Case Law Details
Hindustan Petroleum Corporation Ltd. Vs Union of India (Bombay High Court)
The Respondents filed Central Excise Writ Petition No. 60 of 2018 against the Petitioner and was pending before this Court. On 27/12/2019, the Petitioner opted for settling the said SVLDR scheme by filing necessary SVLDRS-1 declaration. The said application however was rejected on the same day i.e. 27/12/2019, on the ground that the application belongs to goods of Fourth Schedule.
It is vehemently submitted by the learned counsel for the Petitioner that no personal hearing was granted by the Respondents while rejecting the application filed by the Petitioner or while representations made by the Petitioner. The impugned orders are in violation of principles of natural justice.
It is not in dispute that the Petitioner had filed SVLDRS declaration form under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019. It was the case of the Petitioner that the Superior Kerosene Oil did not fall under Fourth Schedule or in any event not an excisable goods. The said application however was rejected without rendering a personal hearing to the Petitioner and only rejected with remarks on the ground of ineligibility i.e. “the application belongs to goods of Fourth Schedule”. The Petitioner thereafter made various representations to the Respondents. In the said representations it was vehemently contended by the Petitioner, as to, how the Superior Kerosene Oil did not fall under Fourth Schedule or in any event was not an excisable product. The Petitioner had also pointed out that in similar case of Superior Kerosene Oil valuation for the Petitioner, the Committee had accepted the application and issued Form 3.
The Commissioner however rejected the said representation without rendering any personal hearing to the Petitioner. It is the case of the Petitioner that if personal hearing would have been rendered by the Respondents to the Petitioner, the Petitioner would have explained their case, as to, why Superior Kerosene Oil was not excisable and thus Petitioner was eligible to apply under the said Scheme. The Petitioner also could have pointed out the said e-mail dated 26/11/2019 from Shri Navraj Goel, OSD (CX), CBIC in respect of another plant of the Petitioner at Vapi, Gujarat.
This Court in the case of Thought Blurb (supra) has dealt with the issue of as to whether any hearing is mandatory or not before passing any order on the application form under SVLDR scheme of 2019. After considering Sections 125 to 129 of the Finance Act, this Court held that before insisting on the payment of the excess amount or the higher amount, the designated committee is required to give an opportunity of hearing to the declarant. In a situation, when the amount estimated by the designated Committee is in excess of the amount declared by the declarant, an opportunity of hearing is required to be given by the designated Committee to the declarant, then it would be in complete defiance of logic and contrary to the very object of the scheme to outrightly reject an application (declaration) on the ground of being ineligible without giving a chance to the declarant to explain as to why his application (declaration) should be accepted and relief under the scheme should be extended to him. Summary rejection of an application without affording any opportunity of hearing to the declarant would be in violation of the principles of natural justice. Rejection of application (declaration) will lead to adverse civil consequences for the declarant as he would have to face the consequences of enquiry or investigation or audit.
If the Respondents would have given an opportunity to the Petitioner to produce the said communication dated 26/11/2019 and to explain as to how the Superior Kerosene Oil is not an excisable goods and as to why the Superior Kerosene Oil would not fall under the Fourth schedule, then the scenario would have been different.
Even issue of interpretation whether the Superior Kerosene Oil was an excisable product or not and whether the Superior Kerosene Oil falls under Fourth Schedule or not would have bearing on the aspect of eligibility of the Petitioner to file such declaration under the said Scheme or not and thus warrant personal hearing to the Petitioner before deciding the issue of eligibility.
In our view, the impugned order annexed at page no. 46 and order of rejection at page no. 64 is in violation of principal of natural justice and thus, it deserves to be quashed and set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
Rule.
2. Mr. Jitendra Mishra, learned counsel for the Respondents waives service of notice on behalf of the Respondents. By consent of learned counsel for the parties, petition is heard finally.
3. By this petition filed under Article 226 of the Constitution of India, the Petitioner has prayed for a writ of mandamus for restoring the SVLDRS-1 declaration filed by the Petitioner and consider the same on merit, as if the said scheme is still in existence, and regularize the same by issuing necessary discharge certificate in Form SVLDRS-4.
4. The Central Government has introduced “Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019” which was applicable for old cases, i.e. pending cases as on 30/06/2019, under Central Excise and Service Tax laws. (Hereinafter referred as the ‘said Scheme’).
5. The Respondents filed Central Excise Writ Petition No. 60 of 2018 against the Petitioner and was pending before this Court. On 27/12/2019, the Petitioner opted for settling the said SVLDR scheme by filing necessary SVLDRS-1 declaration. The said application however was rejected on the same day i.e. 27/12/2019, on the ground that “the application belongs to goods of Fourth Schedule”.
6. The Petitioner thereafter approached the Designated Committee and the Commissioner on various occasions. It was the case of the Petitioner that Superior Kerosene Oil is not an “excisable goods” under Fourth Schedule to Central Excise Act. Relevant portion from The Constitution (One hundred & First Amendment) Act, 2016 was also pressed in service in their support. It was the case of the Petitioner that the dispute pertains to valuation of Superior Kerosene Oil sold by the Petitioner to other Oil Marketing Companies like BPCL and IOCL under Public Distribution System and that Superior Kerosene Oil although mentioned in Fourth Schedule to Central Excise Act, the same is not “excisable goods”.
7. The Petitioner also sent an e-mail to the Commissioner on 29/01/2020 explaining that Superior Kerosene Oil is not excisable goods under Fourth Schedule of the Central Excise Act and also submitted various documents in support of its contentions.
8. On 05/02/2020, the Petitioner sent e-mail to CBIC and a copy to the Commissioner seeking clarification on applicability of SVLDR scheme to the Superior Kerosene Oil. However, on 06/02/2020, the Commissioner rejected the said application filed by the Petitioner on various grounds.
9. The Petitioner applied for intervention of the Member (GST-CX, ST, Legal and CV), Central Board of Indirect Taxes and Customs vide letter dated 12/02/2020 with a request to restore the application filed by the Petitioner and enable them to pay the tax dues and settle the issue under the said Scheme. There was no response to the said request made by the Petitioner. The Petitioner thus filed this Petition.
10. Ms. Padmavati Patil, the learned counsel for the Petitioner invited our attention to the Form SVLDRS-1 filed by the Petitioner annexed at Exh. ‘B’ of the petition and the order passed by the Commissioner thereon rejecting the said application on the ground that the application belongs to goods of Fourth Schedule.
11. The learned counsel for the Petitioner invited our attention to the Fourth schedule and also Section 125 of the Finance Act, 2019. She submits that in no circumstances, Superior Kerosene Oil would fall under the Fourth schedule. She submits that the said Superior Kerosene Oil is even otherwise not an excisable goods.
12. The learned counsel for the Petitioner also placed reliance on the Communication from Shri Navraj Goyal, OSD (CX) dated 26th November, 2019 dealing with the similar issue of the Vapi Gujarat plant of the Petitioner. The matter was referred to the said Central Board of Indirect Taxes and Customs. By the said e-mail addressed to Shri Ramandasani (of HPCL), the OSD (CX) clarified that only goods pertaining to products such as petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel and tobacco and tobacco products were outside the purview of SVLDR Scheme. She submitted that the Superior Kerosene Oil was thus admittedly not outside the purview of the SVLDR scheme.
13. It is vehemently submitted by the learned counsel for the Petitioner that no personal hearing was granted by the Respondents while rejecting the application filed by the Petitioner or while representations made by the Petitioner. The impugned orders are in violation of principles of natural justice.
14. The learned counsel placed reliance on the judgments of this Court in cases of Thought Blurb Vs. Union of India and Ors.1 and M/s Metro Developers Vs. Union of India and Ors.2 and Jai Sai Ram Mech and Tech India P. Ltd. Vs. Union of India and Ors.3. in support of the submission that the impugned order passed by the Respondents is in gross violation of principles of natural justice and deserves to be quashed and set aside on that ground alone.
15. Shri Jitendra Mishra, the learned counsel for the Respondents on the other hand invited our attention to the impugned order dated 27/12/2019 and submits that the Respondents have recorded the reason at the time of rejecting the said application on the ground of ineligibility as ‘the application belongs to goods of Fourth Schedule”.
16. It is submitted by the learned counsel for the Respondents that the Commissioner by the impugned order dated 06/02/2020 had communicated the reasons while rejecting the application made by the Petitioner.
17. The learned counsel for the Respondents invited our attention to the paragraph Nos.6 and 11 of the impugned order dated 06/02/2020 rejecting the representation made by the Petitioner and submits that the Petitioner did not bring to notice of the Commissioner, the communication dated 26/11/2019 from Shri Navraj Goel, OSD (CX) to the Petitioner. If the said communication would have been brought to the notice of the Respondents, the office of the Commissioner could have confirmed the same with CBIC and taken a considered view accordingly.
18. It is not in dispute that the Petitioner had filed SVLDRS declaration form under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019. It was the case of the Petitioner that the Superior Kerosene Oil did not fall under Fourth Schedule or in any event not an excisable goods. The said application however was rejected without rendering a personal hearing to the Petitioner and only rejected with remarks on the ground of ineligibility i.e. “the application belongs to goods of Fourth Schedule”. The Petitioner thereafter made various representations to the Respondents. In the said representations it was vehemently contended by the Petitioner, as to, how the Superior Kerosene Oil did not fall under Fourth Schedule or in any event was not an excisable product. The Petitioner had also pointed out that in similar case of Superior Kerosene Oil valuation for the Petitioner, the Committee had accepted the application and issued Form 3.
19. The Commissioner however rejected the said representation without rendering any personal hearing to the Petitioner. It is the case of the Petitioner that if personal hearing would have been rendered by the Respondents to the Petitioner, the Petitioner would have explained their case, as to, why Superior Kerosene Oil was not excisable and thus Petitioner was eligible to apply under the said Scheme. The Petitioner also could have pointed out the said e-mail dated 26/11/2019 from Shri Navraj Goel, OSD (CX), CBIC in respect of another plant of the Petitioner at Vapi, Gujarat.
20. This Court in the case of Thought Blurb (supra) has dealt with the issue of as to whether any hearing is mandatory or not before passing any order on the application form under SVLDR scheme of 2019. After considering Sections 125 to 129 of the Finance Act, this Court held that before insisting on the payment of the excess amount or the higher amount, the designated committee is required to give an opportunity of hearing to the declarant. In a situation, when the amount estimated by the designated Committee is in excess of the amount declared by the declarant, an opportunity of hearing is required to be given by the designated Committee to the declarant, then it would be in complete defiance of logic and contrary to the very object of the scheme to outrightly reject an application (declaration) on the ground of being ineligible without giving a chance to the declarant to explain as to why his application (declaration) should be accepted and relief under the scheme should be extended to him. Summary rejection of an application without affording any opportunity of hearing to the declarant would be in violation of the principles of natural justice. Rejection of application (declaration) will lead to adverse civil consequences for the declarant as he would have to face the consequences of enquiry or investigation or audit.
21. The principles laid down in the said judgment are to be considered by the Respondents while deciding the Petitioner’s case, as to, whether Superior Kerosene Oil which was the subject matter of the said declaration under the SVLDRS scheme, falls under Fourth schedule or not and whether the said product is at all excisable or not.
22. The Petitioner had also relied upon the communication dated 26/11/2019 from Shri Navraj Goyal, OSD (CX) clarifying that only the Petroleum Crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel and tobacco and tobacco products are under Central Excise. Based on this communication, the learned counsel for the Petitioner vehemently contended that the Superior Kerosene Oil is not an excisable product and would not fall under Fourth Schedule to the Central Excise Act, 1944.
23. If the Respondents would have given an opportunity to the Petitioner to produce the said communication dated 26/11/2019 and to explain as to how the Superior Kerosene Oil is not an excisable goods and as to why the Superior Kerosene Oil would not fall under the Fourth schedule, then the scenario would have been different.
24. Even issue of interpretation whether the Superior Kerosene Oil was an excisable product or not and whether the Superior Kerosene Oil falls under Fourth Schedule or not would have bearing on the aspect of eligibility of the Petitioner to file such declaration under the said Scheme or not and thus warrant personal hearing to the Petitioner before deciding the issue of eligibility.
25. In our view, the impugned order annexed at page no. 46 and order of rejection at page no. 64 is in violation of principal of natural justice and thus, it deserves to be quashed and set aside.
26. We accordingly pass the following order.
O R D E R
(i) Order dated 27/12/2019 and 06/02/2020 are quashed and set aside. The declaration filed by the Petitioner in Form SVLDR-1 annexed at page 46 of Petition under the SVLDR Scheme is restored to file.
(ii) The Respondents shall grant personal hearing to the Petitioner.
(iii) After granting of such opportunity of being heard, the Respondents shall pass a fresh Order without being influenced by the observations made and the conclusions drawn in the rejection order at Exh. G and letter annexed at Exh. D and letter annexed at Exh. H of the petition and in accordance with law.
(iv) The Respondents shall also consider the effect of the communication dated 26/11/2019 from Shri Navraj Goyal, OSD (CX), who clarified that only Petroleum Crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel and tobacco and tobacco products are under Central Excise and shall consider, whether in view of the said communication, the Superior Kerosene Oil would be excisable product or not and consequently, whether the Petitioner would be eligible to apply under the SVLDRS Scheme or not.
(v) The Respondents shall issue three days clear notice to the Petitioner before granting personal hearing to the Petitioner.
(vi) The Petitioner shall appear before the Respondents in response to the said notice and shall not seek any unnecessary adjournment.
(vii) The Respondents shall pass a fresh Order within eight weeks from the date of granting personal hearing to the Petitioner.
(viii) The Order that would be passed by the Respondents shall be communicated to the Petitioner within one week from the date of passing of such Order.
(ix) If the Order that would be passed by the Respondents goes adverse against the Petitioner, no coercive steps shall be taken against the Petitioner by the Respondents upto two weeks from the date of the communication of the said Order.
27. Writ Petition is allowed in aforesaid terms.
28. Rule is made absolute. No order as to costs.
29. Parties to act on the basis of an authenticated copy of this order.
