TMI Blog2020 (8) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... of an Amnesty component. The Circular also clarified a few issues raised after the Scheme was notified - a reading of the said clause would clearly indicate that in certain matters when tax had been paid by utilizing the input credit and the matter was under dispute, the tax already paid through input credit should be adjusted by the Designated Committee at the time of determination of the final amount payable under the Scheme. Therefore, even if there was a dispute regarding the tax paid through input credit, the Circular mandated that the Designated Committee should adjust the tax already paid through input credit. It, therefore, follows that the Designated Committee cannot embark upon an exercise of adjudication and state that it was not permissible for the declarant to claim that he had paid the tax through input credit. It was not in dispute that the petitioner was entitled to avail of the input credit. However, the only contention of the Revenue was that the petitioner became disentitled to avail of the input credit because the requisite forms were not filed within the prescribed period and his right to claim input credit had lapsed. From a reading of the clarification iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 801/2020 (T-TAR) - - - Dated:- 19-8-2020 - HON BLE MR. JUSTICE N.S. SANJAY GOWDA PETITIONER (BY SRI C.R. RAGHAVENDRA, ADV. FOR SRI RAGHURAMAN.V., ADV.) RESPONDENTS (BY SRI AMIT DESHPANDE, ADV. FOR R-1 R-2) ORDER 1. The facts which give rise to filing of the writ petition are as follows: 2. The petitioner is an Advertising Agency engaged in the business of providing advertising services. 3. On 07.09.2018, the Directorate General of GST Intelligence issued a Show Cause Notice (for short, SCN ), in which the petitioner was asked to show cause as to why the petitioner was not liable to pay a sum of ₹ 13,06,07,173/- as service tax. 4. The said SCN also called upon the petitioner to show cause as to why an amount of ₹ 91,87,632/- which had been paid by the petitioner be appropriated towards the above mentioned demand. 5. The SCN also called upon the petitioner to show cause as to why a total CENVAT credit of ₹ 4,15,14,081/, taken as per the ST-3 Returns filed in July 2018 and August 2018 for the period from October 2012 to June 2017, should not be denied. 6. Various other contentions and demands were also made, which are, howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowing the Cenvat credit and contends that the Designated Committee, under the Scheme, had no jurisdiction to embark upon any adjudication as to the entitlement or disentitlement of an assessee and Designated Committee was basically bound to merely verify the correctness of the declaration and assess the liability as per the declaration. 13. The petitioner has sought for quashing of Annexures-A B (Form No.SVLDRS-2 Form No.SVLDRS-3) and seeks for a direction to the Revenue to accept the declaration made by it as per Annexure-F as final and also permit him to re-file Form No.SVLDRS-1 by including the Cenvat credit of ₹ 4,15,14,081/-. 14. The Revenue, on being notified of this writ petition, has filed statement of objections contending that the petitioner was not entitled to avail of the Cenvat credit since it had not complied with the requirements of Cenvat Credit Rules, and therefore, the Form No. SVLDRS- 3 raised against the petitioner was perfectly in order. 15. In order to adjudicate upon the issues involved in this writ petition, a brief overview of the Scheme would be necessary. 16. The Parliament, with the object of bringing to an end the disputes rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted Committee shall issue a statement after verifying the correctness of the declaration indicating the amount payable by the declarant and on payment of the amount indicated in the statement, the declarant would become entitled for being issued a Discharge Certificate in electronic form which would be the conclusive proof that the declarant would not be liable to pay any further duty, interest or penalty, and that he would also not be prosecuted under the Indirect Tax Enactment with respect to matter and time period covered in the declaration. 24. Thus, basically a person whose liability to pay service tax was in dispute, such a person could avail the Scheme by making a declaration in the electronic form and the Designated Committee would verify the declaration and thereafter, issue a statement indicating the amount payable and on the said amount being paid, the person would be discharged of all liabilities i.e., both financial as well as penal. 25. In the instant case, it is not in dispute that the SCN was issued raising a demand of ₹ 13,06,07,137/-. It is also not in dispute that the petitioner filed a declaration in Form No.SVLDRS-1 declaring that he was liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voice, bill or, as the case may be, challan. In case the payment of the value of input service and the service tax paid or payable as indicated in the invoice, bill or, as the case may be, challan referred to in Rule 9, is not made within three months of the date of the documents, the said proviso mandates that the service provider pays an amount equal to the Cenvat credit availed on such input service and once the said payment is made, the output service provider is entitled to take the credit of the amount equivalent to the Cenvat credit paid earlier subject to the other provisions of these rules. However, fifth proviso to Rule 4(7) of the Cenvat Credit Rules, 2004 lays down a condition that no Cenvat credit is allowed to be taken after one year of the date of issue of any of the documents specified in Sub-rule (1) of Rule 9 of Cenvat Credit Rules, 2004. It is pertinent note that with effect from 01st July, 2017, the Cenvat Credit Rules, 2004 have been superseded and replaced with new Cenvat Credit Rules, 2017 vide Notification No.20/2017 C.E. (NT) dated 30.06.2017 as per which the provider of output service is allowed to transfer the credit of service tax paid on input services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words, the question as to whether the petitioner was entitled to claim that he had paid tax through input credit was itself the subject matter of the dispute under the SCN and in view of the clarification issued in the Circular, the Designated Committee was bound to adjust the tax paid through input credit and it could not disallow the tax paid through input credit. 35. As stated above, it was not in dispute that the petitioner was entitled to avail of the input credit. However, the only contention of the Revenue was that the petitioner became disentitled to avail of the input credit because the requisite forms were not filed within the prescribed period and his right to claim input credit had lapsed. In my view, from a reading of the clarification issued in the Circular, it is clear that the tax paid by utilizing the input credit which was under dispute had to be taken into consideration by the Designated Committee while issuing Form No.SVLDRS-3. 36. It may also be profitable to appreciate the function of the Designated Committee under the Act by ascertaining the intent of the Legislature as found in the language employed in the statute. 37. Section 126 of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records. (5) On receipt of a request for an adjournment under sub-rule (4), the designated committee may grant the same electronically in Form SVLDRS-2B: Provided if the declarant does not appear before the designated committee for personal hearing after adjournment, the committee shall decide the matter based on available records. (6) Within thirty days of the date of issue of Form SVLDRS-3, the designated committee may modify its order only to correct an arithmetical error or clerical error, which is apparent on the face of record, on such error being pointed out by the declarant or suo motu by issuing electronically a revised Form SVLDRS-3. 38. The statute uses the term verify the correctness of the declaration , while the Rule uses the term shall be verified by the designated committee based on the particulars furnished by the declarant as well as the records available with the Department . A plain reading of the provisions would mean that the Designated Committee would be required only to examine the accuracy of the statement made in the declaration with reference to the records available with it and this would basically mean that the Designated Committee ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier to the enactment of the scheme between the Revenue and Declarant. 41. It may also be pertinent to state that the Revenue had also published a Frequently Asked Questions column, in which, it was stated as follows: Q52. I have already paid duty/tax by utilizing the input credit, and the matter is under dispute. Will this duty/tax already paid through input credit be adjusted against my duty/tax liability calculated under the Scheme? Ans. Yes. In such cases, duty/tax already paid through input credit shall be adjusted by the Designated Committee at the time of determination of final amount payable under the Scheme. 42. A reading of the said question and answer would also indicate that tax already paid through input credit would have to be adjusted by the Designated Committee. 43. The argument of the Revenue that the Designated Committee had not embarked upon an adjudication process and it merely verified to correctness of the declaration and on verification, it had been found that the petitioner was not eligible to avail of the input credit, cannot be accepted. 44. The Designated Committee, in fact, while issuing Form No.SVLDRS-2, has created a Remarks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated Committee in Form Nos.SVLDRS-2 SVLDRS-3 and is seeking for a direction to the Designated Committee to accept the declaration made by him in Form No.SVLDRS- 1 as final. 50. In my view, if it is to be held that the Designated Committee had no jurisdiction to adjudicate upon any entitlement as claimed in the declaration, the remarks column created in Annexures-A B cannot be sustained and would have to be quashed. The petitioner has basically sought for quashing of Annexures A and B because it contained the decision of the Designated Committee. I am, therefore, of the view that the prayers made by the petitioner have not become infructuous either by the manner in which they are made or by the expiration of Scheme. 51. The net result of this discussion would therefore be that Form No.SVLDRS-1 filed by the petitioner as per Annexure-F would have to be accepted as final. 52. Learned Counsel for the Revenue places reliance on the judgment rendered by this Court in W.P.No.51929/2019. In my view, the said decision did not consider the question as to whether the Designated Committee can disallow an entitlement of a declarant while verifying the correctness of the declarati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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