Madras High Court
M/S.Narayana Associates vs The Designated Committee on 13 June, 2023
W.P.No.8478 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 13.06.2023
CORAM
THE HONOURABLE DR. JUSTICE ANITA SUMANTH
W.P.No.8478 of 2020 and
WMP.No.10227 of 2020
M/s.Narayana Associates,
Prop: M.Narayana Moorthy,
Plot No.4B, Chandra City,
Vasantham Nagar,
Avadi, Chennai-600 071. ... Petitioner
Vs
The Designated Committee, SVLDRS Scheme,
GST & Central Excise,
Chennai Outer Commissioner,
2052, 2nd Avenue, 12th Main Road,
Newry Towers, Anna Nagar,
Chennai-600 040. ... Respondent
Prayer: Writ Petition filed under Article 226 of the Constitution of India,
praying to issue a Writ of Certiorarified Mandamus, to call for the records of
the case relating to rejection in SVLRD-1 dated, 13.02.2020 by the Respondent
and quash the said Rejection order and thereby direct the Respondent to estore
the declaration ARN No.LD3112190017375 dated, 31.12.2020 filed by the
Petitioner under Section 123(d) of Finance Act, 2019 and settle the dispute
under the said scheme.
https://www.mhc.tn.gov.in/judis
1
W.P.No.8478 of 2020
For Petitioner : Ms.Sri Visvapriya
For Respondent : Mr.A.P.Srinivas, Senior Standing Counsel
assisted by
Mr.K.S.Ramasamy, Junior Standing Counsel
ORDER
The petitioner is a sole proprietary and was registered with the Service
Tax Department under the category 'management consultant service'. The
petitioner had made an application under Sabkha Vishwas (Legacy Dispute
Resolution) Scheme, 2019 (in short, 'Scheme'), which has come to be rejected
on 13.02.2020 and is hence challenged by way of the present writ petition.
2. Though the petitioner has raised grounds relating to the violation
of principles of natural justice, such grounds are not pursued in the writ
petition. Instead, the substantial point raised relates to the ground of rejection
itself which turns upon an interpretation of Section 125 of the Scheme as per
which certain persons have been declared to be ineligible for availing the
Scheme. Section 125 sets out eight categories of such applicants who are
ineligible and it reads thus:-
"125. Declaration under Scheme. - (1) All persons shall
be eligible to make a declaration under this Scheme
except the following, namely:-
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W.P.No.8478 of 2020
(a) who have filed an appeal before the appellate forum
and such appeal has been heard finally on or before the
30th day of June,2019.
(b) who have been convicted for any offence punishable
under any provision of the indirect tax enactment for the
matter for which he intends to file a declaration.
(c) who have been issued a show cause notice, under
indirect tax enactment and the final hearing has taken
place on or before the 30th day of June, 2019.
(d) who have been issued a show cause notice under
indirect tax enactment for an erroneous refund or refund;
(e) who have been subjected to an enquiry or
investigation or audit and the amount of duty involved in
the said enquiry or investigation or audit has not been
quantified on or before the 30th day of June, 2019;
(f) a person making a voluntary disclosure;
(i) after being subjected to any enquiry or investigation
or audit; or
(ii)having filed a return under the indirect tax enactment,
wherein he has indicated an amount of duty payable, but
not has paid it;
(g) who have filed an application in the Settlement
Commission for settlement of a case;
(h) persons seeking to make declarations with respect to
excisable goods set forth in the Fourth Schedule to the
Central Excise Act, 1944 (1 of 1944);
(2) A declaration under sub-section (1) shall be made in
such electronic form as may be prescribed."
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W.P.No.8478 of 2020
3. In the present case, the petitioner was in receipt of letter dated
10.10.2019 calling upon the petitioner to submit various particulars on the basis
of an allegation that there was a mis-match between the income tax and service
tax returns for the year 2016. It is this letter that is cited by the respondent to
stand in the way of acceptance of petitioner's eligibility under the Scheme in
terms of Section 125(f) which states that any assessee which has been subjected
to enquiry or investigation or audit would not be eligible to make a declaration
under the Scheme.
4. The petitioner would draw attention to the fact that in sub-clause
125 (e), which also refers to enquiry or investigation or audit, there is a
requirement that the quantification of duty should have been done prior to
30.06.2019. Thus, she would submit that the requirement for being subjected to
enquiry or investigation or audit should also be read along with the aforesaid
date. To put it in another way, her specific submission is that it is only if the
assessee has been subject to enquiry or investigation or audit prior to
30.06.2019, that the assessee would be rendered ineligible whereas, in the
present case, enquiry was admittedly on 10.10.2019 which is beyond the
effective date.
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W.P.No.8478 of 2020
5. In this context, she relies on the decisions of the Bombay High
Court in the case of New India Civil Erectors Pvt Ltd v Union of India [2021 48
GSTL 17 (Bom)], UCC Infrastructure Pvt Ltd v Union of India, [2022 65
GSTL 294 (Bom)] and M/s. Sonjoli Construction v Union of India and others
[W.P.No. 5423 of 2021 dated 24.08.2022]. In all these writ petitions, the Courts
have taken a view that the enquiry or investigation or audit should have been
conducted prior to 30.06.2019 and any such enquiry or investigation or audit
conducted thereafter would be inconsequential in the context of the Scheme.
The decisions were thus, all in favour of the petitioner / assessees in those
matters.
6. The respondent was asked to verify whether those decisions have
attained finality and accepted by the Income-Tax Department. Today,
Mr.A.P.Srinivas, learned Senior Standing Counsel, would confirm that one of
the decisions of the Bombay High Court wherein the matter had been remanded
to the file of the designated authority of the Scheme, had ended in favour of the
assessee and discharge certificate had been issued. No appeals had been filed in
the other two cases as the tax effect had been below the required threshold.
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W.P.No.8478 of 2020
7. Thus, the revenue has accepted the position that Clause (f) of
Section 125 should be read to contain the stipulation that the
enquiry/investigation/audit should have been conducted prior to 30.06.2019
though such date does not figure in the said clause. With this, there is no
necessity for any further discussion in the matter as the interpretation of the
revenue in one case must be applied in respect of other matters involving
identical issues, the Income-Tax Act, 1961 being a central enactment.
8. The judgments in the case of Union of India and others v.
Kaumudini Narayan Dalal and another [(2001) 10 SCC 231]; Berger Paints
India Ltd. v. Commissioner of Income Tax, Calcutta [(2004) 12 SCC 42];
Commissioner of Income Tax v. Shivsagar Estate [(2004) 9 SCC 420] and
Commissioner of Income Tax v. Narendra Doshi [(2004) 2 SCC 801] are all to
the effect that where a particular issue has been decided in the case of an
assessee in one particular manner, and that interpretation/decision has been
accepted by the revenue, it is not open to the revenue to challenge the
correctness of that view in the case of other assessees without just cause.
9. Per contra, Mr.Srinivas refers to Commissioner of Central Excise,
Chandigarh v. Doaba Steel Rolling Mills [2011 (269) E.L.T. 298 (S.C.),
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W.P.No.8478 of 2020
wherein the similar issue, as to whether non-challenge of one order on an issue
would stand in the way of the Central Excise Department taking a view
contrary to that order in the case of other assessees, came up for consideration.
The Bench held that that proposition was not of universal application for the
reason that there may be several compiling reasons such as, revenue involved,
divergent views of the Tribunals or High Court, public interest or others, that
would impel the revenue to either prefer an appeal or not. Hence, while there is
some substance in the submission that there must be uniformity of approach
qua a particular issue, it cannot be putforth as an all encompassing and
overriding proposition. At paragraph 24, they state as follows:
24.As regards the argument of learned counsel for
the respondents that having not assailed the correctness
of some of the orders passed by the Tribunal and a
decision of the High Court of Karnataka, the revenue
cannot be permitted to adopt the policy of pick and
choose and challenge the orders passed in the cases
before us, it would suffice to observe that such a
proposition cannot be accepted as an absolute principle
of law, although we find some substance in the stated
grievance of the assessees before us, because such
situations tend to give rise to allegations of malafides etc.
Having said so, we are unable to hold that merely
because in some cases revenue has not questioned the
correctness of an order on the same issue, it would
operate as a bar for the revenue to challenge the order in
another case. There can be host of factors, like the
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W.P.No.8478 of 2020
amount of revenue involved, divergent views of the
Tribunals/High Courts on the issue, public interest etc.
which may be a just cause, impelling the revenue to
prefer an appeal on the same view point of the Tribunal
which had been accepted in the past. We, may however,
hasten to add that it is high time when the Central Board
of Direct and Indirect Taxes comes out with a uniform
policy, laying down strict parameters for the guidance of
the field staff for deciding whether or not an appeal in a
particular case is to be filed. We are constrained to
observe that the existing guidelines are followed more in
breach, resulting in avoidable allegations of malafides
etc.; on the part of the officers concerned.
10. A perusal of the entire Scheme, indicates the following. (i) the
Scheme was introduced by the Finance Act,2019 (ii) It has come into force on
01.09.2019, being the effective date. (iii) Section 121 (c)(iii) refers to filing a
return of by the declarant under indirect tax enactment on or before '30.06.2019'
(iv) Section 123, defining 'tax dues' mentions in sub-clauses (i) (ii) (b) & (c),
the date '30.06.2019' as being the cut-off date for computation of tax dues, (v)
Section 124, being, 'relief available' under the Scheme clauses (a) & (d) refers
to the cut-off date being '30.06.2019' and (vi) Section 125 refers to '30.06.2019'
in clauses (a) (c) and (e) thereof.
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W.P.No.8478 of 2020
11. Thus, the Scheme has adopted, in several instances, the 30th of
June 2019 as a watershed for various purposes, including determination of tax
dues / arrears.
12. The argument of the respondent is that had it been the intention of
legislature that 30.06.2019 be adopted for the purposes of Section 125(f), it
would have so stipulated in that clause itself. This is certainly a possible
argument. In cases involving the interpretation of a beneficial
scheme/exemption notification, the accepted Rule is that the scheme be
interpreted strictly in line with the avowed and stated intention thereof. Seen in
the light, clause 125(f) of the scheme must be read as is, without the addition of
the date, 30.06.2019. However, this is not to be, as the interpretation of the
Income Tax Department is itself contrary to that position.
13. Written instructions from the office of the Commissioner, CGST
and Central Excise Commissionerate, Belapur in F.No.V/HLC/Bel-
GST/MISC/2020-21 dated 22.05.2023, make it clear that pursuant to the order
of the High Court dated 31.01.2022, the Bombay Commissionerate has
accepted the order on 18.01.2022 'on merit'. The Designated committee of
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W.P.No.8478 of 2020
SVLDRS has reconsidered the matter and issued a discharge certificate on
22.04.2022. The instructions read as follows:
'Sir,
Please refer to your office letter
GEXCOM/LGL/HC/ST/155/ 2023-LGL-COMMR-CGST-
CHENNAI (OUTER) dated 09.05.2023 on the above
subject.
It it to inform that vide the order dated 31.01.2022,
The Hon'ble Court has remanded the matter back to the
Designated Committee of SVLDRS, to consider the
declaration of the Petitioners afresh under the voluntary
disclosure category and thereafter grant consequential
reliefs. The Hon'ble Court has directed to grant an
opportunity of hearing to the Petitioners and thereafter
pass a speaking order. As the matter has been remanded
for denovo consideration, thus this office has accepted
the said order on 18.01.2022 on merit. Further, the
Designated committee of SVLDRS has reconsidered the
matter and issued discharge Certificate i.e. SVLDRS-4 on
22.04.2022.'
14. In light of the discussion and for the reasons assigned above, this
writ petition is allowed. Discharge certificate be issued within a period of two
weeks from today. No costs. Connected miscellaneous petition is closed.
13.06.2023
vs/ssm
Index : Yes
Speaking order
Neutral Citation : Yes
https://www.mhc.tn.gov.in/judis
W.P.No.8478 of 2020
To
The Designated Committee, SVLDRS Scheme,
GST & Central Excise,
Chennai Outer Commissioner,
2052, 2nd Avenue, 12th Main Road,
Newry Towers, Anna Nagar,
Chennai-600 040.
https://www.mhc.tn.gov.in/judis
W.P.No.8478 of 2020
Dr.ANITA SUMANTH, J.
vs
W.P.No.8478 of 2020 and
WMP.No.10227 of 2020
13.06.2023
https://www.mhc.tn.gov.in/judis
