2025 (7) TMI 484 - HC - Service Tax

Rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - appeal was pending before the appellate forum and during pendency of appeal the petitioner therein submitted an application before the designated committee made under the SVLDR 2019 - HELD THAT - As per Section 125 of the Finance Act All persons shall be eligible to make a declaration under this Scheme except those who have filed appeal before the appellate forum and such appeal have been heard finally on or before 30.06.2019 who have been issued show cause notice under the Indirect Tax enactment and the final hearing has taken place on or before 30.06.2019 and who have been subjected to enquiry or investigation and in which the investigation and audit have been quantified on or before 30.06.2019 therefore the matter which has been heard and closed or decided before 30.06.2019 in such case the person shall not be eligible to make a declaration under this Scheme. In the present case the case of the petitioner had been adjudicated upto the Cess Tax much before the 1st of September 2019 when this Scheme was introduced. It is seen that the case of the petitioner is distinguishable from the case of Synpol Products Pvt. Ltd 2020 (9) TMI 257 - GUJARAT HIGH COURT before the High Court of Gujarat therefore the designated committee has rightly rejected the application of the petitioner as the petitioner is not eligible under Section 125 of the Finance Act. The present petition stands dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the petitioner is eligible to make a declaration under the 'Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019' (SVLDR Scheme) for settlement of redemption fine imposed in lieu of confiscation of goods under the Central Excise Act and RulesRs.

- Whether the redemption fine and penalty imposed on the petitioner can be settled under the SVLDR Scheme, considering the finality of adjudication and appellate orders prior to the Scheme's cutoff dateRs.

- The applicability and interpretation of Section 125 of the Finance Act, 2019, which prescribes eligibility criteria and exclusions for declaration under the SVLDR Scheme.

- The relevance and binding nature of precedents, particularly the decision in Synpol Products Pvt. Ltd. vs. Union of India, regarding the inclusion of redemption fine within the amount in arrears under the Scheme.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Eligibility under the SVLDR Scheme for settlement of redemption fine and penalty

Relevant legal framework and precedents: The SVLDR Scheme was notified under Chapter V of the Finance Bill, 2019-20, aiming to resolve legacy disputes related to indirect taxes. Section 125 of the Finance Act, 2019, explicitly sets out eligibility criteria and exceptions for making declarations under the Scheme. Key exclusions include cases where appeals have been finally heard or show cause notices have been finally adjudicated on or before 30.06.2019.

The petitioner relied on the Gujarat High Court decision in Synpol Products Pvt. Ltd., which held that the amount in arrears under the Scheme includes both duty and redemption fine, and that applications could be entertained even if appeals were pending, provided they had not been finally decided before the cutoff date.

Court's interpretation and reasoning: The Court examined the timeline and procedural history of the petitioner's case. The adjudication, including imposition of redemption fine and penalties, was completed with final appellate orders attained before the Scheme's introduction. The Court distinguished the present case from Synpol Products Pvt. Ltd., noting that in the latter, appeals were pending and not finally decided before 30.06.2019, whereas in the present matter, the adjudication and appeals were finalized earlier.

Key evidence and findings: The petitioner's goods were seized in 2010, followed by adjudication imposing redemption fine and penalties. The appellate authorities upheld these orders, and the appeal before the Customs, Excise and Service Tax Appellate Tribunal was dismissed, rendering the order final well before the Scheme's cutoff date.

Application of law to facts: Section 125(1)(a) of the Finance Act excludes persons "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" from eligibility. Since the petitioner's appeal was finally heard and dismissed before this date, the petitioner is not eligible to make a declaration under the Scheme.

Treatment of competing arguments: The petitioner's counsel argued that redemption fine should be included within the amount in arrears and that the Scheme should apply notwithstanding the finality of appeals, relying on Synpol Products Pvt. Ltd. The Court rejected this argument on the ground that the factual matrix differs, and the statutory language clearly excludes cases where appeals have been finally decided before the cutoff date.

Conclusion: The petitioner is ineligible to participate in the SVLDR Scheme for settlement of redemption fine and penalty, as the adjudication and appeals were finalized before 30.06.2019, in accordance with Section 125 of the Finance Act.

Issue 2: Interpretation of Section 125 of the Finance Act, 2019

Relevant legal framework: Section 125 outlines persons eligible to make declarations under the SVLDR Scheme and enumerates specific exceptions. These include persons with appeals finally heard before 30.06.2019, persons convicted under indirect tax enactments, persons against whom show cause notices have been finally adjudicated before 30.06.2019, and persons subjected to investigation or audit where the duty involved has not been quantified before 30.06.2019.

Court's interpretation and reasoning: The Court emphasized the plain language of Section 125, which restricts eligibility to persons whose disputes were pending or unresolved as on 30.06.2019. The Scheme is designed as a one-time settlement mechanism for legacy disputes that are not yet finally adjudicated. The Court held that the petitioner's case falls squarely within the excluded category under clause (a) of Section 125(1).

Key evidence and findings: The petitioner's case was adjudicated and appeals were finally disposed of prior to the cutoff date, thereby disqualifying the petitioner from availing the Scheme.

Application of law to facts: The Court applied the statutory exclusion strictly, rejecting any interpretation that would extend the Scheme's benefits to cases already finally adjudicated before the Scheme's commencement.

Treatment of competing arguments: The petitioner's reliance on a broader interpretation of the Scheme and inclusion of redemption fine within arrears was not accepted, as it conflicted with the express statutory exclusions.

Conclusion: Section 125 of the Finance Act precludes the petitioner's eligibility under the SVLDR Scheme, given the finality of adjudication and appeals before 30.06.2019.

3. SIGNIFICANT HOLDINGS

- "All persons shall be eligible to make a declaration under this Scheme except the following, namely: (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."

- The Court held that the petitioner's case is distinguishable from Synpol Products Pvt. Ltd., as the petitioner's appeals were finally adjudicated before the cutoff date, rendering the petitioner ineligible under the Scheme.

- The Court affirmed that the SVLDR Scheme is not applicable to cases where adjudication and appeals have attained finality before the Scheme's effective date, emphasizing strict compliance with the statutory eligibility criteria under Section 125 of the Finance Act.

- The application of the Scheme for settlement of redemption fine and penalty is contingent upon eligibility as per statutory provisions, and cannot be extended to cases already finally adjudicated.

- The petition was dismissed on the ground of ineligibility under the Scheme, with no order as to costs.