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TMI Blog2020 (8) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner 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 Rs. 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, however, not relevant for the purpose of this writ petition and hence, are not stated herein. 7. As the matter stood thus, the Parliament enacted a Scheme called Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (for short, 'the Scheme') as a part of Finance (No.2) Act, 2019. The said Scheme came into force with effect from 01.09.2019. The said Scheme consisted of a mechanism which sought to bring to an end the legacy issues relating to payment of service tax. The object of the Scheme was twofold. Firstly, it was for Dispute Resolution and, secondly it was for granting Amnesty. The Scheme envisaged that if the duty involved was more than Rs. 50 lakhs, the assessee on payment of 50% of the demand would be eligible to receive a Discharge Certificate. In other words, if an assessee, in order to put an end to any d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements 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 relating to the liability of service tax, enacted the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The object of the said Scheme was both Dispute Resolution and also Amnesty. 17. The intent behind the Scheme is as stated in paragraph 3 of the Circular dated 27.08.2018 issued by the Department which reads as follows: "3. Dispute resolution and amnesty are the two components of this Scheme. The dispute resolution component is aimed at liquidating the legacy cases locked up in litigation at various forums whereas the amnesty component gives an opportunity to those who have failed to correctly discharge their tax liability to pay the tax dues. As may be seen, this Scheme offers substantial relief to the taxpayers and others who may potentially avail it. Moreover, the scheme also focuses on the small tax payers as would be evident from the fact that the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 Rs. 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 pay a sum of Rs. 13,38,22,524/- (Annexure-F). 26. It is also not in dispute that the Designated Committee after verifying the correctness of the declaration, did not dispute the tax dues of the declarant at Rs. 13,38,22,524/-. However, the only dispute raised by the Designated Committee was that the petitioner was not entitled to consider the sum of Rs. 4,15,14,081/- as pre-deposit, as the said sum was an input credit that the petitioner was not entitled to. 27. It is, therefore, clear that the tax dues that the petitioner was liable to pay was not in dispute, by both the Revenue as well as by the petitioner. 28. The only bone of contention between the parties is, as to whether the petitioner could contend that he was entitled to take advantage of Cenvat credit on input services amounting to Rs. 4,15,14,081/- and consider the same as a pre-deposit under the scheme. 29. It is not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under the negative list regime only to the extent of such credits whose details are declared in TRAN-1 or TRAN-2 filed in accordance with Section 140 of Central Goods and Services Tax Act, 2017 read with Rule 15 of the Cenvat Credit Rules, 2017." 30. It is, therefore, clear that one of the subject matters of the SCN was, as to whether the petitioner was entitled to Cenvat credit. As could be seen from paragraph 17.2, the Revenue contended that since the returns were not filed within the prescribed time and since the entitlement to avail of the input credit had lapsed, the petitioner could not be permitted to take advantage of the Cenvat credit. 31. The Circular dated 27.08.2019 issued by the Department categorically states that one of the objectives of the Scheme was to give an opportunity to those who had failed to correctly pay the tax. The Circular states that to this extent the Scheme comprised of an Amnesty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rule 6 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 (for short, 'the Rules') which define the functions of the Designated Committee reads as follows: "126. (1) The designated committee shall verify the correctness of the declaration made by the declarant under Section 125 in such manner as may be prescribed: Provided that no such verification shall be made in case where a voluntary disclosure of an amount of duty has been made by the declarant. (2) The composition and functioning of the designated committee shall be such as may be prescribed. xxxxxx 6. Verification by designated committee and issue of estimate, etc.- (1) The declaration made under section 125, except when it relates to a case of voluntary disclosure of an amount of duty, shall be verified by the designated committee based on the particulars furnished by the declarant as well as the records available with the Department. (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 can only satisfy itself as to whether the Tax liability admitted by the declarant was accurate or not. The term "verify the correctness" cannot be stretched to mean that the Designated Committee can embark upon an adjudication regarding the entitlement or otherwise of the declarant. In my view, the Committee, in the guise of verifying the accuracy of the declaration, cannot adjudicate upon any of the contentious issues which existed between the Revenue and the Assessee before the Scheme was enacted. 39. It is to be borne in mind that the Designated Committee created under the Scheme is only meant to verify the correctness of the declaration made. On verification, if the Designated Committee was to find any inaccuracies in the declaration, it was bound to take note of it and issue a statement to the declarant and the declarant could either accept the estimate or indicate his disagreement and seek for a personal hearing. This entire process would necessarily be in rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication, 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' column which is not actually provided for in the prescribed statutory form. This, by itself, indicates that the Designated Committee wanted to express as to why it was disallowing the claim made by the declarant. The Designated Committee, under the Scheme, can only verify the correctness of the figures furnished by the declarant and it cannot decide whether the entitlement of a declarant was justified or not. 45. This may also be viewed from another angle. The Revenue had issued a SCN stating that the petitioner was not entitled for availing of the input credit and in response the petitioner was contending that this view of the Revenue was incorrect and he was entitled to the input credit. Therefore, a dispute regarding entitlement was raised and was pending when the Scheme had been enacted. 46. By virtue of the beneficial provisions of the Scheme, the declarant would be entitled to contend that his entitlement cannot be adjudicated by the Designated Committee at all. The D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 declaration. Learned Counsel also placed reliance on the judgment of the Supreme Court in the case of COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI VS DILIP KUMAR AND COMPANY & OTHERS - AIR 2018 SC 3606. In my view, the said judgment could have no application since it is a decision which relates to interpretation of a notification granting tax exemption. 53. As a consequence, the petitioner is entitled to succeed and the writ petition is allowed. 54. The decision rendered by the Designated Committee as found in the remarks column in Annexures-A & B which reads as follows stand quashed. Annexure-A (Form No. SVLDRS-2) Remarks As claimed by the applicant in their application, the deposit of Rs. 4,15,14,081/- cannot be considered as deposit in the light of the para 32 (iii) read with para 17 of the SCN No.109/2018-19 dated 07.09.2018. Further, the deposit of Rs. 1,20,000/- paid as late fee (as per verification of the JAC) is also not considered as deposit. Annexure-B (Form No. SVLDRS- 3) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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