Bibikulam,
Madurai-625 002.
3 The Assistant Commissioner of
CGST And Central Excise,
Tirunelveli Division,
C.R.Building, Tractor Street,
NGO 'A' Colony,
Tirunelveli-627 002.
4 . The Superintendent of Central Excise,
Service Tax Range,
Tirunelveli.
5 The Superintendent of CGST And Central Excise,
Nagercoil Range,
48/1-4, Sivaraj Building 1st Floor,
Tower Junction,
Nagercoil-629 001.
https://www.mhc.tn.gov.in/judis
W.P.(MD)No.25380 of 2022
S.SRIMATHY, J
ksa
Order made in
W.P.(MD)No. 25380 of 2022
18.07.2023
https://www.mhc.tn.gov.in/judis
