TMI BlogSVLDRS- WHEN PARLIAMENT POINTED TO THE MOON THE PARLIAMENTARY DRAFTSMAN SAW ONLY THE FINGERS!X X X X Extracts X X X X X X X X Extracts X X X X ..... SVLDRS- WHEN PARLIAMENT POINTED TO THE MOON THE PARLIAMENTARY DRAFTSMAN SAW ONLY THE FINGERS! - By: - jayaprakash gopinathan - Other Topics - Dated:- 24-9-2019 - - I m the parliamentary draftsman I compose the country's laws, And of half the litigation I m undoubtedly the cause. I employ a kind of English Which is hard to understand. Though the purists do not like it, All the lawyers think it's grand The oft quoted stanza from the Poetic justice-Law poems is reminded here to emphasize the casual drafting of Chapter V of Finance Bill (No.2), 2019 for its enactment to reduce legacy litigations. Immediately after introduction of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 , CBIC issued a F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AQ to create awareness and to explain the subject to the litigant assesses. As in the past, this FAQ too merely contains words and phrases from the statute without verifying the legal hurdles this enactment may create to assessees in its implementation as well as after scrutiny of the documents by the C AG. This write-up is about Question No.5 of the FAQ on SVLDRS Q5. What is the scope of duty/tax relief covered under section 124(1)(b) with respect to SCN for late fee and penalty only where the amount of duty/tax in the said notice has been paid or is nil? Ans. The relief shall be of the entire amount of late fee or penalty. The above FAQ and its answer are not a standalone comment but based on Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 (1) ( b ) of Finance Act, (No.2) 2019. Section 124 (1) ( b ) where the tax dues are relatable to a show cause notice for late fee or penalty only, and the amount of duty in the said notice has been paid or is nil, then, the entire amount of late fee or penalty; The question as to whether the words OR can be interpreted as AND was an issue under litigation in respect of Rule 14 of Cenvat credit Rules, 2004 for a long time. Rule 14 : Recovery of CENVAT Credit wrongly taken or erroneously refunded - Where the CENVAT Credit has been taken or utilised wrongly or erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of output service and the provisions of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries. Different appellate authorities handed out contradicting orders to the question as to whether the term or appeared in between taken OR utilised in Rule 14 of CCR, 2004 can be read as AND . The chaos ended only when apex court in Union of India Vs Ind-Swift Laboratory { 2011 (2) TMI 6 - SUPREME COURT } held that in the term or used in Rule 14 of Cenvat Credit Rules, 2004 can only read as or and not as and . The Court vide para 17 18 of the judgment declared that A statutory provision is generally read down in order to save such provision from being declared unconstituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal or illegal. Rule of reading down is in itself a rule of harmonious construction in a different name and generally used to straighten prudities or ironing out creases to make a statute workable. Supreme Court rulings holding that in the grab of reading down a provision, it is not open to read words and expressions not found in provision/ statute and venture into judicial legislation. Therefore, the Apex Court refused to read taken OR utilised in Rule 14 of Cenvat Credit Rules 2004 as taken AND utilised . However immediately after the apex court s judgment, the Rule 14 of Cenvat Credit Rules 2004 was further amended by replacing OR with AND to nullify the effect of the Apex Court s judgment, thus forcing one to believ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the reluctance to replace OR with AND in spite of different papers published in ELT {vol-164-part-1-A9 part-4-A157} and other journals suggesting for such an amendment was with ulterior motives. In SVLDRS, 2019, as stated above, the question and answer framed is where the tax dues are relatable to a show cause notice for late fee OR penalty only, and the amount of duty in the said notice has been paid or is nil then, the entire amount of late fee OR penalty. The question and answer are framed based on the wordings of the Section 124 (1) (b). As in the case of Rule 14 of Cenvat Credit Rules, 2004 , the intention of the statute appears to be to extend waiver of late fee AND penalty in case both proposals ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e there in the SCN and not late fee OR penalty. Therefore the Section 124 (1) (b) ought have been worded accordingly to avoid litigation as in the case of CENVAT Credit Rules, 2004. (b) In case of an assessee who had paid the duty before 30.06.2019 but confirmed demand of interest and penalty is pending payment whether SVLDRS is applicable or not- Lack of clarity :- Another issue that requires clarity is on the question of availment of the scheme for those who have discharged the duty/tax in arrears but interest and penalties, if any, are pending payment as on 30.06.2019. An amount confirmed under Section(s) 11AB and 11AC or Section 75, 76 and 78 and had attained finality will remain as an enforceable arrear. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether absence of specific mention in the SVLDRS scheme about waiver of interest and penalties will be detrimental to the assessee in such cases. Whether Section 123 (e) encompasses the interest and penalty due to definitions provided under Section 121 (c), (d) and Section 122. 123 (1) ( e ) where an amount in arrears relating to the declarant is due, the amount in arrears. Section 121 (c) defines amount in arrears means the amount of duty which is recoverable as arrears of duty under the indirect tax enactment, on account of- ( i ) no appeal having been filed by the declarant against an order or an order in appeal before expiry of the period of time for filing appeal; or ( ii ) an order in app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal relating to the declarant attaining finality; or ( iii ) the declarant having filed a return under the indirect tax enactment on or before the 30th day of June, 2019, wherein he has admitted a tax liability but not paid it Section 121 ( d ) amount of duty means the amount of central excise duty, the service tax and the cess payable under the indirect tax enactment Section 122 - details of enactments that are made applicable to the scheme Reading of the section(s) 121(c),121(d) , 122 and 123(e) together will inform that the amount in arrears include all the dues estimated and pending realization as on 30.06.2019 which includes interest payable on duty/tax paid and penalty payable. A doubt m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay arise whether the scheme is applicable for the interest or penalty or both pending payment since as in the case of SCN for penalty or late fee or both there is no specific law provided for interest, penalty or late fee or all in the case of arrears. When the entire duty is paid, the duty payable is 0 and by stating 0 as amount in arrears, it appears the declaration can be filed for availing the benefit in as much as 0 is also an amount in arrears. However, if there is a specific provision like Section 124(b) of the Act, there will not be any room for future confusions or objections for extending the scheme in such cases too. (c) Whether paper Cess is intentionally left out or is it an omission : Another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue is the exclusion of the paper Cess under Section 122 of Finance Act, (No 2), 2019 . Paper Cess is levied under Notification S.O 862 (E) dated 27/10/1980 @1/8% on the value of paper and paper board by the department of Industrial Development . Different Cesses imposed under different laws like Agriculture produce cess Act, 1940 etc are included in Section 122 of Finance Act, (No 2) 2019 . The absence of paper cess under Section 122, left out demands or arrears of paper cess from the scheme. It appears a further notification is necessary for paper cess to be included in the SVLDRS. (d ) Whether an enactment of the Centre that permits its enforcement by States will come under the SVLDRS: The Medicinal and T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oilet Preparations (Excise Duties) Act, 1955, is a Central Act that is enforced by State Sales Tax (State GST) authorities. Whether the declaration under SVLDRS filed before the Central Government authorities may be sufficient to get the benefit now envisaged under the scheme since the demands or arrears are pending before the State authorities. This aspect may also be considered. The intention of the legislature is to be expressed in clear words and no inference can be arrived at especially in case of exemptions and concessions granted by the parliament. A legislative draftsman while drafting a legislative bill and other instruments when putting parliamentary wishes into his own language should be aware of past decisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court in similar issues and avoid repeating inconsistencies and grammatically wrong sentences. Then only the spirit of SVLRDS or any other scheme to improve the ease of doing business envisaged by the parliamentarians/ legislators can be achieved. - Reply By Ganeshan Kalyani as = Nice write-up Sir. Your analysis and presentation is too good. Thanks. Dated: 24-9-2019 - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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