TMI Blog2022 (9) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... n objectives of liquidation of past disputes pertaining to Central Excise and Service Tax on the one hand and disclosure of unpaid taxes on the other hand, the primary focus is to unload the baggage of pending litigations in respect of Service Tax and Central Excise from pre-GST regime so that the business can move on. It is crystal clear that a person making Voluntary Disclosure after being subjected to any enquiry or investigation or audit is clearly ineligible to avail the benefit of the Scheme of 2019 and, therefore, ineligible to proceed further under the Voluntary Disclosure category. Once we have considered the statutory Scheme based on admitted facts on record and thereby reached at the conclusion based on our own reading of clause (f) of Sub-Section (1) of Section 125 of the Finance (No.2) Act, 2019, in our considered opinion, as also in view of the foregone conclusion, only on the ground that the opportunity of hearing was not afforded to the petitioner, we are not inclined to interfere with the decision of the respondents in rejecting petitioner s declaration holding ineligible to avail the benefit of the Scheme of 2019. The subsequent challenge to the legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pur. Though, the petitioner requested the said Authority about the fact of it having availed the benefit under the Scheme of 2019, the proceedings continued which required the petitioner to submit required record to the audit team. 6. The petitioner, as pleaded, also requested the designated Committee constituted under the Scheme of 2019 for giving opportunity of hearing before passing any adverse order, but the same was not afforded. 7. The audit proceedings eventually resulted in issuance of Internal Audit Report against the petitioner for the same period for which petitioner had filed application under the Scheme of 2019, followed by show cause notice of the even date on 08.01.2021. 8. In the meantime, the petitioner received impugned Communication dated 12.10.2020 wherein, it was mentioned that the petitioner had filed application under the category of Voluntary Disclosure for relaxation of applicable interest and penalty in respect of declared service pertaining to the period from April 2016 to June 2017 for which departmental audit had already been initiated, but remained pending. In the said communication, it was further disclosed that in the case of Voluntary Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019. The benefit of the Scheme of 2019 could not be denied on the basis that audit proceedings were initiated vide Communication dated 28.11.2019 as this is subsequent to the cut off date 30.06.2019. It is the contention of learned counsel for the petitioner that the objective of the Scheme of 2019 was to bring to an end pending litigations pertaining to Service Tax and Central Excise. The Scheme has twin objectives of liquidation of past disputes pertaining to Central Excise and Service Tax on the one hand and disclosure of unpaid taxes on the other hand, the primary focus is to unload the baggage of pending litigations in respect of Service Tax and Central Excise from pre-GST regime so that the business can move on, which is also the view expressed by the Board vide its Circular dated 27.08.2019 wherein, all the officers and staff working under the Board were called upon to partner with trade and industry to make the Scheme a grand success which in turn will enable the administrative machinery to fully focus in the smooth implementation of GST. 11. Further contention is that the Scheme of 2019 being a beneficent Scheme, the reasons and object behind promulgation of the Scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , audit report and show cause notice are also liable to be quashed. 15. In support of his submission, learned counsel for the petitioner has relied upon the decisions of the Hon ble Supreme Court in the cases of Tata Engineering and Locomotive Co. Ltd. Versus The State of Bihar and Another, (2000) 5 Supreme Court Cases 346 M/s Yashi Constructions Versus Union of India Others, (Petition for Special Leave to Appeal (c) No.2070/2022) decided on 18.02.2022 and the decisions of the Bombay High Court in the cases of New India Civil Erectors PVT. LTD. Versus Union of India, 2021 (48) G.S.T.L. 17 (Bom.) Thought Blurb Versus Union of India, 2020 (43) G.S.T.L. 499 (Bom.). 16. Per-contra, learned counsel appearing for the respondents would submit that the petitioner had applied for benefit of the Scheme of 2019 under Voluntary Disclosure on 31.12.2019. However, before that, audit proceedings were initiated vide Letter dated 28.11.2019 requiring the petitioner to provide necessary documents to conduct the audit of the petitioner-firm. Thus, the audit enquiry was taken up by the department prior to filing of SVLDRS application dated 31.12.2019. The petitioner avoided to fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make a Voluntary Disclosure and get the benefit of the Scheme of 2019. As the petitioner is clearly excluded being one falling in category stated in Clause (f) under Sub- Section (1) of Section 125 of the Scheme of 2019, which is a forgone conclusion, on the face of the statutory Scheme, the petitioner is not entitled to any relief only on the ground of violation of principles of natural justice though, it was not entitled to such hearing as the petitioner itself is guilty of suppression of material facts that before submission of Voluntary Disclosure on 30.06.2019, admittedly, audit proceedings were initiated vide Letter dated 28.11.2019 requiring the petitioner to submit documents so that audit could be completed. 18. In support of his submission, learned counsel for the respondents has placed reliance on a Circular dated 29.10.2019 (not filed by the respondents) and order dated 18.02.2022 of the Hon ble Supreme Court in SLP No.2070 of 2022 (M/s. Yashi Constructions Versus Union of India and Others). 19. We have given our anxious consideration to the elaborate submissions made by the learned counsel for the respective parties, perused the relevant provisions of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular dated 27.08.2019 mentioned that the Scheme is bold endeavour to unload the baggage relating to the legacy taxes viz. Central Excise and Service Tax that have been subsumed under GST and to allow business to make a new beginning and to focus on GST. It was, therefore, highlighted that it is incumbent upon all officers and staff of the CBIS to partner with the trade and industry to make the Scheme a grand success. 25. Further more under para-3 thereof, it was stated that the dispute resolution and amnesty are the two components of the Scheme of 2019. While the dispute resolution component is aimed at liquidating the legacy cases locked up on the litigations at various forums, the amnesty component gives an opportunity to those, who have failed to correctly discharge their tax liability to pay the tax dues. It was further stated that the Scheme offers substantial reliefs to the tax payers and others, who may potentially avail it. The circular also highlighted that the Scheme also focuses on the small tax payers as would be evident from the fact that the extend of relief provided is higher in respect of cases involving lesser duty (smaller tax payers can generally be expected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Commission for settlement of a case; (h) persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944. (2) A declaration under sub-section (1) shall be made in such electronic form as may be prescribed. 29. Therefore, express exclusion of certain category of persons clearly depicts the legislative intention that the benefit of the Scheme is not available for those, who are within the mischief of exception clause. All other persons, who are not within the said exception as engrafted under Section 125 of the Finance (No.2) Act, 2019 would be eligible to make declaration under the Scheme and certainly in those cases, where the persons are eligible for declaration, their declarations would be required to be processed in terms of provisions contained in Sections 126 to 130 of the Finance (No.2) Act, 2019, which includes verification of declaration, issuance of a statement by designated Committee, rectification of errors and finally issuance of discharge certificate as conclusive of matter and time period. Restrictions of the Scheme have been engrafted in Section 130 of the Finance (No.2) Act, 2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y clear and unambiguous and does not leave any scope to entertain any doubt. 35. The aforesaid constructive interpretation becomes clear upon perusal of SVLDRS-1 referable to declaration under Section 125 of the Finance (No.2) Act, 2019 read with Rule 3 of the (Sabka Vishwas) (Legacy Dispute Resolution) Scheme Rules, 2019, column 8 which is in the form of questionnaire is as below:- 8. Please answer Yes or No: 1. Have you been convicted for an offence for the matter for which this declaration is being made? [ Note : If you answer YES to this question, you are ineligible to proceed further under the Scheme.] Yes No 2. Have you filed an application in the Settlement Commission for the case for which this declaration is being made? [ Note : If you answer YES to this question, you are ineligible to proceed further under the Scheme.] Yes No 3. Are you seeking to make this declaration with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944 (specified petroleum and tobacco produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yes No 10. Have the tax dues with regard to the matter under enquiry, investigation or audit NOT been quantified on or before 30.06.2019? [ Note : If you answer YES to this question, you are ineligible to proceed further under the INVESTIGATION, ENQUIRY OR AUDIT category.] Yes No 36. The questionnaire is formulated keeping in view various exception clauses under Sub-Section (1) of Section 125 of the Finance (No.2) Act, 2019. Question No.8 clearly requires the declarant to disclose whether he has been subjected to any enquiry or investigation under the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994 in respect of the goods/services or both for which declaration is being made by way of search of premises, or issuance of summons, or requiring the production of accounts, documents or other evidence or recording of statement. 37. The note appended thereto makes it clear that if the answer is yes, the declarant is ineligible to proceed further under the Voluntary Disclosure category. 38. In view of the above, it is crystal clear that a person making Voluntary Disclosure a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation, upon disclosure of which, its declaration was not liable to be proceeded further. The petitioner by such suppression, procured benefit by way of issuance of discharge certificate. As soon as this fact was brought to the notice of the authorities, provisions of Section 129 (2)(C) of the Finance (No.2) Act, 2019 were invoked. The provision clearly states that in a case of Voluntary Disclosure where any material particular furnished in the declaration is subsequently found to be false, within a period of one year of issue of the discharge certificate, it shall be presumed as if declaration was never made and proceedings under the applicable Indirect Tax enactment shall be instituted. That is what was stated in Communication dated 12.12.20220 and the authority rightly concluded that the declaration filed by the petitioner under the category of Voluntary Disclosure appears to have been filed wrongly as audit had already been initiated. Resultantly, SVLDRS applications were cancelled. 43. Reliance placed on clarification by way of answers about FAQ No.10 and FAQ No.39, is completely misplaced. Question No.10 and answer to the same is as below:- Q10. I have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the petitioner therein under the Scheme of 2019 was examined. Application of the petitioner was rejected on the ground of ineligibility with the remark that tax dues were not finalised as on 30.06.2019. 49. Therefore, the issue raised in that case was different. On factual score, that was not a case dealing with a case like the present one in hand. 50. The petitioner has placed reliance upon the another decision of the Bombay High Court in the case of New India Civil Erectors Pvt Ltd Versus Union of India (Supra). However, for the reasons stated herein above and the interpretation placed upon statutory Scheme of 2019, particularly interpretation of various exception clauses including Clause (f) of Sub-Section (1) of Section 125 of the Finance (No.2) Act, 2019, we find ourselves unable to subscribe to the view taken in that case that the enquiry or investigation or audit referred to in clause (f) (i) would necessarily have to be initiated on or before 30.06.2019. 51. Once we have considered the statutory Scheme based on admitted facts on record and thereby reached at the conclusion based on our own reading of clause (f) of Sub-Section (1) of Section 125 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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