India Japan Lighting Private Ltd Vs Designated Committee (Madras High Court)
Summary: The Madras High Court, in India Japan Lighting Private Ltd Vs The Designated Committee, held that an assessee who had fulfilled the substantive requirements of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, could not be denied a discharge certificate in Form SVLDRS-4 merely because the withdrawal of its pending appeal was delayed due to circumstances beyond its control or because the electronic facility for processing declarations had subsequently closed. The Court distinguished the substantive requirements of payment and withdrawal of litigation from procedural requirements relating to communication of withdrawal to the designated authority. It directed the designated committee to process the request manually and issue the discharge certificate within four weeks.
The dispute originated from a show cause notice dated 09.12.2005 proposing recovery of CENVAT credit availed on outward transportation services for November 2004 to September 2005. The demand was confirmed up to the Customs, Excise and Service Tax Appellate Tribunal, following which the petitioner filed CMA No.1591 of 2009 before the Madras High Court. During the pendency of that appeal, the Central Government introduced the Sabka Vishwas Scheme under the Finance (No.2) Act, 2019. The petitioner submitted Form SVLDRS-1 on 24.12.2019 and paid the amount determined under Form SVLDRS-3 on 04.03.2020 and 06.03.2020, well before the extended payment deadline of 30.06.2020.
To comply with Section 127(7), the petitioner sought withdrawal of its pending appeal in July 2020. However, due to the COVID-19 pandemic and the resulting disruption of judicial proceedings, the matter was listed only on 16.09.2021, when the High Court permitted withdrawal. The petitioner subsequently communicated the withdrawal order to the Department and requested issuance of Form SVLDRS-4. The authorities rejected the request through communications dated 06.09.2023 and 08.11.2023, stating that the Scheme had closed and the case did not qualify for manual processing under the Board’s instructions. The Department also passed Order-in-Original No.34/2023-GST (AC), dated 21.11.2023, reviving the demand.
The petitioner argued that the payment and steps necessary for withdrawal had been completed within the relevant period and that a judicial listing delay should not defeat settlement benefits. Reliance was placed on R.R. Housing (India) Pvt. Ltd. Vs The Designated Committee (SVLDRS), Sir Gujan Builder Vs The Designated Committee, and the Supreme Court’s COVID-19 limitation-extension proceedings. The Department maintained that both payment and withdrawal were mandatory conditions and that the appeal had actually been withdrawn only after the Scheme’s closure.
Examining Section 127(8) of the Finance (No.2) Act, 2019 and Rule 9 of the relevant Rules, the High Court observed that the legislation prescribed a timeline for payment but did not independently prescribe a deadline for withdrawal of pending cases. The statutory period of thirty days for issuing the discharge certificate operated after payment and submission of proof of withdrawal, whichever was later. The Court emphasized that the purpose of the Scheme was to bring longstanding disputes to an end and that procedural formalities should not defeat relief where essential statutory conditions had been satisfied.
The Court further applied the principle actus curiae neminem gravabit, meaning that an act of the Court should prejudice no person. Referring to the Supreme Court judgments in Mithilesh Kumari Vs Prem Behari Khare and A.R. Antulay Vs R.S. Nayak, it held that the petitioner could not be penalised for the delay in listing its withdrawal application during the pandemic. The Court also considered the Supreme Court’s extension of limitation in Suo Motu Writ Petition (Civil) No.3 of 2020 and the earlier Madras High Court ruling in Sir Gujan Builder, recognising the obligation to process qualifying discharge requests manually where necessary.
Accordingly, the High Court set aside the communications dated 06.09.2023 and 08.11.2023 and directed the first respondent to process the petitioner’s request manually and issue Form SVLDRS-4 within four weeks from receipt of the judgment. The consequential Order-in-Original dated 21.11.2023 was also set aside. The writ petition was allowed, reinforcing that an assessee who has complied with the essential settlement requirements cannot be deprived of the Scheme’s benefits because of judicial delays or administrative processing limitations.
Cases Discussed
1. M/s. R.R. Housing (India) Pvt. Ltd. Vs The Designated Committee (SVLDRS) — 2023 (11) TMI 900 (Madras High Court). The Court referred to this decision concerning the directory nature of timelines prescribed under the Sabka Vishwas Scheme. It supported the proposition that procedural timelines should not defeat the substantive benefits of settlement.
2. M/s. Sir Gujan Builder Vs The Designated Committee and Others — 2022 (5) TMI 432 (Madras High Court). The Court relied on this judgment to hold that once the declarant satisfies the relevant requirements, the designated committee must process the discharge request, manually or otherwise, rather than reject it on procedural grounds.
3. In Re: Cognizance for Extension of Limitation — Suo Motu Writ Petition (Civil) No.3 of 2020; Order dated 23.03.2020; 2020 (5) TMI 418 (Supreme Court). The Court considered the Supreme Court’s suspension and extension of limitation during the COVID-19 pandemic while assessing the delay in withdrawal of the petitioner’s pending appeal.
4. Mithilesh Kumari and Others Vs Prem Behari Khare — MANU/SC/0318/1989 (Supreme Court). The judgment was cited for the principle actus curiae neminem gravabit, under which a litigant should not suffer prejudice because of an act of the Court.
5. A.R. Antulay Vs R.S. Nayak and Another — (1988) 2 SCC 602 (Supreme Court). The Court referred to this judgment for the principle that judicial acts and procedural irregularities should not prejudice a litigant and that procedural rules must serve the administration of justice.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present Writ Petition has been filed challenging the impugned letters bearing C.No.IV/06/1037 /2020-TRC dated 06.09.2023 and C.No.IV/06/1037 /2020-TRC dated 08.11.2023, whereby the request made by the petitioner to issue discharge certificate in Form SVLDRS-4 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme was rejected. By way of amendment, the petitioner has also challenged the subsequent order in Order-in-Original No.34/2023- GST (AC) dated 21.11.2023 passed by the respondents.
2. The respondents rejected the request primarily on the ground that the Scheme had already been closed and, therefore, the request could not be processed electronically. It was further stated that the case of the petitioner did not satisfy the conditions prescribed in the Board’s instructions for manually processing a declaration filed under the Scheme.
3. The brief facts that are necessary for disposal of the Writ Petition are as follows:
i. The petitioner was initially issued a show cause notice dated 09.12.2005, proposing recovery of CENVAT Credit availed in respect of outward transportation services for the period from November 2004 to September 2005. The demand was ultimately confirmed up to the level of the Customs Excise Service Tax Appellate Tribunal (CESTAT) in A.No.E/PD/189/07 & E/323/07. As against the said order, the petitioner had preferred an appeal in CMA.No.1591 of 2009 before this Court.
ii. During the pendency of the Civil Miscellaneous Appeal, the Central Government introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 under the Finance (No.2) Act, 2019. The petitioner availed the benefit of the Scheme and filed the declaration in Form SVLDRS-1 on 24.12.2019, within the time prescribed under the Scheme and made the payments quantified under Form SVLDRS-3 on 04.03.2020 and 06.03.2020, which is well before 30.06.2020, i.e., the extended time line for makingpayments.
iii. Thereafter, the petitioner submitted a written request before the Registry of this Court on 06.07.2020, seeking withdrawal of the appeal in compliance with the requirements under Section 127(7) of the Act. The matter was listed before the Hon’ble Division Bench of this Court on 16.09.2021 and the Hon’ble Division Bench permitted the petitioner to withdraw the CMA as the petitioner had availed the benefit of the settlement scheme.
iv. The petitioner communicated the order of withdrawal on 15.03.2022, which was acknowledged by the Range Office on 17.03.2022. Subsequently, the petitioner addressed a letter dated 24.07.2023, requesting the second respondent to issue Form SVLDRS-4, which was acknowledged on 25.07.2023. However, by the impugned proceedings dated 06.09.2023 and 08.11.2023, the request was rejected primarily on the ground that since the scheme had been closed, the declaration could not be electronically processed and the request could not be manually processed as the petitioner’s case did not fall within the Board’s instructions.
4. The learned counsel for the petitioner submitted that as a consequence to the impugned letters, the respondents went on to pass the order-in-original No.34/23-GST(AC), dated 21.11.2023 reviving the settled demand under the GST Act, 2017. The learned counsel for the petitioner relying upon the instructions No.1/2021-CX, dated 17.03.2021, submitted that the Government of India, Department of Revenue, Central Board of Excise & Customs (Central Excise Wing), permitted the designated committee to approve the manual process and the request for grant of declaration without any reference to the Board’s instructions, upon fulfilment of the following conditions:
“i. The order of the Hon’ble High Court has been accepted by the concerned Commissionerate.=
ii. The Ld ASG / Sd. Counsel who had represented the case before the Hon’ble Court has opined to accept the said order of the Hon’ble Court”
5. The learned counsel for the petitioner further submitted that the petitioner had made the payment within the prescribed time and had also taken steps to withdraw the CMA immediately.
6. The learned counsel relied upon the judgment of this Court in M/s.R.R. Housing (India) Pvt. Ltd. vs. the Designated Committee (SVLDRS), reported in 2023 (11) TMI 900 – Madras High Court, and contended that even the time line prescribed under the Scheme has been held to be directory and had been extended periodically.
7. The learned counsel also relied upon the judgment of this Court in M/s.Sir Gujan Builder vs. The Designated Committee and others reported in 2022 (5) TMI 432 Madras High Court and contended that the Department cannot refuse to issue discharge certificate on the ground that a Court order is required, when the declarant had satisfied all the requirements.
8. The learned counsel further submitted that the petitioner cannot be made to suffer for the procedural infractions, and the respondent cannot contend that the Scheme had been closed, particularly, in view of the extension of the period of limitation granted by the Hon’ble Supreme Court in Suo Motu Writ Petition (Civil) No.3/2020, by order dated 23.03.2020 reported in 2020 (5) TMI 418 – SC.
9. The learned counsel submitted that under the above circumstances, the impugned orders may be set aside and the respondents be directed to process the request for SVLDRS-4 manually and, once the declaration as sought for is issued, the assessment proceedings dated 21.11.2023, rejecting the settled dues, would become redundant.
10. Mr. A.P.Srinivas, learned Senior Standing Counsel appearing for the respondents would contend that the Scheme per se mandates two conditions to be fulfilled within the prescribed time, namely, payment and withdrawal of the litigation, and such withdrawal must be intimated to the Committee. In the present case, though the payment was made in time, CMA was withdrawn only after the Scheme was closed and, therefore, the impugned orders rejecting the request for declaration are correct, and consequently, the impugned order dated 21.11.2023 is also valid in law.
11. Heard both sides and perused the materials available on records.
12. Before proceeding further, let us briefly analyse the provisions of the Finance (No.2) Act, 2019, i.e., Sabka Vishwas (Legacy Dispute Resolution) Scheme. As per the provisions of the Scheme, a person desirous of availing the benefit thereof was required to file a declaration in Form SVLDRS-1. Thereafter, the declaration would be verified by the designated committee and Form SVLDRS-3 would be issued quantifying the amount payable. Initially, as per the Scheme, the declaration in Form SVLDRS-1 ought to have been submitted on or before 31.12.2019 and the payment of the amount determined under SVLDRS-3 had to be made within a period of thirty days from the date of its issue. Subsequently, vide Notification dated 01/2020-Central Excise-Non Tariff, dated 14.05.2020, Rule 7 was amended by extending the period for payment by substituting the following words:
“In the said rules, in rule 7, for the words “within a period of thirty days from the date of its issue”, the words, figures and letters “on or before the 30th day of June, 2020” shall be substituted.”
13. As per Section 127(7) of the Finance (No.2) Act, 2019, any writ petition or appeal or reference pending before any High Court or the Supreme Court against any order in respect of the tax dues shall be withdrawn by the declarant and furnish such proof of withdrawal to the designated committee, in such manner as may be prescribed, along with the proof of payment referred to in sub-section (1). Thereafter, Form SVLDRS-4 will be issued, discharging the declarant from any liability as contemplated under sub-section (8) of Section 127 of the Act, within thirty days of the said payment and submission of the said proof, whichever is later.
14. The object of the Finance (No.2) Act, 2019 is to put a quietus to the disputes pending for a long time. The provisions are framed in such a way that they comprise of substantial and procedural compliances. The substantial conditions are payment and withdrawal. However, intimation to the authority about the withdrawal of the case, is procedural in nature.
15. The main contention of the respondents is that the request for issuance of discharge certificate has to be made only electronically and since the Scheme has been closed, it is impossible for the respondents to process the request for the discharge certificate.
16. It is not in dispute that the petitioner had made the payment in time and had also placed a request for the earlier listing of the case before this Court as early as on 16.07.2020.
17. Section 127(8) of the Finance (No.2) Act, 2019 reads as under: “(8) On payment of the amount indicated in the statement of the designated committee and production of proof of withdrawal of appeal, whenever applicable, the designated committee shall issue a discharge certificate in electronic form, within thirty days of the said payment and production of proof.”
18. Rule 9 of the Scheme reads as under:
“9. Issue of discharge certificate.- The designated committee on being satisfied that the declarant has paid in full the amount as determined by it and indicated in Form SVLDRS-3, and on submission of proof of withdrawal of appeal or writ petition or reference referred to in rule 8, if any, shall issue electronically in Form SVLDRS-4 a discharge certificate under sub-section (8) of section 127 within thirty days of the said payment and submission of the said proof, whichever is later:
Provided that in a case where Form SVLDRS-3 has not been issued by the designated committee by virtue of the proviso to subrule (2) of rule 6, the discharge certificate shall be issued within thirty days of the filing of declaration referred to in sub-rule (1) of rule 3.”
19. Section 127(8) and Rule 9 mandate that the discharge certificate contemplated under sub-section (8) of Section 127 must be issued within 30 days of the said payment and submission of the said proof, whichever is later. The scheme does not provide any timeline for withdrawal of the cases and has mandated a timeline only for payment which also has been held to be only directory in M/s.R.R. Housing (India) Pvt. Ltd. vs. the Designated Committee (SVLDRS) by this Court.
20. It is pertinent to mention here that the Scheme was in force when the devastating Covid pandemic resulted in the Government being forced to impose a lock down. The Hon’ble Apex Court considering the extraordinary circumstances, passed orders in Suo Motu Writ Petition (Civil) No.3/2020, dated 23.03.2020 reported in 2020 (5) TMI 418 – SC, suspending the period of limitation applicable under various enactments. The suspension was in force till 28.02.2022, and the Hon’ble Apex Court ultimately granted a further period of 90 days in cases where the limitation would have expired during the period from 15.03.2020 to 28.02.2022.
21. In the present case, it is not in dispute that the payment was within time and the petitioner had also taken steps for withdrawal of the CMA when the scheme was in force. The petitioner had promptly placed a request before this Court for withdrawing the Civil Miscellaneous Appeal. However, due to Covid-19 pandemic, the matter could be listed only on 16.09.2021, and the petitioner cannot be found fault with or penalised for the same.
22. The legal maxim actus curiae neminem gravabit is squarely applicable in the circumstances of the present case. The maxim embodies the settled principle that an act of the Court shall prejudice no person. In this regard, useful reference may be made to the judgment of the Hon’ble Supreme Court in Mithilesh Kumari and others vs. Prem Behari Khare reported in MANU/SC/0318/1989, wherein the said principle was recognized and applied. The relevant paragraph of the said judgment reads as follows:
“26. ………….. As the maxim goes, actus curiae neminem gravabit. Nobody should suffer for an act of the court….. ”
23. Similarly, the Supreme Court in the case of A R. Antulay vs. R.S.Nayak and another, reported in (1988) 2 SCC 602, held as follows:
“81. ………. It has been said long time ago that “Actus Curiae Neminem Gravabit”-an act of the Court shall prejudice no man. This maxim is founded upon justice and good sense and affords a safe and certain guide for the administration of the law.
24. The request for withdrawal was made during the first wave of the pandemic, which is well within the period when the Scheme was in force. Though the Scheme expired at the end of December 2020 for other areas excluding Jammu & Kashmir and Ladakh, for which, it was extended till February 2021. The petitioner had already taken steps for withdrawal of the CMA during the subsistence of the Scheme. The listing of the case was beyond the control of the petitioner and was within the domain of this Hon’ble Court. In view of the orders passed by the Apex Court suspending the period of limitation under various laws, the same would also encompass the scheme propounded under the Finance (No.2) Act, 2019 and the benefit should be extended to assessees who have made the payments.
25. As rightly contended by the learned counsel for the petitioner by placing reliance upon the judgment of this Court in M/s.Sir Gujan Builder versus the Designated Committee and others, reported in 2022 (5) TMI 432 – MADRAS HIGH COURT, once the requirements are completed in time, by settlement of the account and withdrawal of the case, the designated committee is bound to process the request either manually or otherwise.
26. It is settled law that when concessions are to be granted on certain conditions and when the petitioner has satisfied the essential conditions, the procedural formalities cannot be cited to deny the relief. In the present case, intimation to the authority about the withdrawal of the case is only a procedural requirement, therefore, according to this Court, the same should not come in the way of the petitioner, who has otherwise complied with the legal requirements. Therefore, the respondents ought to have processed the request of the petitioner for the discharge certificate in SVLDRS-4, instead of proceeding with the adjudication.
27. In view of the above,, the impugned orders are set aside and the first respondent is directed to process the request for SVLDRS-4 manually and issue discharge certificate within four weeks from the date of receipt of a copy of this order. As a consequence, the proceedings dated 21.11.2023 is unsustainable and hence, set aside. Accordingly, the Writ Petition is allowed. WMP.No.5817, 609, and 610 of 2024 are allowed and other connected miscellaneous petitions are closed.
