2025 (6) TMI 1175 - AT - Service Tax

Substitution of the present Respondent with the jurisdictional Commissioner - Departmental appeal should be dismissed as deemed withdrawn pursuant to the Assessee s settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 or not - HELD THAT - Admittedly Section 123(A)(2) clearly stipulate that in case of pendency of appeal by the declarant and by the Department sum of the amount of the duty being disputed by both would be taken together for determination of tax dues. Objection of the Department to such Miscellaneous Application is that only the exact amount dropped i.e. Rs.3, 93, 16, 150/- was taken into consideration while filing declaration under the scheme by the Assessee-Appellant but not the non-quantifiable other liabilities which had no reference in the appeal memo but subsequently computed by the Respondent-Department as Rs.20, 52, 53, 792/- (inclusive of the quantified one). In the instant case neither Respondent-Department had raised any objection to such declaration that unascertained amount was not included nor the Designated Committee had preferred to make an upward revision of the disputed amount. This being so after issue of discharge certificate in respect of declaration made for both the appeals Section 129 brings the matter into a conclusive stage against which no further proceedings should continue. Both the appeals filed by Assessee-Appellant and the Departmental appeal would follow the fate as explained in CBIC Circular No. 1072/05/2019-CX dated 25.09.2019. Conclusion - i) SVLDRS Scheme contemplates simultaneous withdrawal of both declarant and departmental appeals upon settlement thereby ensuring comprehensive closure of legacy disputes. ii) The issuance of the discharge certificate under the Scheme precludes any further adjudicatory proceedings and both the Assessee s and Department s appeals must be treated as withdrawn or dismissed accordingly. The Departmental appeal is dismissed as deemed withdrawn and Assessee-Appellant s appeal as withdrawn as has been settled under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - application allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the substitution of the present Respondent with the jurisdictional Commissioner is appropriate following the restructuring of Commissionerates after the introduction of GST.

- Whether the Departmental appeal should be dismissed as deemed withdrawn pursuant to the Assessee's settlement under the "Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019".

- Whether the disputed amounts from both the Assessee's and Department's appeals should be aggregated for determination of tax dues under Section 123(A)(2) of the Finance Act, 2019.

- Whether the Designated Committee had the authority and obligation to revise the declared disputed amount under Section 127(2) and (3) of the Finance Act, 2019, and whether procedural safeguards were observed.

- The effect of issuance of the discharge certificate (Form No. SVLDRS-4) under the Scheme on the continuation of appeals.

2. ISSUE-WISE DETAILED ANALYSIS

Substitution of Parties Post-Reorganization

The Court considered the restructuring of Commissionerates consequent to GST implementation and allowed miscellaneous applications for substitution of the Respondent with the jurisdictional Commissioner of CGST & Central Excise, Mumbai West Commissionerate. The legal framework governing such substitution is implicit in procedural rules relating to appeals and representation before the Tribunal. The Court found no objection to this substitution, recognizing the necessity to reflect the current administrative structure in ongoing appeals.

Dismissal of Departmental Appeal as Deemed Withdrawn under Sabka Vishwas Scheme

The core legal framework is the "Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019" (SVLDRS), introduced as Chapter V to the Finance Act, 2019, particularly Sections 123(A), 126, 127, and 129. Section 123(A)(2) mandates that when appeals are pending both from the declarant and the Department, the disputed amounts are to be aggregated for settlement purposes.

The Assessee had filed an appeal challenging a demand of Rs.11,87,20,098/- (net of allowed CENVAT Credit), while the Department filed an appeal against the dropping of a demand of Rs.3,93,16,150/-. The Assessee opted for settlement under the SVLDRS, filing Form SVLDRS-1 that included both these amounts. The Designated Committee considered the aggregate disputed amount and issued a discharge certificate (Form SVLDRS-4) after confirming the Assessee's deposit exceeded 50% of the disputed sum.

The Department objected, contending that non-quantifiable liabilities beyond the declared amounts were not included in the settlement declaration. The Court analyzed Section 127(2) and (3), which empower the Designated Committee to revise the declared amount upward, providing an opportunity to the declarant to be heard before finalizing the payable amount. However, no such revision or objection was raised by either the Department or the Committee.

Accordingly, the Court held that issuance of the discharge certificate conclusively settles the dispute under Section 129, precluding further proceedings. The Court relied on CBIC Circular No. 1072/05/2019-CX dated 25.09.2019, which clarifies that deemed withdrawal applies to both declarant and departmental appeals pending before forums other than the Supreme Court or High Court. Thus, the Department's appeal was dismissed as deemed withdrawn, and the Assessee's appeal was treated as withdrawn pursuant to the settlement.

Aggregation of Disputed Amounts under Section 123(A)(2)

The Court emphasized the statutory provision mandating aggregation of disputed amounts from both declarant and Department appeals to determine the total tax dues for settlement under the Scheme. This principle ensures comprehensive resolution of all related disputes arising from the same show-cause notice or demand. The Court rejected the Department's contention that only the quantifiable amount was included, noting that the non-quantifiable liabilities were neither part of the appeal memo nor declared under the Scheme, and no upward revision was initiated.

Authority and Procedure of the Designated Committee under Sections 127(2) and (3)

The Court scrutinized the procedural safeguards under the Scheme, which require the Designated Committee to assess the declared disputed amount and revise it if it exceeds the declarant's declaration, with an opportunity for the declarant to be heard. The absence of any such revision or objection in the instant case was critical. This procedural compliance confirmed the validity of the discharge certificate and the consequent finality of the settlement.

Effect of Discharge Certificate and Finality under Section 129

Section 129 of the Finance Act, 2019, provides that after issuance of the discharge certificate, no further proceedings shall continue in respect of the settled amount. The Court held that this provision conclusively bars continuation of appeals related to the settled dispute. The Court's interpretation aligns with the legislative intent to provide finality and certainty to legacy dispute resolution under the Scheme.

3. SIGNIFICANT HOLDINGS

"Section 124(1)(a) outlines the relief available in the case of one or more appeals arising out of a Show Cause Notice. Such an appeal may have been filed either by the party or by the department. Further, Section 127(6) provides for deemed withdrawal of such appeals filed by a declarant pending at a forum other than the Supreme Court or High Court. It is clarified that such deemed withdrawal will also be applicable for departmental appeals."

This holding establishes that the SVLDRS Scheme contemplates simultaneous withdrawal of both declarant and departmental appeals upon settlement, thereby ensuring comprehensive closure of legacy disputes.

The Court conclusively determined that the issuance of the discharge certificate under the Scheme precludes any further adjudicatory proceedings, and both the Assessee's and Department's appeals must be treated as withdrawn or dismissed accordingly.

The principle of aggregating disputed amounts under Section 123(A)(2) was reaffirmed as essential for the Scheme's operation, ensuring that all related disputes are settled collectively.

The Court's reasoning underscores the mandatory procedural safeguards under Sections 127(2) and (3), emphasizing the need for the Designated Committee to provide an opportunity to the declarant before revising declared amounts.