Case Law Details
R.Shanmugam Pillai & Sons Vs Designated Committee (Madras High Court)
No denial of SVLDRS benefit by treating assessee under arrears category on basis of numbering of appeal and pending adjudication before CESTAT
Conclusion: Even though assessee filed an appeal on 10 days prior to the cut off date before the CESTAT, therefore, on 30.06.2019, in the eye of law, there had been a litigation by way of appeal which had been filed and pending before the appellate forum, therefore, assessee was eligible to claim the benefit under the scheme by treating him under the category of “litigation”. It was unjustified to state that unless and until the appeal was numbered and it was pending adjudication before any appellate forum like the CESTAT, then only it could be considered to be an eligible person to be categorised under the litigation category,
Held: Assessee had a tax arrears payable to the respective authority. Therefore, in order to get the benefit of the scheme called ‘Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, assessee made an application and based on such application, the authority, who was the authority, under the scheme, to determine the amount payable by permitting assessee to avail the benefit under the scheme, had declared it as Rs.7,32,236/-, by proceedings dated 22.01.2020. However, subsequently by proceedings dated 27.01.2020, assessee having been considered to be under arrears category, the authority had determined the amount payable by assesssee as Rs.13,24,448/-. Felt aggrieved over the said declaration made by authority treating assessee as “under arrears” category, whereby the higher amount had been determined by authority, assessee had moved this writ petition. It was held that admittedly, assessee filed an appeal on 20.06.2019 ie., 10 days prior to the cut off date before the CESTAT, therefore, on 30.06.2019, in the eye of law, there had been a litigation by way of appeal which had been filed and pending before the appellate forum. Whether the appeal filed on 20.06.2019 would be subsequently numbered or not was not the criteria, as the same had not been mentioned either under Section 124 or 125. Moreover, when there was a specific exclusion provided under Section 125, all other categories were eligible to seek such declaration in view of the language used in Section 125(1) ie., “all persons should be eligible to make a declaration under this scheme except the following, namely;” Therefore, what are all the excluded category exclusively given in Clauses (a) to (h), alone shall be excluded from the purview of the eligible persons to seek a declaration and all the remaining persons certainly, will be eligible to claim. Therefore, Section 125 shall not be read in isolation and it should be read with Section 124, which makes it clear that, the relief available to a declarant under the scheme shall be calculated, where, the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice which is pending as on 30.06.2019. The said declaration categorising assessee under “arrears category” was not in consonance with Section 124 or 125. Therefore, assessee was eligible to claim the benefit under the scheme by treating him under the category of “litigation”. Therefore, what had been recorded in the order dated 22.01.2020 should prevail and the subsequent order dated 27.01.2020 could not be sustained.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The prayer sought for herein is for a Writ of Certiorarified Mandamus, calling for the records in SVLDRS-3 No. L270120SV301305 dated 27.01.2020 issued by the respondent determining an amount of Rs.13,24,448/- as payable under Arrears category and quash the same as arbitrary, illegal and against the principles of natural justice and consequently direct the respondent to determine the amount payable afresh under Section 124(1)(a) of the Finance (No.2) Act, 2019 under SABKA VISHWAS (Legacy Dispute Resolution) Scheme 2019 as pending litigation category after verification of the records.
2. The petitioner had a tax arrears payable to the respondent. Therefore, in order to get the benefit of the scheme called ‘Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, the petitioner made an application and based on such application, the respondent, who is the authority, under the scheme, to determine the amount payable by permitting the petitioner to avail the benefit under the scheme, has declared it as Rs.7,32,236/-, by proceedings dated 22.01.2020.
3. However, subsequently by proceedings dated 27.01.2020, the petitioner having been considered to be under arrears category, the respondent has determined the amount payable by the petitioner as Rs.13,24,448/-. Felt aggrieved over the said declaration made by the respondent treating the petitioner as “under arrears” category, whereby the higher amount has been determined by the respondent, the petitioner has moved this writ petition.
4. In this context, learned Counsel appearing for the petitioner has relied upon the relevant provisions of the scheme, especially, Sections 124 and 125, which are relevant for the issue raised in this writ petition. Therefore, Sections 124 and 125, to the extent which are required to be noticed are extracted hereunder:
“124.(1) Subject to the conditions specified in sub-section (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 or more appeals arising out of such notice which is pending as on the 30th day of June, 2019, and if the amount of duty is,-
(i) rupees fifty lakhs or less, then, seventy per cent of the tax dues;
(ii) more than rupees fifty lakhs, then, fifty per cent of the tax dues;”
…..
125.(1) All persons shall be eligible to make a declaration under this Scheme except the following, namely:-
(a) who have filed an appeal before the appellate forum and such appeal has been heard finally on or before the 30th day of June, 2019;”
5. In this context, it is the case of the petitioner, as projected by the learned Counsel for the petitioner that, as against the order passed by the original authority as well the Commissioner (Appeals), further appeal had been filed by the petitioner assessee before the CESTAT on 20.06.2019. One of the conditions which has been imposed under the scheme, especially, under Section 125(a) as referred to above, is that, those who filed appeal and the same had been heard finally, but orders were not passed as on 30.06.2019, shall not be eligible to claim any declaration under the scheme. By referring upon the said provision, learned Counsel would contend that, insofar as the petitioner’s case is concerned, the appeal admittedly had been filed prior to the cut off date ie., 30.06.2019. Therefore, on 30.06.2019, though the appeal had been filed before the CESTAT, Chennai, the same had not been considered or heard finally as contemplated under Section 125 (1) (a). Therefore, the petitioner also shall be eligible to claim maximum benefit under the category of “under litigations” of the scheme.
6. In fact, the case of the petitioner had been initially considered only under the said category by the respondent and a declaration to that effect have been made by order dated 22.01.2020, wherein the petitioner having been declared under the category of ‘litigation’, where the tax relief having been given, the final tax amount payable by the petitioner has been determined as Rs.7,32,236/-. However, within a period of one week, the respondent once again re-declared the category of the petitioner as ‘arrears’ category, thereby after giving the tax relief, the amount payable by the petitioner was determined as Rs.13,24,448/-. Comparing these two, learned Counsel appearing for the petitioner pointed out that, a per Section 125(1) (a) r/w. 124(1)(a), the petitioner is eligible to claim under the category of “litigation” and not under the category of “arrears”, because, he has already filed an appeal on 20.06.2019 ie., 10 days prior to the cutoff date ie., 30.06.2019. Therefore, on that date, the petitioner should only be treated as a “litigant” and not as “arrears”. Therefore, the amount under the “litigation” category shall be the only amount payable by the petitioner. Therefore, the present requirement of paying the higher amount by treating the petitioner as an “arrears category” is unjustifiable and unlawful, as it goes against the spirit of the provisions of the scheme.
7. Heard Mr.K.Prabhu, learned Standing Counsel appearing for the respondent, who would submit that, though it was claimed by the petitioner that the appeal was filed before the CESTAT on 20.06.2019, unless and until the appeal is numbered and it is pending adjudication before any appellate forum like the CESTAT, then only he can be considered to be an eligible person to be categorised under the litigation category, otherwise, he can only be treated as an “arrears category”. As the appeal had been filed by him 20 days before, it cannot be taken as a pending appeal and therefore, the petitioner cannot be treated under the “litigation category”, for availing the maximum benefit under the scheme. Hence, a wrong declaration so made on 22.01.2020, has been rectified and accordingly, a fresh declaration was made by the impugned order dated 27.01.2020, by categorising the petitioner under “arrears category”, and the amount has been accordingly determined. Therefore, the impugned order does not require any interference, he contended.
8. I have considered the rival submissions made by the learned Counsel and have perused the materials placed before this Court.
9. It is no doubt clear that the scheme was in force. At the time when the Scheme was in force, the petitioner made application to avail the benefit as per Sections 124 & 125, as referred to above, wherein it has been mentioned that, who are all the eligible persons who can claim the benefit or to get a declaration for availing the benefit of the scheme. In this context, the ineligibility of any assessee to claim the benefit under the scheme has been specifically earmarked in Section 124, where, in sub-clause (1)(a), it has been specifically mentioned that, those who have filed an appeal before the appellate forum and such appeal has been heard finally on or before 30.06.2019, shall not be eligible to make a declaration under the scheme.
10. Here, in the case in hand, admittedly, the petitioner filed an appeal on 20.06.2019 ie., 10 days prior to the cut off date before the CESTAT, therefore, on 30.06.2019, in the eye of law, there has been a litigation by way of appeal which has been filed and pending before the appellate forum. Whether the appeal filed on 20.06.2019 would be subsequently numbered or not is not the criteria, as the same has not been mentioned either under Section 124 or 125. Moreover, when there is a specific exclusion provided under Section 125, all other categories are eligible to seek such declaration in view of the language used in Section 125(1) ie., “all persons shall be eligible to make a declaration under this scheme except the following, namely;”
11. Therefore, what are all the excluded category exclusively given in Clauses (a) to (h), alone shall be excluded from the purview of the eligible persons to seek a declaration and all the remaining persons certainly, will be eligible to claim. Therefore, Section 125 shall not be read in isolation and it should be read with Section 124, which makes it clear that, the relief available to a declarant under the scheme shall be calculated, where, the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice which is pending as on 30.06.2019. This language used in Section 124 (1) (a) makes it abundantly clear that, the pendency of the appeal is enough for making a person eligible to claim the benefit under the scheme. In fact, this has been considered in the proper perspective at the initial stage, where, the maximum tax benefit having been given, it was determined that only a sum of Rs.7,32,236/- is to be paid by the petitioner. Subsequently, for the reason best known to them or based on the aforesaid reasons given by the learned Standing Counsel for the respondent, further declaration has been made within a week’s time, where the petitioner was considered under the “arrears category”, and the due amount was determined as Rs.13,24,448/-.
12. The said declaration categorising the petitioner under “arrears category” is not in consonance with Section 124 or 125, as has been quoted hereinabove. Therefore, the petitioner, in the considered opinion of this Court, is eligible to claim the benefit under the scheme by treating him under the category of “litigation”. Therefore, what has been recorded in the order dated 22.01.2020 shall prevail and the subsequent order dated 27.01.2020, which is impugned herein cannot be sustained. In that view of the matter, this Court is passing the following order:
“The impugned order is quashed. The respondent is hereby directed to treat the petitioner under the “litigation category”, and accordingly, the earlier order passed by the respondent dated 22.01.2020, whereby the amount of Rs.7,32,236/- has been determined for payment shall be considered. In this context, it is further to be noted that during the pendency of the writ petition, pursuant to the orders passed by this Court, it is claimed by the petitioner that the said amount of Rs.7,32,236/- as determined by the respondent, in entirety since has been paid, no further amount needs to be paid. Therefore, confirming the same, the petitioner’s liability to pay the tax shall be declared accordingly. The needful as indicated above shall be undertaken by the respondent within a period of four [4] weeks from the date of receipt of a copy of this order.”
13. Accordingly, the writ petition stands disposed of. However, there shall be no order as to costs. Consequently, the connected miscellaneous petition is closed.
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