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TMI Blog2022 (7) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... ers may be deemed just and proper in the facts and circumstances of the present case." 2. We have heard Mr. Sunit M. Shah, the learned Counsel assisted by Mr. Vasim Mansuri, the learned advocate appearing for the writ applicant and Mr. Nikunt K Raval, the learned Standing Counsel appearing for the respondents Nos. 2 and 3 respectively. 3. It appears from the materials on record that there was a partnership firm running in the name of M/s. Sunshine Corporation. Two individuals namely (1) Sarfarazbhai H. Rangwala and (2) Mumtajbiwi Y. Rangwala were the partners of the said firm. M/s. Sunshine Corporation came to be dissolved on 31.3.2004. A new firm in the name of M/s. Sunshine Paints (writ applicant) came into existence from 1.4.2004. The writ applicant started operating from the very same business premises from where M/s. Sunshine Corporation used to operate. Two individuals namely (1) Saeedkhan H. Rangwala and (2) Majeed Y. Rangwala are the partners of the writ applicant firm. There is one another company in the name of M/s.Spraylac Colour figuring in this litigation. It is a trading company and two individuals namely (1) Yusufbhai H. Rangwala and (2) Ibrahimbhai Rangwala are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "A-5" and A-6" and aummarized in Annexure "A" to this notice should not be demanded and recovered from them under sub-section (1) of Section 11A of the Central Excise Act, 1944 by invoking the extended period of five years as provided in the proviso to the said sub-section. (ii) As they have already paid an amount of Rs.9,53,814/- towards their duty liability during investigation, why the same should not be appropriated towards the aforesaid amount recoverable from them. (iii) Penalty should not be imposed upon them under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the erstwhile Central Excise Rules, 1944, Rule 25 of the Central Excise (No.2) Rules, 2001 and Rule 25 of the Central Excise Rules, 2002 read with Section 38A of the Act ibid. (iv) Interest as applicable under Section 11AB of the Central Excise Act, 1944 should not be recovered from them. 44. Shri Sarafranjbhai H. Rangwala and Ms. Mumtajbiwi Y. Rangwala, Partners of M/s. Sunshine Corporation; Shri Saeedkhan H. Rangwala and Shri Majeed Y. Rangwala partners of M/s. Sunshine Paints, Ahmedabad and Shri Yusufbhai H. Rangwala and Shri Ibrahimbhai Rangwala, Partners of M/s Spraylac Colour Company, Ah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Mr. Manish R. Bhatt, learned Senior Counsel for the petitioners has referred to the order of the Settlement Commission and drawn the attention of this Court to the observations made by the Settlement Commission in paragraph 6.2 of the order which reads as under :- "The Bench further finds that the applicant has fulfilled all the conditions for admission of the case in terms of subsection (1) of Section 32E of the Act. Accordingly, the applications filed by the applicant and the coapplicants are allowed to the proceeded with under sub-section (1) of Section 32F of the Act." Referring to the penalty, it is observed as under :- "The Bench imposes penalty on the applicant and the co-applicants as below : (a) Penalty of Rs.15 Lacs on the applicant, M/s.Sunshine Pints. Case law prohibits penalties on the firm as well as the partners. Therefore, no penalty is called for against partners. (b) Penalty of Rs.15 Lacs on the coapplicant, Shri Ibrahim Rangwala (Partner of M/s. Spraylac Colour Company)." 7. Learned Senior Counsels Mr. Manish R. Bhatt as well as Mr. Mihir Joshi referred to subject Index of 2007 (219) ELT and submitted that the law is well settled that once the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discretion for not weaving which is normally exercised in such a situation. 10.Therefore, when no reasons are assigned by the Settlement Commission for rejecting such a claim for waiver or fine and penalty and in light of the settled legal position, particularly, the judgment of the Apex Court referred to and relied upon by the petitioners in the case of State of Punjab V/s. Bhag Singh, 2004 (164) ELT 137 (S.C.) and which has also been followed consistently. 11.This very principles have been reiterated by the Hon'ble Supreme Court and has been found in various decisions including the judgment of the Hon'ble Supreme Court in the case of Ran Singh and another V/s. State of Haryana and others, (2008) 4 SCC 70 wherein the Hon'ble Supreme Court has observed in paragraph 10 as under :- "10. 5.......Reasons introduce clarity in an order. On plainest reasons, howsoever brief, in its order indicative of an application of its mind, ....... The absence of reasons has rendered the [High Court judgment] not sustainable.... 12.6. ... Even in respect of administrative orders, Lord Denning, M.R. In Breen V/s. Amalgamated Engg. Union observed : (All ER p. 1154h) "The giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve, the bare principles of natural justice, it is required to be set aside. Therefore, the submissions made by learned Standing Counsel Ms. Ami Yajnik on this count cannot be accepted. 15.Therefore, keeping in view the totality of the circumstances, we deem it expedient and appropriate that ends of justice would be served in case the matters on the issue of claim of waiver of penalty and fine is remitted back to the Settlement Commission for reconsideration. 16.Accordingly, present group of petitions stand allowed. The orders passed by the Settlement Commission dated 05.10.2007 so far as Special Civil Application Nos.4896 to 4900 of 2008 are concerned and the order dated 08.10.2007 passed by the Settlement Commission so far as Special Civil Application No.28680 of 2007 and the order dated 11.04.2007 passed by the Settlement Commission so far as Special Civil Application No.6127 of 2008 are hereby set aside to the extent it challenges or confines the challenge regarding non-waiver of penalty and fine. For this very limited aspect, the matter has been remanded back to the Settlement Commission for a fresh consideration on this aspect in accordance with law. The Settlement Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm SVLDRS 1 on 20.11.2019, the same was replied to us on 07.12.2019 with the following remarks within the rectangle: Remarks Assessee has paid Rs.22140800 vide various challans after filing returns for pending dues for returns Jul 2014 to may 2017 (Except mar 2015 where no declaration filed) of Rs.32873440. Paid amounts adjusted from Jul 2014 returns onward leading to full payment on returns from Jul 2014 to Jul 2016 (other than mar 2015) and pending payment for Aug 2016 onwards. The remarks on 2nd page is: Remarks: other noticee application rejected. 2. The reasons shown in the remark of declaration made by Sunshine Paints is not relevant. We have paid the entire duty amount of Rs.51,76,676/- and also an interest amount of Rs.11,87,041/-. Copies of the challans for both are enclosed herewith for your ready reference. 3. The Civil Appeal no. 2864-2864 of 2012 is admitted in the Hon'ble Supreme Court, vide order dated 12th March, 2012. The appeal is pending till date including as on 30.6.2019. 4. With this submission it should be appreciated that the rejection of our application is wrongful, because the facts mentioned in the remarks are nowhere relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder was for an amount of duty of Rs.900 and penalty of Rs. 90. The declarant files an appeal against this order. The amount of duty which is being disputed is Rs. 900 and hence tax dues are Rs.900. Illustration 3: The show cause notice to a declarant was for an amount of duty of Rs.1000 and an amount of penalty of Rs.100. The order was for an amount of duty of Rs. 900 and penalty of Rs. 90. The declarant files an appeal against this order of determination. The departmental appeal is for an amount of duty of Rs. 100 and penalty of Rs. 10. The amount of duty which is being disputed is Rs. 900 plus Rs. 100 i.e Rs. 1000 and hence tax dues are Rs. 1000. Illustration 4: The show cause notice to a declarant was for an amount of duty of Rs. 1000. The order was for an amount of duty of Rs.1000. The declarant files an appeal against this order of determination. The first appellate authority reduced the amount of duty to Rs. 900. The declarant files a second appeal. The amount of duty which is being disputed is Rs. 900 and hence tax dues are Rs. 900; (b) where a show cause notice under any of the indirect tax enactment has been received by the declarant on or before the 30th day of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portant. It provides that if the notice has been issued to the declarant and other persons making them jointly and severally liable for an amount then the amount indicated in the said notice as jointly and severally payable shall be taken to be the amount of duty payable by the declarant. 18. Indisputably one composite show cause notice was issued in the case on hand. The writ applicant, in our view cannot be held liable for the alleged duty short paid by M/s Sunshine Corporation. In the show cause notice nowhere it has been stated that M/s Sunshine Paints (writ applicant) is jointly and severally liable for the alleged duty short paid by M/s Sunshine Corporation. The reason is not far to seek. The liability alleged to have been incurred by M/s Sunshine Corporation is for the period of F.Y. 2001 to 2002, 2002 to 2003 and 2003 to 2004 during which the writ applicant was not in existence at all. 19. In such circumstances referred to above, the partners of the writ applicant firm cannot be made liable to make good the duty alleged to have been short paid by M/s Sunshine Corporation. In other words M/s Sunshine Corporation cannot be considered as a co-noticee for the purpose of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Scheme. This will also cover cases where the main noticee has settled the matter before the Settlement Commission and paid the dues and in which co-noticees were not a party to the proceedings before the Settlement Commission." The above clarification specified that the co-noticee would be entitled to file an application under the scheme only if the main noticee had discharged the duty demand. In the instant case, the main noticee i.e. M/s Sunshine Corporation had not discharged the duty demand and as such the application of the petitioner i.e. co-noticee to the show cause notice has been rejected. 7. With reference to para-3 (b), it is submitted that the application under contention falls under the category of "Litigation", the relief thereof is governed by the provisions of Section 124(1) (a) and (b) of the Finance (No 2) Act, 2019 which reads as under: "124. (1) Subject to the conditions specified in subsection (2), the relief available to a declarant under this Scheme shall be calculated as follows:- (a) where the tax dues are relatable to a show cause notice or one more appeals arising out of such notice which is pending as on the 30th day of June, 2019, and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icee had not discharged the duty demand." 22. Thus, from the aforesaid, it is apparent that the Sunshine Corporation is being considered as principal noticee whereas M/s. Sunshine Paints (writ applicant) has been considered as the co-noticee for the sole reason that the writ applicant took over the business of M/s. Sunshine Corporation. As noted above, for the period during which M/s. Sunshine Corporation incurred liability writ applicant firm was not even in existence and in such circumstances, We are of the view that the writ applicant cannot be treated as a co-noticee. 23. Before we close this order, we must refer to a decision of the Bombay High Court in the case of Thought Blurb Vs. Union of India, 2020 (10) TMI 1135. A division bench of the Bombay High Court after examining the budget speech of the Hon'ble Finance Minister while introducing the scheme as well as considering the statement and objects of the scheme and the views expressed by the Board held that a liberal view is required to be taken to make the scheme successful. It was held as under:- "54. As discussed above, though the scheme has the twin objectives of liquidation of past disputes pertaining to centr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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