Orissa High Court

M/S. Orissa Stevedores Ltd vs Designated Committee on 11 November, 2024

Author: Arindam Sinha

Bench: Arindam Sinha, M.S. Sahoo

                    IN THE HIGH COURT OF ORISSA AT CUTTACK
                                     W.P.(C) No.26408 of 2020
            M/s. Orissa Stevedores Ltd.                      ....                  Petitioner


                                               -versus-

            Designated Committee, Central                    ....         Opposite Parties
            GST and Customs, Bhubaneswar
            and others

            Advocates appeared in this case:

            For Petitioner           : Mr. J. Sahoo, Senior Advocate

            For Opposite Parties : Mr. T.K.Satapathy, Senior Standing Counsel

            CORAM:

                     THE HON'BLE MR. JUSTICE ARINDAM SINHA
                                      AND
                       THE HON'BLE MR. JUSTICE M.S. SAHOO

                                             JUDGMENT

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Date of hearing and judgment: 11th November, 2024

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ARINDAM SINHA, J.

1. Mr. Sahoo, learned senior advocate appears on behalf of petitioner and

submits, his client seeks mandamus commanding revenue to issue

SVLDRS-4 (discharge certificate) in favour of his client. He submits, there

stood issued show cause notice (SCN) dated 15th October, 2015 demanding

₹5,19,28,080/- as wrongly availed Input Tax Credit (ITC) during financial

// 2 //

years 2010-11 to 2013-14. Adjudication pursuant to the SCN remained

pending, when there was enactment by Parliament introducing Sabka

Vishwas (Legacy Dispute Resolution) Scheme, 2019 by Finance (no.2) Act,

2019. His client applied under the scheme on prescribed form SVLDRS-1.

In so applying his client indicated payment of entire demand by adjustment

of the ITC, disputed by revenue under said SCN. On query made he submits,

his client did not opt to claim any part of the ITC as relief under the scheme.

It being for purpose of resolution and amnesty, the adjustment must be

acknowledged and discharge certificate issued. That will put paid to

subsequent adjudication and reiteration of, inter alia, the demand. He

submits, circulars issued by revenue are binding on it. He relies on judgment

of the Supreme Court in Commissioner of Central Excise and Service Tax,

Rohtak v. Merino Panel Product Limited reported in (2023) 2 SCC 597 for

the proposition.

2. On query made he submits further, there is no dispute regarding his client

having paid tax on the input services. When his client sought to avail the

accumulated credit of ITC against output services, revenue disputed by saying

that in some cases the output services were entirely ineligible for adjustment

and others, partially. So therefore, revenue is in receipt of the tax on the input

service, which payment benefit his client was sought to be prevented from

utilizing. Revenue's case of ineligibility amounted to demand of tax. His client

had applied under the scheme. He seeks interference.

// 3 //

3. Mr. Satapathy, learned advocate, Senior Standing Counsel appears on

behalf of revenue and submits, petitioner wrongly availed the ITC. Having

had done so, it is not entitled to benefit of the scheme. There has been no

deposit of tax as could be claimed to have been made under the scheme. To

that effect SVLDRS-2 and 3 were duly issued. He relies on paragraph-7 in

the counter to submit it is clear, where CENVAT matters are under dispute,

same can be settled by paying applicable post-relief duty. In instant case,

availing of ITC at ₹5,19,28,080/- has been questioned by the Department and

hence, the SCN was issued. Petitioner did not deposit the tax. The matter was

pending for adjudication. Petitioner opted for relief under SVLDR Scheme,

2019, in category of 'Litigation' and was therefore required to pay 50% of the

litigated amount. Petitioner's claim that it paid the entire disputed amount is a

blatant lie. In the meantime adjudication order dated 19th August, 2024 has

been passed confirming the demand, imposing interest and penalty. No

interference is warranted. The writ petition be dismissed.

4. We have perused relevant sections in chapter-V of the Finance Act.

Section 120 introduced the scheme. It was duly notified to come into force.

Pursuant thereto by circular dated 27th August, 2019, Central Board of

Indirect Taxes and Customs elaborated on it. Petitioner relies on declaration

of law made by the Supreme Court in Merino Panel (supra) that circulars

issued by revenue are binding on it.

5. The circular says, dispute resolution and amnesty are the two

components of the scheme. It is aimed at liquidating the legacy cases locked

// 4 //

up in litigation at various forums, whereas the amnesty component gives an

opportunity to those who have failed to correctly discharge their tax liability,

to pay the tax dues. The circular also says, it may be appreciated that ambit

of the scheme is very wide.

6. Section 125(1) in the Finance Act provides for eligibility of persons

to make a declaration under the scheme. There has been no submission

made to effect petitioner was or is ineligible to have applied under the

scheme. The allegation against petitioner is, it did not make the deposit.

That is the effect of forms SVLDRS-2 and 3. So in considering petitioner's

contention, of application of the scheme to it and liquidation of the legacy

tax demand in the prior period by adjustment of its ITC, we have to

adjudicate whether it is entitled to issuance of discharge certificate

SVLDRS-4.

7. For application of the scheme to petitioner, on its behalf there was

reliance on clause(c) in paragraph-10 of the circular. The clause is

reproduced below.

"(c) This Scheme provides for adjustment of any amount paid as pre-

deposit during appellate proceedings or as deposit during enquiry, investigation or audit [Sections 124(2) and 130(2) refer]. In certain matters, tax may have been paid by utilizing the input credit, and the matter is under dispute. In such cases, the tax already paid through input credit shall be adjusted by the Designated Committee at the time of determination of the final amount payable under the Scheme."

(emphasis supplied)

// 5 //

8. As there is no dispute regarding eligibility of petitioner to have

applied under the scheme and the application was in respect of the demand

under the SCN, petitioner opted to indicate payment of the entire demand by

adjustment and not claim any amnesty. Above reproduced clause in the

circular mandates adjustment by the designated committee at the time of

determination of the final amount payable under the scheme. There has

been demonstration that the exact amount demanded under the SCN,

petitioner claimed to have paid by adjustment of the ITC. Contention of

revenue is omission of required deposit of the wrongly availed ITC, as

had been intimated by issuance of SVLDRS-2 and 3. Only then can there