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2022 (8) TMI 542 - HC - Service TaxMaintainability of petition - amount paid as pre-deposit and/or deposit during enquiry, investigation or audit is required to be deducted after extending the relief available to a declarant u/s 124 of SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 - amount of pre-deposit/deposit is first required to be adjusted while determining the amount of ‘tax dues’ u/s 123 of the Scheme and, thereafter, relief u/s 124 of the Scheme is to be extended to a declarant or not - clause 2(iv) of Circular No. 1072/05/2019/CX dated 25.09.2019. HELD THAT:- It is an admitted fact that declarations of the petitioners have been accepted by the Designated Committee and Form SVLDRS-3 has been issued to them and the only dispute pertains to the amount payable by the declarants. Petitioner-Aloke Dutta contends that the Designated Authority has determined a sum of Rs. 1,34,32,364.40/- as payable by the petitioner, whereas, as per the Scheme, it is only liable to pay an amount of Rs. 36,22,401/-. Similarly, in the case of M/s. Vassu Enterprises, the amount payable has been determined as Rs. 1,05,59,869.80/-, whereas, as per the petitioner, the amount payable is only Rs. 80,64,412.20/-. Admittedly, there is no dispute with respect to the amount determined in the Order-in-Original and/or the amount of deposit/pre-deposit made by petitioners, but the only dispute in the instant cases, is with respect to computation of the amount payable by the declarants. As per petitioners, ‘amount of arrears’ means the ‘amount of duty’ which is reflected as recoverable in the Orders-in-Original, being the ‘tax dues’ amount, and, accordingly, relief under Section 124(1)(c)(ii) is to be granted on the said amount; whereas, as per the Revenue, the amount recoverable under the Orders-in-Original is the ‘amount of duty demanded less the amount already paid by petitioners’, and, accordingly, benefit of tax relief has to be granted on the net outstanding amount. If the interpretation given by the Revenue of the word ‘recoverable’ u/s 121(c) is accepted, the same would lead to an incongruous interpretation leading to absurdity which is to be avoided. Admittedly, in both the cases, show cause notice has been issued to petitioners under section 73(1) of the Finance Act, 1994, wherein the total amount of duty recoverable from petitioners has been reflected, and, further, in the show cause notice, petitioners have been directed to show cause as to why the amount of pre-deposit/deposit made by petitioners be not adjusted from the amount of duty recoverable from the petitioners - Orders-in-Original have been passed and even in the Orders-in-Original, the amount of duty shown as recoverable is the amount of duty evaded by the petitioners and, further, in the Orders-in-Original, it has been stated that the amount of deposit made by the petitioners would be adjusted/appropriated from the amount of duty. The impugned Circular No.1072/05/2019/CX dated 25.09.2019 has an effect of altering the definition of ‘amount in arrears’ as defined under section 121(c) of the Scheme. Admittedly, section 121(c) of the Scheme uses the term ‘recoverable’ as opposed to the term ‘outstanding’ and to this extent, impugned Circular is contrary to the Scheme itself - Admittedly, in the show cause notices issued to petitioners, the amount reflected as payable was the amount of service tax not paid by them. If petitioners would have filed appeal against the Orders-in-original disputing the amount payable as determined in the said Orders-in-original being the amount of ‘service tax not paid’ by petitioners, the petitioners would have been extended relief u/s 124(1)(a) being equivalent to the amount of duty disputed by petitioners in the said appeal, i.e. the amount of service tax determined. Merely because petitioners, instead of filing appeal, have claimed benefit under the Scheme, the amount of service tax payable and/or recoverable from the petitioners cannot be reduced with the amount of deposit/pre-deposit by treating the said amount as the amount only outstanding against the petitioners. Even from a plain reading of Section 124(2), it would be evident that the amount of deposit made during enquiry, investigation or audit is required to be deducted after extending relief under section 124(1) of the Scheme and at the time of issuing statement indicating the amount payable by a declarant - the action of Designated Committee by first deducting the amount of deposit made by petitioners during enquiry, investigation or audit and, thereafter, extending relief to the petitioners by computing the amount of tax due on the outstanding amount, is not as per the mandate of the Scheme. Further, clause 2 (iv) of Circular No.1072/05/2019/CX dated 25.09.2019, to the extent it provides that tax relief is to be granted on the outstanding duty amount, as against the amount of duty recoverable, has an effect of altering the effect of the Scheme itself and cannot be given effect to. The Designated Committee is directed to re-compute the amount payable by petitioners under the scheme in view of the observations made, and to issue revised SVLDRS-3 Form to the petitioners within a period of four weeks from the date of this order - application allowed.
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