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2025 (5) TMI 939 - HC - Service TaxRejection of the declarations made by the petitioner in Form SVLDRS-1 filed by the petitioner under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - scope of Appellate Forum as per Section 121 (f) of the SVLDRS - HELD THAT - The respondent-Designated Committee is formed under the Rule-5 of the Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS) Rules 2019 for short (for short the Rules ) under consist of Principal Commissioner or Commissioner of Central Excise and Service Tax as the case may be and the Additional Commissioner or the joint Commissioner of the Central Excise and Service Tax as the case may be and as per the proviso there shall be only one such Designated Committee in Commissioner of Central Excise and Service Tax. Therefore the application filed on-line by the petitioner is required to be considered by the respondent No. 3-Designated Committee as per Rule 5 of the Rules. The SVLDRS is part of the Finance (No. 2) Act 2019 with an object to reduce the litigation of all other Acts which were subsumed under the GST Act and as per the provisions of Section 122 of the Finance (No. 2) Act 2019 all the Indirect Tax Enactments are covered for application of the Scheme which included the Act 1963 also. SVLDRS being a Scheme framed by the Central Government in the Finance Act the object of the Scheme is to reduce the litigation in view of the coming into force of the GST Act with effect from 01.07.2017 as such litigation was pertaining to the various Indirect Tax Enactments and by this SVLDRS the tax payers were granted the relief as per the provisions of Section 124 and the petitioner was entitled to the benefit under the Scheme regarding the Cess levied under the Act 1963 as the Scheme was made applicable to the said Act. Therefore merely because the Appeal filed by the petitioner before the Appellate Tribunal under the said Act was not covered by the definition of Appellate Forum under Section 121 (f) of the Finance Act the petitioner cannot be deprived of the benefits of the SVLDRS and the petitioner therefore is entitled to the benefit of the SVLDRS by application of Section 123 (b) of the Finance Act which provides for tax dues regarding the show-cause notice issued under the Indirect Tax Enactment prior to 30th June 2019. The respondent-Designated Committee is directed to consider the application filed by the petitioner in Form SVLDRS-1 considering the same under clause (b) of Section 123 of the SVLDRS for computation of tax dues to grant the relief under Section 124 (1) (a) of the SVLDRS for tax dues relating to the show-cause notice and thereafter grant four weeks time to pay the tax as computed by the petitioner as per Form SVLDRS-1 and on payment of such tax issue the Form SVLDRS-4 forthwith. Conclusion - The petitioner is entitled to the benefit under the Scheme regarding the Cess levied under the Act 1963 as the Scheme was made applicable to the said Act. Therefore merely because the Appeal filed by the petitioner before the Appellate Tribunal under the said Act is not covered by the definition of Appellate Forum under Section 121 (f) of the Finance Act the petitioner cannot be deprived of the benefits of the SVLDRS and the petitioner therefore is entitled to the benefit of the SVLDRS by application of Section 123 (b) of the Finance Act which provides for tax dues regarding the show-cause notice issued under the Indirect Tax Enactment prior to 30th June 2019. Petition allowed.
The core legal questions considered by the Court in this judgment are:
1. Whether the petitioner is entitled to relief under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 ("SVLDRS") in respect of the Textile Committee Cess demand raised under the Textiles Committee Act, 1963 ("the Act, 1963"). 2. Whether the appeal filed by the petitioner before the Textiles Committee Appellate Tribunal qualifies as an "appellate forum" under Section 121(f) of the SVLDRS for the purpose of availing relief under the Scheme. 3. Whether the Designated Committee was justified in rejecting the petitioner's declaration under Form SVLDRS-1 on the ground that the appeal was not pending before an appellate forum as defined under the SVLDRS and that Central Excise Officers lacked jurisdiction over the Textile Committee Cess. 4. The proper interpretation and application of the relevant provisions of the SVLDRS, including Sections 121, 122, 123, 124, and 125 of the Finance (No. 2) Act, 2019. 5. The scope of the SVLDRS in relation to indirect tax enactments subsumed by the Goods and Services Tax Act, 2017 ("GST Act") and the extent to which the Scheme's benevolent object should influence its interpretation. Detailed Issue-wise Analysis: Issue 1: Applicability of SVLDRS to Textile Committee Cess under the Act, 1963 The petitioner was engaged in manufacturing textile products and was subject to a demand of Textile Committee Cess under the Act, 1963 for the period 2004-05 to 2007. The petitioner contested the demand through various appeals and writ petitions, with the matter pending before the Textiles Committee Appellate Tribunal. The SVLDRS was introduced by the Central Government under the Finance Act, 2019, to settle legacy disputes under indirect tax enactments subsumed by the GST Act effective 1 July 2017. Section 122 of the SVLDRS explicitly includes the Textiles Committee Act, 1963 as an indirect tax enactment to which the Scheme applies. The Court noted that the Act, 1963 was therefore clearly covered by the Scheme, making the petitioner's case eligible for consideration. Issue 2: Whether the appeal pending before the Textiles Committee Appellate Tribunal qualifies as an "appellate forum" under Section 121(f) of the SVLDRS Section 121(f) of the SVLDRS defines "appellate forum" as the Supreme Court, High Court, Customs, Excise and Service Tax Appellate Tribunal (CESTAT), or Commissioner (Appeals). The appeal filed by the petitioner was before the Textiles Committee Appellate Tribunal, which is not included in this definition. The Designated Committee rejected the petitioner's Form SVLDRS-1 on this ground, stating that the appeal was not pending before an appellate forum as defined under the Scheme. The Court observed that while Section 123(a) of the SVLDRS refers to tax dues in respect of appeals pending before the defined appellate forums, Section 123(b) provides an alternative basis for tax dues: where a show-cause notice under an indirect tax enactment was received on or before 30 June 2019. Since the petitioner had received a show-cause notice in 2011, predating 30 June 2019, the Court held that the petitioner's tax dues could be quantified under Section 123(b) notwithstanding that the appeal was not pending before an appellate forum as defined in Section 121(f). Issue 3: Justification of rejection of the petitioner's declaration by the Designated Committee The Designated Committee rejected the petitioner's declaration on two grounds: (i) the appeal was not pending before an appellate forum as per Section 121(f) of SVLDRS; and (ii) Central Excise Officers lacked jurisdiction over the Textile Committee Cess, which was levied and collected by the Textile Committee. The Court found that the first ground was not sustainable because the Scheme contemplates tax dues quantifiable either by pending appeals before specified appellate forums or by show-cause notices issued before 30 June 2019. The petitioner's case fell within the latter category. Regarding the second ground, the Court noted that the Act, 1963 was an indirect tax enactment covered by the Scheme, and the jurisdictional issue did not disentitle the petitioner from availing the Scheme's benefit. Issue 4: Interpretation and application of SVLDRS provisions The Court undertook a detailed examination of the relevant provisions:
The Court held that the petitioner was entitled to relief under Section 124(1)(a) based on the tax dues arising from the show-cause notice issued prior to 30 June 2019, regardless of the appeal's status before the appellate forum. Issue 5: Object and purpose of SVLDRS and its liberal construction The Court emphasized the benevolent object of the SVLDRS, which was enacted to reduce litigation and facilitate settlement of legacy indirect tax disputes subsumed by the GST Act. The Court relied on precedents highlighting the need for liberal and purposive construction of such amnesty or settlement schemes to avoid defeating their object. It referred to earlier decisions of this Court and the Bombay High Court, supported by Supreme Court judgments, which held that statutory provisions should not be interpreted to produce absurd or unjust results, and that relief schemes should be construed sympathetically to advance their purpose. The Court applied these principles to reject the narrow and literal construction urged by the respondents and to uphold the petitioner's entitlement to relief under the SVLDRS. Application of Law to Facts and Treatment of Competing Arguments The petitioner argued that the denial of relief based solely on the appeal not being before an appellate forum under Section 121(f) was erroneous, as the Act, 1963 was included in the list of indirect tax enactments under Section 122 and the show-cause notice was issued before 30 June 2019, entitling the petitioner to relief under Section 123(b) and 124(1)(a). The respondents contended that the Form SVLDRS-1 was filed under the category 'litigation' and sub-category 'Appeal Pending' with duty type 'Central Excise', and since the appeal was not pending before a recognized appellate forum, the petitioner was not eligible for relief. They also argued that Central Excise Officers lacked jurisdiction over the Textile Committee Cess. The Court found the respondents' arguments unpersuasive. It held that the petitioner's entitlement to relief was not contingent solely on the appeal's status before the appellate forum but could be based on the show-cause notice under the Act, 1963. The jurisdictional objection did not preclude relief under the Scheme. Conclusions The Court concluded that the petitioner was entitled to the benefit of the SVLDRS in respect of the Textile Committee Cess demand arising from the show-cause notice issued prior to 30 June 2019 under the Act, 1963. The rejection of the petitioner's declaration on the ground that the appeal was not pending before an appellate forum as defined under Section 121(f) was unsustainable. The Designated Committee was directed to consider the petitioner's application under Section 123(b) of the SVLDRS for computation of tax dues and grant relief under Section 124(1)(a), allowing four weeks' time for payment of the computed tax and thereafter issue the requisite Form SVLDRS-4. Significant Holdings and Core Principles Established: "The petitioner was entitled to the benefit under the Scheme regarding the Cess levied under the Act, 1963 as the Scheme was made applicable to the said Act. Therefore, merely because the Appeal filed by the petitioner before the Appellate Tribunal under the said Act was not covered by the definition of Appellate Forum under Section 121 (f) of the Finance Act, the petitioner cannot be deprived of the benefits of the SVLDRS and the petitioner therefore, is entitled to the benefit of the SVLDRS by application of Section 123 (b) of the Finance Act which provides for tax dues regarding the show-cause notice issued under the Indirect Tax Enactment prior to 30th June, 2019." "Where the plain literal interpretation of a statutory Provision produces a manifestly unjust result which could never have been intended by the legislature, the Court might modify the language used by the legislature so as to achieve the intention of the legislature and produce a rational construction." "The object of the amnesty scheme is to bring about expeditious and effective resolution of old disputes and recoveries of old outstanding dues of the Government and reduction of administrative costs. Since such scheme is applicable to all pending cases, the officers acting under the relevant statutes are expected to respect the object of the scheme and to ensure that the assessees get the benefit under the scheme." These holdings reaffirm the principle that relief schemes like SVLDRS must be construed liberally and purposively to advance their object and that technical or narrow interpretations should not defeat the scheme's benevolent intent.
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