Case Law Details
UITC India Pvt. Ltd. Vs Union of India (Orissa High Court)
Petitioner filed applications under the SVLDR-1 for availing the benefit of the said Scheme. The Department however rejected the applications on the ground ineligibility observing that in terms of Section 125(1)(h) of the Finance Act, 2019 “the product falling under the Fourth Schedule to the CE Act is not eligible for this Scheme”.
The above interpretation placed by the Department on Section 125(1)(h) of the Finance Act, 2019 appears not to be correct. No doubt that the Petitioner’s product (Process Oil) falls under the Fourth Schedule to the CE Act but as far as the rate of duty is concerned, as already noticed, what is indicated is ‘…..’. The said ‘….. ’ has been defined as indicating that in respect of the goods against which the above ‘…..’ is found, excise duty is not leviable at all. Therefore, there is no question of the Petitioner’s product being outside the purview of the SVLDR Scheme read with the Fourth Schedule to the CE Act. The Court, therefore, rejects the plea of the Department that the Petitioner would be ineligible for the benefit of the SVLDR Scheme.
In that view of the matter, the Court quashes the order dated 16th December, 2019 and other similar orders issued by the Department (all of which have been assailed by the Petitioner in the writ petitions) rejecting the SVLDR applications of the Petitioner since they are based on an erroneous interpretation of not only the SVLDR Scheme but also Section 125(1)(h) of the Finance Act.
A direction is issued to the Department to process the Petitioner’s applications for amnesty under the SVLDR Scheme and after hearing the Petitioner on a date to be informed to the Petitioner at least one week in advance and to pass a reasoned order on the Petitioner’s applications under the said SVLDR Scheme within a period of four weeks thereafter and, in any event, on or before 13th February, 2023 with the order being communicated to the Petitioner within a week thereafter. No further directions are called for.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. Aggrieved by the denial of the benefit of the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 (SVLDR Scheme) incorporated in Chapter-V of the Finance Act, 1994 by invoking Section 125(1)(h) of the Finance Act (No.2) Act of 2019, the Petitioner has filed these petitions.
2. The background facts are that the Petitioner, a company having its registered office in Sundergarh in Odisha, is engaged in the manufacturing of goods falling under Chapter-27 of the erstwhile First Schedule of the Central Excise Tariff Act, 1985 (CET Act) till the coming into force of the Goods and Services Tax (GST) regime with effect from 1st July, 2017. The Petitioner manufactures (i) Light Creosote Oil falling under Chapter sub-heading 2707 9100, (ii) Coal Tar Oil falling under Chapter sub-heading 2707 9900, (iii) PCM (U-2000) falling under Chapter sub-heading 2707 9900, (iv) Anthracene Oil falling under Chapter sub-heading 2700 9100, (v) Heavy Creosote Oil falling under Chapter sub-heading 2707 9100, (ii) Coal Tar Pitch falling under Chapter sub-heading 2708 1090, (vii) Napthalene Balls/ Powder falling under Chapter sub-heading 2707 4000, (viii) Dehydrated Coal Tar falling under Chapter subheading 2706 0010, (ix) Process Oil falling under Chapter subheading 2710 1990, (x) Coal Tar Sludge falling under Chapter subheading 2706 0010, (xi) Crude Napthalene falling under Chapter sub-section 2707 4000, (xii) Pressed Napthalene falling under Chapter sub-heading 2707 4000, amongst others under the First Schedule of the CET Act, as it existed prior to 1st July, 2017 i.e., till the date of introduction of GST regime.
3. The Petitioner then got registered under the GST Act and obtained a GST Registration number. After the coming into force of the GST regime, there have been amendments to the Central Excise Act, 1944 (CE Act), Customs Act, 1962, the Finance Act and the Central Sales Tax Act. As far as the CE Act is concerned, excise duty is leviable only on petroleum products and tobacco products, whereas the CET Act has been omitted altogether. Even under CST Act, CST is leviable only on petroleum products and alcoholic liquor. Certain cesses have also been abolished. A Fourth Schedule has been incorporated in the CE Act for goods falling under Chapters 24 and 27, i.e., Tobacco and manufactured Tobacco substitutes and Mineral Fuels, Mineral Oil and products of their distillation.
4. All the goods covered by Chapters 24 and 27 of the erstwhile First Schedule of the CET Act are not included ipso facto in the Fourth Schedule of the CE Act. Only certain goods of those two Chapters have been included. As far as the Petitioner is concerned, one of its manufactured products, i.e., Process Oil falling under Chapter sub-heading 2710 1990 of the erstwhile CET Act has been incorporated in the Fourth Schedule of the CE Act. However, when it comes to specifying the rate of duty under the entry ‘other’ under 2710 1990 under the column ‘Rate of Duty’ five dots, i.e., ‘…..’ has been indicated.
5. In the additional notes to the Fourth Schedule of the CE Act ’ has been explained as denoting “that Central Excise duty under this Schedule is not leviable on such goods”.
6. Mr. C.R. Das, learned counsel appearing for the Petitioner, has drawn attention to other entries in the Fourth Schedule which either clearly specify the rate of duty or in some instances the rate of duty is shown as ‘NIL’. As regards certain other entries, the rate of duty is specified as ‘…..’. As far as the Petitioner is concerned, its product, i.e., Process Oil admittedly falls under Chapter subheading 2710 1990 and in terms of the additional notes, excise duty on such goods ‘is not leviable’.
7. After the introduction of the SVLDR Scheme in 2019 incorporated in the Finance Act, 2019 under Chapter V, 1st September, 2019 was appointed as the date of the commencement of the Scheme. Under Section 125(1) of the Scheme, all persons shall be eligible to make a declaration thereunder except the following:
“(a) to (g) …..
(h) Persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944”. (emphasis supplied)
8. The expression ‘excisable goods’ occurring in Section 125(1)(h) can only mean goods on which excise duty is payable. This is further clarified by a Circular dated 27th August, 2019 issued by the Central Board of Indirect Taxes and Customs where it has been explained as under:
“2. As may be appreciated, this Scheme is endeavour to unload the baggage relating to the legacy taxes viz. Central Excise and Service Tax that have been subsumed under GST and allow business to make a new beginning and focus on GST. Therefore, it is incumbent upon all officers and staff of CBEC to partner with the trade and industry to make this Scheme a grand success.
3. Dispute resolution and amnesty are the two components of this Scheme. The dispute resolution component is aimed at liquidating the legacy cases locked up in litigation at various forums whereas the amnesty component gives an opportunity to those who have failed to correctly discharge their tax liability to pay the tax dues. As may be seen, this Scheme offers substantial relief to the taxpayers and others who may potentially avail it. Moreover, the Scheme also focuses on the small taxpayers as would be evidence from the fact that the extent of relief provided is higher in respect of cases involving lesser duty (smaller taxpayers can generally be expected to face disputes involving relatively lower duty amounts).
…………..
6. It may be appreciated that the ambit of this Scheme is wide enough to cover all kinds of pending disputes, including call book cases, except for a few categories. The exclusions are firstly, cases in respect of goods that are still subject to levy of Central Excise such as specified petroleum products and tobacco i.e., goods falling in the Fourth Schedule to the Central Excise Act, 1944.”
9. Therefore, when we speak of ‘excisable goods’ it only refers to goods that are subject to levy of some duty of central excise.
10. A Press release issued on 22nd August, 2019 explained that the amnesty component of the SVLDR Scheme “offers an opportunity to the taxpayers to pay the outstanding tax and be free of any other consequence under the law. There is also a complete amnesty from prosecution.”
11. Except Process Oil falling under sub-heading 2710 1990 under the Fourth Schedule of the CE Act, all the other goods of the Petitioner are outside its purview. However, by virtue of the explanation offered in the additional notes to the Fourth Schedule, central excise duty is not at all leviable on Process Oil.
12. It is in this background that the Petitioner filed applications under the SVLDR-1 for availing the benefit of the said Scheme. The Department however rejected the applications on the ground ineligibility observing that in terms of Section 125(1)(h) of the Finance Act, 2019 “the product falling under the Fourth Schedule to the CE Act is not eligible for this Scheme”.
13. The above interpretation placed by the Department on Section 125(1)(h) of the Finance Act, 2019 appears not to be correct. No doubt that the Petitioner’s product (Process Oil) falls under the Fourth Schedule to the CE Act but as far as the rate of duty is concerned, as already noticed, what is indicated is ‘…..’. The said ‘….. ’ has been defined as indicating that in respect of the goods against which the above ‘…..’ is found, excise duty is not leviable at all. Therefore, there is no question of the Petitioner’s product being outside the purview of the SVLDR Scheme read with the Fourth Schedule to the CE Act. The Court, therefore, rejects the plea of the Department that the Petitioner would be ineligible for the benefit of the SVLDR Scheme.
14. In that view of the matter, the Court quashes the order dated 16th December, 2019 and other similar orders issued by the Department (all of which have been assailed by the Petitioner in the writ petitions) rejecting the SVLDR applications of the Petitioner since they are based on an erroneous interpretation of not only the SVLDR Scheme but also Section 125(1)(h) of the Finance Act.
15. A direction is issued to the Department to process the Petitioner’s applications for amnesty under the SVLDR Scheme and after hearing the Petitioner on a date to be informed to the Petitioner at least one week in advance and to pass a reasoned order on the Petitioner’s applications under the said SVLDR Scheme within a period of four weeks thereafter and, in any event, on or before 13th February, 2023 with the order being communicated to the Petitioner within a week thereafter. No further directions are called for.
16. The writ petitions are disposed of in the above terms.
