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TMI Blog2021 (9) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... ises of the petitioner and its directors etc. In the 'Panchnama' drawn on 10.02.2016 itself, an allegation of short payment of Central Excise duty (against shortage of stock) Rs. 2,18,516/- was made. A copy of the same is annexed as Annexure No. 1 to the writ petition. Pursuant to the search, an investigation (under the Act), became pending against the petitioner and its directors. During that investigation, on 13.05.2016, the statement of Dinesh Garg, a director of the petitioner-company came to be recorded. As per Annexure-A to that statement duty payment Rs. 45,38,231/- was avoided upon clandestine removal of excisable goods. Its copy is annexed as Annexure No. 3 to the writ petition. Relevant to our discussion, the contents of question nos. 3 and 7 together with the answers furnished by the said Dinesh Garg, in that statement, read as under: "Q-3. On the basis of print outs of sales register taken from the laptop and sales register submitted by your accountant Shri Gaurav Tyagi on 10.02.2016 in reply of Question No.4 of his statement, a detail have been prepared containing date wise entries of sales made to different buyers during the period 01.04.2015 to 09.02.2016 in Annexu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f disputed duty payable under the Act at Rs. 47,56,751/- and the Estimate Amount Payable (EAP in short) Rs. 14,27,025.30/-. The disputed duty payable/'tax dues' disclosed was the sum of the alleged short-paid duty - as per the 'Panchnama' document dated 10.02.2016 and, the evaded duty - as per the statement of Dinesh Garg dated 13.05.2016. The Designated Committee did not dispute the computation of disputed duty payable and EAP disclosed by the petitioner yet, on 31.01.2020, instead of issuing a demand on SVLDRS-3 it issued a demand on SVLDRS-2, to the petitioner. It also computed the EAP at Rs. 14,27,025.30. It included the amount of Rs. 2,18,516/- already paid by the petitioner, during the investigation. 6. Thereafter, though no hearing took place, the Designated Committee rejected the petitioner's declaration by the impugned order dated 05.05.2020. While rejecting the petitioner's declaration, it has been observed as under: "I find that in the instant case, the officers of Anti-evasion, Central Excise Commissionerate, Meerut has initiated an enquiry against the party, wherein a search was conducted on 10.02.2016. During the visit a shortage in stock of finishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of duty payable under the indirect tax enactment;" 9. Also, the phrase "enquiry or investigation" has been defined under Section 121(m) of the Scheme. It reads: "121(m). "enquiry or investigation", under any of the indirect tax enactment, shall include the following actions, namely:- (i) search of premises; (ii) issuance of summons; (iv) recording of statements;" 10. Clearly, a person against whom an enquiry, investigation or audit may be pending and whose 'tax dues' may not have been 'quantified', would remain ineligible to make a declaration on form SVLDRS-1. According to the revenue, for the purposes of Clause 123(c) of the Scheme, on 30.06.2019, the 'tax dues' against the petitioner were not 'quantified'. Admittedly, prior to that date no communication whatsoever was issued by any Central Excise authority to the petitioner to communicate the 'quantified' amount of 'tax dues'/duty amount payable. 11. However, there is no doubt that the 'Panchnama' document dated 10.02.2016 prepared by the Central Excise authorities, in writing, clearly mentioned the amount Rs. 2,18,516/- as the amount of duty short paid by the petitioner. Again, there c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was also given the power to issue binding orders and instructions and directions to other authorities under the Scheme, for its proper administration. In exercise of that power, the CBIC issued the Circular No. 1071/4/2019-CX.8, dated 27.8.2019 (hereinafter referred to as the 'Circular'). Relevant to our discussion, the opening Clauses and Clause 10(g) of that Circular read as under: " I am directed to state that the Government has announced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 as a part of the recent Union Budget. Further, in accordance with the Finance (No.2) Act, 2019, the Central Government has notified the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 as well as issued Notification No. 04/2019 Central Excise-NT dated 21.08.2019 to operationalize this Scheme from 01.09.2019 to 31.12.2019. 2. As may be appreciated, this Scheme is a bold endeavor to unload the baggage relating to the legacy taxes viz. Central Excise and Service Tax that have been subsumed under GST and allow business to make a new beginning and focus on GST. Therefore, it is incumbent upon all officers and stall of CBIC to partner with the trade and industry to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt. Also, our Court has consistently followed the same. 15. In Commissioner of Customs, Calcutta & Ors. Vs. Indian Oil Corporation Ltd. & Anr., (2004) 3 SCC 488, the above principle was reiterated and reaffirmed. After discussing the entire gamut of law on the subject, the Supreme Court held as below: "12. The principles laid down by all these decisions are : (1) Although a circular is not binding on a Court or an assessee, It is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A show cause notice and demand contrary to existing circulars of the Board are ab initio bad. (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars." 16. Thus, the Circular would bind the revenue authorities ranked lower to the CBIC, in so far as it is beneficial to the petitioner. Those r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it wielded, to its own advantage, under the Scheme. Thus, it waived that advantage and relaxed the rigor of law - to make the Scheme more purposeful and successful by maximizing amicable/consented resolution of legacy disputes, under all indirect taxation enactments, in the context of the imminent enforcement of the G.S.T. Regime, at the relevant time. That being the emphasis laid by the CBIC, it clearly sought to maximize the number and quantum of settlements under the Scheme. That intent is self-apparent from a plain reading of paragraphs 2 and 3 of the Circular. It needs no elaboration. 20. Thus, the CBIC has only clarified the meaning to be given to the word 'quantified' used under the Scheme - to include thereunder any duty liability admitted (in writing) by a person (during an enquiry or investigation) - as a 'written communication' spoken of under Section 121(r) of the Scheme. Also, Rs. 45,38,231/- is the exact amount 'quantified' while issuing the subsequent show-cause-notice dated 06.09.2019. While that notice may never be read as evidence of the 'quantification' made earlier since that show-cause-notice was issued after the cut-off date 30.06.2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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