Eureka Fabricators Pvt. Ltd. Vs Union of India & Ors. (Bombay High Court )
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
Heard Mr. Prasannan Namboodiri, learned counsel for the petitioners and Mr. Pradeep Jetly, learned senior counsel for the respondents.
2. This order shall dispose of both the writ petitions as facts are common in both petitions. Petitioner in Writ Petition (L) No.4416 of 2020 is the Director of petitioner company in Writ Petition (L) No.4417 of 2020.
3. Writ Petition (L) No.4417 of 2020 has been filed under Article 226 of the Constitution of India for quashing of order dated 11.09.2020 passed by the respondent No.3 i.e. the Designated Committee and further seeks a direction to the respondents to settle the declaration of the petitioner dated 20.09.2019 filed under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (for short “SVLDRS”) and thus granting consequential relief(s) including refund of an amount of Rs.45,60,438.00 to the petitioner.
4. Before we advert to the submissions made on behalf of the respective parties, it will be apposite to briefly refer to the relevant facts as pleaded. For the sake of convenience, facts in Writ Petition (L) No.4417 of 2020 are considered for adjudication.
4.1. Petitioner is a manufacturing unit holding central excise registration for manufacturing of pressure vessels i.e. road tankers and storage tanks falling under tariff item No.73090090 of the first schedule to the Central Excise Tariff Act, 1985.
4.2. Intelligence input was received by officers of the headquarters of Anti Evasion Wing Thane-I Commissionerate that the petitioner was clearing pressure vessels / tanks for highly inflammable gases such as LPG, Propane, Ammonia etc. without payment of central excise duty under the guise of job work of fabrication on payment of service tax and simultaneously availing credit of central excise duty paid on the inputs which were supplied free of cost by the petitioner’s clients for fabrication.
4.3. Show Cause-cum-Demand notice dated 04.10.2017 was issued to the petitioner and its Director demanding duty on clearances effected by the petitioner without alleged payment of central excise duty fraudulently and an amount of Rs.1,66,26,967.00 was sought to the recovered from the petitioner under the provisions of section 11A(4) of the Central Excise Act, 1944 (for short “the Central Excise Act“). During the investigation petitioner deposited a total sum of Rs.50,00,000.00 on various dates in May and June 2017 against the aforesaid demand / duty liability.
4.4. Petitioner filed application dated 20.07.2018 for settlement before the Settlement Commission. By order dated 07.08.2018 Settlement Commission rejected the petitioner’s application but granted liberty to approach the Commission after compliance with the conditions contained in section 32E of the Central Excise Act.
4.5. In the meanwhile the Joint Commissioner of CGST and Central Excise, Thane Rural passed Order-in-Original dated 31.01.2019 in adjudication confirming the demand of central excise duty of Rs.1,66,26,967.00 from the petitioner under section 11A(4), imposed equal penalty of Rs.1,66,26,967.00 under section 11AC(c) and also imposed penalty of Rs.16,50,000.00 each on the petitioner company and Mr. Vinoo Bakshi, Director under Rules 25 and 26 of the Central Excise Rules, 2002.
4.6. Petitioner filed statutory appeal against the Order-in-Original before the Commissioner (Appeals) on 12.04.2019. Simultaneously petitioner also deposited a sum of Rs.5,17,877.00 towards central excise duty and Rs.18,00,000.00 towards interest with the respondents.
4.7. By order dated 08.08.2019 Commissioner (Appeals) rejected the appeal of the petitioner and confirmed the Order-in-Original dated 31.01.2019.
4.8. SVLDRS came into force w.e.f. 01.09.2019; petitioner filed online application in Form SVLDRS-1 on 20.09.2019 declaring the ‘tax dues’ under section 123(a) of the Finance Act, 2019 (for short “the said Act“) at Rs.1,66,26,967.00 and ‘amount payable’ under the scheme as per section 121(e) of the said Act at Rs.9,95,606.00 after deducting and adjusting the sums of Rs.55,17,877.00 deposited towards central excise duty and Rs.18,00,000.00 deposited towards interest under section 124(2) of the said Act.
4.9. Respondent No.3 i.e. Designated Committee issued Form SVLDRS-2 on 23.10.2019 quantifying the estimated amount payable under the scheme at Rs.33,13,483.00. Petitioner appeared before the Designated Committee for personal hearing on 23.10.2019 and filed its written submissions on 29.10.2019.
4.10. Respondent No.3 i.e. Designated Committee re-issued Form SVLDRS-2 on 12.11.2019 estimating the amount payable by the petitioner under the scheme at Rs.33,13,483.00.
4.11. Petitioner submitted Form SVLDRS-2A on 12.11.2019 itself stating that the challans pertaining to two deposits namely Rs.55,17,877.00 paid towards central excise duty and Rs.18,00,000.00 paid towards interest were not considered while estimating the amount and if so considered the balance final amount payable under the scheme would be Rs.9,95,607.00 only.
4.12. However, respondent No.3 i.e. Designated Committee by order dated 18.11.2019 in Form SVLDRS-3 quantified the estimated amount payable by the petitioner under the scheme at Rs.55,56,045.00.
4.13. Being aggrieved, petitioner filed Writ Petition No.3510 of 2019 before this Court for quashing Form No. SVLDRS-3 and for redetermination of the ‘amount payable’ under the scheme at Rs.9,95,607.00. By order dated 30.06.2020 this Court quashed Form No. SVLDRS-3 dated 18.11.2019 subject to the petitioner depositing the sum of Rs.55,56,045.00 with the respondents and further directed respondent No.3 i.e. the Designated Committee to give a hearing to the petitioner for estimation and computation of its liability under the scheme and pass a fresh order in accordance with law.
4.14. Petitioner complied with the said order and deposited Rs.55,56,045.00 with the respondents.
4.15. Thereafter respondent No.3 i.e. the Designated Committee passed a fresh order dated 11.09.2020 determining the amount payable under the scheme by the petitioner at Rs.46,47,860.50. This order passed by the respondent No.3 i.e. the Designated Committee is impugned in the present petition.
5. Writ petition (L) No.4416 of 2020 has been filed by the Director of Eureka Fabricators Pvt. Ltd. for the following reliefs:-
“(a) Decide the substantial questions of law raised in the foregoing paras or such other questions as this Hon’ble Court may formulate in favour of the Petitioner;
(b) Set aside the rejection of Form SVLDRS-1 dated 30.10.2019 ARN No. LD3010190000368 by Respondent No.3 and allow the Petition;
(c) Issue a writ of mandamus and/or any other appropriate writ, order or direction to the Respondents to finally settle the declaration filed by the Petitioner in Form SVLDRS-1 dated 30.10.2019 ARN No. LD3010190000368 by issuing discharge certificate in Form SVLDRS-4.”
5.1. Petitioner in Writ Petition (L) No.4416 of 2020 has challenged the rejection of its SVLDRS-4 application dated 30.10.2019 by respondent No.3 i.e. the Designated Committee on the ground of ineligibility with the following remarks : ‘Applicant has not discharged the amount estimated in SVLDRS-3 in the case of M/s Eureka Fabricators, which is the main notice in this case. Hence theapplication of personal penalty imposed on Director is liable for rejection’.
6. Respondents have filed reply affidavit refuting the contentions of the petitioner and justifying the order passed by the
Designated Committee. Thus respondents seek dismissal of the writ petition.
7. Mr. Namboodiri, learned counsel appearing on behalf of the petitioner submitted that petitioner had filed its declaration / application in Form SVLDRS-1 in the category of ‘Litigation’ and ‘sub- category of ‘Appeal Pending’ as on 30.06.2019. The appeal filed by the petitioner against the Order-in-Original dated 31.01.2019 was pending adjudication before the Commissioner (Appeals) as on 30.06.2019; petitioner’s declaration was therefore covered under the above category specified in section 124(1)(a)(ii) of the said Act; under section 124(1)(a)(ii) read with section 123(a)(i) of the said Act, the total ‘tax dues’ in the petitioner’s case would be Rs.1,66,26,967.00 and the relief available under the scheme would be 50% of the ‘tax dues’ i.e. Rs.83,13,484.00. He submitted that petitioner had during investigation and pendency of the proceedings deposited the sums of Rs.50,00,000.00, Rs.5,17,877.00 and Rs.18,00,000.00 respectively; thus the petitioner had deposited a total sum of Rs.73,17,877.00; therefore balance amount payable by the petitioner under the scheme would be Rs.9,95,607.00 (Rs.83,13,484.00 less Rs.73,17,877.00).
7.1 He submitted that the Order-in-Original dated 31.01.2019 was challenged in its entirety before the Commissioner (Appeals) and
the same was pending adjudication as on 30.06.2019; therefore the finding returned by the Designated Committee that the admission of Rs.88,16,598.00 towards central excise duty by the petitioner as appearing in the memorandum of appeal was to be considered as
admitted liability and that the same was to be excluded from the benefit of the scheme cannot be countenanced in as much as the said
submission made in the memorandum of appeal by the petitioner was without prejudice to the rights and contentions of the petitioner and was in the alternative; petitioner’s submission of admitting central excise liability of Rs.88,16,598.00 was a ‘without prejudice submission’ and cannot be construed as admission of duty liability.
7.2. He submitted that respondent No.3 Designated Committee failed to consider that even admitted liability can be settled under the scheme as per section 124(1)(c) read with section 121(c) of the said Act, since even the duty liability voluntarily declared in periodical returns but not paid, are allowed to be settled; neither the scheme nor the circulars issued thereunder expressly state that any amount of admitted duty liability is to be excluded from the purview of the scheme; the exclusions under the scheme defined in section 125
of the said Act do not include ‘admitted duty liability’. Hence he has prayed that the impugned order dated 11.09.2020 passed by the
respondent No.3 i.e. the Designated Committee should be quashed and set aside and petitioner’s SVLDRS-1 form be accepted for
8. PER CONTRA Mr. Pradeep Jetly, learned senior counsel appearing on behalf of the respondents while referring to the affidavit-
in-reply dated 23.11.2020 filed by respondent No.3 submitted that petitioner had categorically admitted central excise duty liability of
Rs.88,16,598.00 in the memorandum of appeal filed before the Commissioner (Appeals) and also in the proceedings before the
Settlement Commission; application before the Settlement Commission was rejected and consequentially Order-in-Original dated 31.01.2019 attained finality. It is vehemently contended that since the petitioner had categorically admitted its central excise duty liability of Rs.88,16,598.00 and there being no dispute as regards the admitted central excise duty liability by the petitioner, the said admitted duty is recoverable from the petitioner and therefore no tax relief under the scheme can be extended to the petitioner on the said admitted duty liability; tax relief under the scheme would therefore be available only towards the remaining portion of the central excise duty i.e. Rs.78,10,369.00 (Rs.1,66,26,967.00 less Rs.88,16,598.00).
8.1. It is further contended that petitioner had admitted its duty liability in the memorandum of appeal dated 12.04.2019 filed before the Commissioner (Appeals) in paragraph No.7 of the grounds of appeal; such admission of tax liability of Rs.88,16,598.00 against
the total confirmed tax liability of Rs.1,66,26,967.00 would therefore be outside the purview of the benefit to be given under the scheme and would stand excluded from the total tax liability; the disputed tax amount for the purpose of application of section 123(a) of the said Act is therefore Rs.78,10,369.00; as against this the tax dues payable by the petitioner under section 124(1)(a) is Rs.39,05,184.5; this being the position the total tax payable is Rs.1,27,21,782.50 (admitted liability i.e. Rs.88,16,598.00 plus benefit under the scheme i.e. 39,05,184.50).
8.2. Referring to section 123(c) of the said Act it is contended that ‘tax dues’ means in case of a single appeal arising out of an order
and pending as on 30.06.2019 before the appellate forum in respect of the total amount of duty being disputed in the appeal; since the
disputed amount in the appeal pending before the Commissioner (Appeals) according to the petitioner is Rs.78,10,369.00; the application of petitioner under the category of litigation is therefore applicable only on this disputed amount as per section 123(a).
Therefore, petitioner is liable to pay the final amount of Rs.16,47,860.50 as determined; Designated Committee having recalculated the amount based on the available facts as follows:-
