No rejection of SVLDRS application if opportunity of hearing was not provided to assessee

E.I. Dupont India Private Limited Vs Designated Committee (Gujarat High Court)

Conclusion: Since in statement in Form SVLDRS­2, no specific notice for affording the opportunity of hearing was given to assessee with regard to variance of quantified amount, therefore, the officer was not justified in rejecting the application under Form SVLDRS­2A stating inter alia that, the application was not eligible under the category of investigation, enquiry or audit.

Held: Assessee-company was engaged in manufacturing of polymers, crop protection products insecticides and fungicides, herbicides, resins etc. and was carrying its manufacturing activities from its unit situated at Gujarat. On account of introduction of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by the Central Government with object to bring an end to pending litigation under the indirect tax regime, assessee company chose to avail the benefit under the Scheme, 2019 and  agreed with the demand as estimated by the respondent No.1 under the statement vide Form SVLDRS­2A dated 10.02.2020. Thereafter, the officer rejected the application stating inter alia that, the application was not eligible under the category of investigation, enquiry or audit. In the aforesaid factual backdrop, assessee being aggrieved had come up before this Court for quashing of the order of the authority in rejecting the application (declaration) filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 for settlement of excise duty as conveyed by letters. It was held that as per the provision, if declarant is not agree with the amount determined by the Designated Committee, he having given right to hearing to explain why he is not agree with the estimated amount determined by the Designated Committee. In the instant case, there was no dispute with regard to estimated amount determined by the Designated Committee. Notice for hearing was for the limited issue with regard to agreement or disagreement with the estimated amount determined by the authority. Record showed that, in statement in Form SVLDRS­2, no specific notice for affording the opportunity of hearing was given to the writ applicant with regard to variance of quantified amount. Thus, the stance of the authority that the statement in Form SVLDRS­2 had been issued for the clarification with regard to the quantification amount was not justified. The action of the officer in issuing statement in Form SVLDRS­2 was in contravention of the Section 127 (1) read with Rule 6 (2).

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

1. We have heard learned Counsel Mr. Sujit Ghosh, assisted by Mr. Paritosh R. Gupta, learned advocate for M/s. Gupta Law Associates for the writ applicant and Mr. Priyank Lodha, learned Standing Counsel appearing for the Respondents.

2. By filing this petition under Article 226 of the Constitution of India, the writ applicant seeks quashing of the order of the respondent No.1 in rejecting the application (declaration) filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinafter referred to as “Scheme, 2019”) for settlement of excise duty as conveyed by letters dated 05.05.2020 and 11.06.2020 and further challenging the legality of the statement issued in Form­SVLDRS­2 dated 07.02.2020 issued by respondent No.1 and seeks further direction to process the declaration made by the petitioner in Form SVLDRS­1.

3. The reliefs as sought for by the petitioner read as under:

“(a) issue a writ of Certiorari, or a writ in the nature of Certiorari calling for the records in the impugned statement in Form SVLDRS­2 dated 07.02.2020 to quash the same as illegal and pass such further orders;

(b) issue a writ of Certiorari, or a writ in the nature of Certiorari calling for the records in the first impugned rejection letter dated 05.02..2020 to quash the same as illegal and pass such further orders;

(c) issue a writ of Certiorari or a writ in the nature of Certiorari calling for the records in the second impugned rejection letter dated 11.06.2020 to quash the same as illegal and pass such further orders;

(d) issue a writ of Mandamus, or direction as the Court deems fit to the Respondent No.1 to process the petitioner’s declaration in Form SVLDRS­1 in accordance with law without being influenced by the objections raised in impugned statement in Form SVLDRS­2 dated 07.02.2020 and the first impugned rejection letter dated 05.05..2020 as also the second impugned rejection letter dated 11.06.2020 and pass necessary orders without being constrained by the time limits prescribed under the Finance Act, 2019 in relation to the SVLDRS Scheme.

4. Briefly stated the facts of the case are that, the petitioner company is engaged in manufacturing of polymers, crop protection products insecticides and fungicides, herbicides, resins etc. The petitioner is carrying its manufacturing activities from its unit situated at Plot No.11, Manjusar, Savli, GIDC, Tundav, Vadodara, Gujarat. With respect to the manufacturing activities, the audit proceedings were carried out for the period from June 2014 to June 2017 by the office of the Commissioner, CGST and Central Excise. During the audit, some discrepancies were found and accordingly, on 28.06.2019, the petitioner was issued a letter bearing F.No.V(a)21­ 224/1A/E.I.Dupont/C­V/L­1/18­19, directing to discharge the tax liability with applicable interest and penalty as mentioned in the aforesaid letter. The relevant paragraphs i.e. 3, 4, 5, 6 and 7 of the letter read as under:

“3. During the audit period, you have made stock transfer of the finished goods to your various depots under Central Excise invoices and sold the same through the depots at higher rate but not discharged duty liability on the differential value as petitioner Section 4 of the Central Excise Act, 1944. On the basis of details provided by you E­mail, the differential duty on the goods sold through various Depot during the audit period comes to Rs.2,41,34,126/­, which is required to be paid by you (Details are attached as per Annexure­C). You are requested to submit the sample copies of Sales Invoices issued from the factory corresponding to the Depot Sales Invoices as mentioned in the mailed Excel Sheet.

4. You have not paid the Central Excise Duty on batch wise samples drawn for in­house testing, which were retained and destroyed subsequently. The excel sheet containing the details of batch wise samples drawn for in­house testing was E­ mailed and as per the details furnished by you, the total duty liability comes to Rs.3,65,913/­(Details are attached as per Annexure­D). You are requested to submit sample copies of related documents, if any.

5. During the course of verification of Sales Bills it is noticed that you have cleared scrap of used packaging materials (viz. Empty MS/Plastic drums/Bottle, corrugated, cartons, wooden pellets etc.) without payment of any Central Excise Duty. As per Rule 6 of Cenvat Credit Rules,2004 as amended vide Notification No.6/2015­CE­NT dated 01.03.2015, you were required to pay Central Excise Duty @ 6 %. As per details provided by you e­mail, the duty liability on such clearance comes to Rs.7,32,181/­ as detailed in Annexure­E. You are requested to submit the sample copies of the invoices for such clearance.

6. During sample check of the cenvat credit documents for (Dec­16 and Apr­Jun, 2017), it is noticed that you have availed excess cenvat credit of Rs.62,831/­ as detailed in Annexure­F.

7. Please provides the details of input service Credit availed, if any in respect of following input services for the audit period. (If not please submit the declaration).

(i) Cenvat Credit taken in respect of Real Estate Agent Service;

(ii) Cenvat Credit taken in respect of Club Membership Fee.

(iii) Cenvat Credit taken on Erection commissioning or installation & Construction service.

(iv) Cenvat Credit taken in respect of Outdoor catering, Hotel accommodation.

(v) Cenvat Credit taken in respect of Outward Freight.

(vi) Any other input service credit which is not related to manufacturing of goods.”

5. On account of introduction of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by the Central Government with object to bring an end to pending litigation under the indirect tax regime, the petitioner company chose to avail the benefit under the Scheme, 2019 and filed its declaration in Form SVLDRS­1 dated 21.12.2019 seeking the tax benefit to the extent of 50 % of the total tax dues of Rs.2,52,95,051/­ as quantified and intimated to the petitioner vide letter dated 28.06.2019. The category under which the application (declaration) filed was investigation, enquiry or audit and it was disclosed that, Rs.1,22,18,781.05/­ as being the amount payable for availing the benefit under the Scheme, 2019.

6. The respondent No.1 in exercise of the powers conferred by sub­section (2) of Section 127 of the Finance (No.2) Act, 2019, determined the amount of Rs.1,22,18,781.50/­ estimated to be payable by the petitioner by issuing Form SVLDRS­2 under the Scheme, 2019.

7. The petitioner agreed with the demand as estimated by the respondent No.1 under the statement vide Form SVLDRS­2A dated 10.02.2020.

8. The respondent No.1 rejected the application vide letter dated 05.05.2020, stating inter alia that, the application was not eligible under the category of investigation, enquiry or audit. In response to the rejection vide letter dated 05.05.2020, the petitioner filed its objections vide letters dated 21.05.2020 and 10.06.2020 stating inter alia, that, the proposed ineligibility was not communicated to the company under the impugned statement and there was no dispute between the petitioner and respondent No.1 with regard to the amount payable. However, respondent No.1 vide second rejection letter dated 11.06.2020, reiterated the same facts communicated in their earlier letter dated 05.05.2020.

9. In the aforesaid factual backdrop, the writ applicant being aggrieved by the actions of the respondent No.1 has come up before this Court by way of present writ application seeking the relief as indicated above.

10. Respondent No.1 in their affidavit in reply taken a stand that, the letter dated 28.06.2019 was an interim letter and quantification of duty involved was still not finally determined as there were further development of draft audit report dated 20.09.2019 and there was a variance between the amount mentioned in the interim letter and the draft audit report. In this circumstances, the amount determined in the letter dated 28.06.2019 cannot be construed as qualification of “tax dues” prior to 30.06.2019. In nut­shell, stand of the respondent No.1 is that, the quantum of tax dues payable by the petitioner was not finalized before 30.06.2019, as a result, the petitioner is ineligible to make a declaration under the Scheme, 2019.

11. Learned Counsel Mr. Sujit Ghosh appearing for the writ applicant raised the following contentions :-

(a) It is submitted that, the respondent No.1 has acted contrary to the objective of the scheme and the petitioner is eligible to make declaration. Referring to the Section 125 (1)(e) of the Finance Act, 2019, it is submitted that, before 30.06.2019, the amount of duty has been quantified by communication/letter dated 28.06.2019 and according to the Circular dated 27.08.2019, written communication would include a letter intimating duty demand. Therefore, before the cut­off date, when authority vide their letter dated 28.06.2019 intimated the petitioner to discharge its tax liability, the petitioner is legally eligible to avail the benefit under the Scheme, 2019. Mr. Ghosh in this regard referred to and rely upon the decision of the Bombay High Court in the case of Saksham Facility Services Vs. Union of India [2020­VIL­620­Bom.­ST], wherein, it was held that, the quantification will include a letter intimating duty demand and not necessarily the amount crystallized following adjudication.

(b) Placing reliance on the decision of Air Link Communication Vs. Union of India in SCA No.10702/2020, Mr. Ghosh would submit that, the eligibility will have to be determined as on the cut­off date and any subsequent corrections ought not to prejudice the claimant. In this regard, he submitted that the respondent No.1 had taken into account the amount mentioned in the draft audit report dated 20.09.2019. Therefore, subsequent developments in terms of the draft audit report dated 20.09.2019 cannot be a ground for rejection of the application;

(c) It is further submitted that, the letter dated 28.06.2019, cannot be termed as interim letter. Referring to the letter dated 28.06.2019 and subsequent audit report as well as show­cause notice, it is submitted that, neither in the letter nor any communication throughout the proceedings have addressed the said letter as an interim letter. Therefore, the amount quantified by the letter dated 28.06.2019 would construe as quantification of “tax dues” prior to 30.06.2019 accordingly, the communications dated 05.05.2020 and 11.06.2020 rejecting the application were without any authority of law and contrary to the provisions of the Scheme, 2019, which requires to be quashed and set aside;

(d) Mr. Ghosh would further submit that, the statement in Form SVLDRS­2 is in complete contravention of the provisions of the Scheme, 2019. In this regard, Mr. Ghosh referred to the Section 127 (1) of the Finance Act read with Rule 6(2) of the SVLDRS Rules, further submits that, if the amount estimated by the designated committee, exceed the amount declared by the declarant, then the committee is required to issue Form SVLDRS­2 indicating the amount payable, as per Section 127 (2) of the Finance Act read with Rule 6(3) of the SVLDRS Rules. He further submits that, the amount estimated by the Designated Committee was Rs.1,22,18,781.05/­and the same was declared by the petitioner in Form SVLDRS­1 and accordingly, the petitioner agreed with the demand estimated by the respondent No.1 by submitting Form SVLDRS­2A dated 10.02.2020. Therefore, it is submitted that, as per Section 127 (2) of the Finance Act, the Designated Committee is empowered to issue Form SVLDRS­2 only when the estimated amount exceed the amount declared by the applicant. It is further submitted that, the amount declared by the petitioner in Form SVLDRS­1 matches with the amount payable estimated by the Designated Committee. Therefore, as per the mandate of the Scheme, the issuance of Form SVLDRS­2 by the authority is in utter disregards of the provisions of the Scheme and it is liable to be quashed and set aside.

(e) Mr. Ghosh would submit that when the amount declared and the amount estimated are the same, then, the Designated Committee shall have to issue Form SVLDRS­3 by operation of the legal provisions contained in Section 127 (1) of the Finance Act, 2019. Therefore, the action on the part of the respondent No.1 Authority for issuance of Form SVLDRS­2 is in contravention with the provisions of the Finance Act, 2019.

(f) Lastly, he would submit that, the rejection of the application vide order dated 05.05.2020 is in gross violation of the principles of natural justice. Referring to the Form SVLDRS­2, Mr. Ghosh would submit that, where the amount is estimated to be payable by the declarant exceeds the amount declared by the declarant, then, the authority is bound to issue Form SVLDRS­2, along with a notice of opportunity of personal hearing. Mr. Ghosh further submits that, while issuing Form SVLDRS ­2, the facts of variance in the amount of draft audit report dated 20.09.2019 and letter dated 28.06.2019 ought to have put to the notice of the writ applicant and the same should require to be reflected in the Form SVLDRS. In such circumstances, the petitioner was not offered any opportunity of hearing or the opportunity to place the documentary evidence to substantiate the new grounds.

In view of the aforesaid submissions, Mr. Ghosh, the learned Counsel appearing for the petitioner would submit that, there is merit in the petition and the same may be allowed as prayed for.

12. On the other hand, Mr. Priyank Lodha, learned standing counsel appearing for the respondent No.1 would submit that, the petitioner’s application was not eligible under the category of Investigation, Enquiry or audit. Referring to the draft audit report dated 20.09.2020 and subsequent show cause notice, it is submitted that, the letter dated 28.06.2019 was an interim letter and at the relevant time, the amount of payable tax was not finally determined as the investigation was not concluded. In this circumstances, it is submitted that, the application is not eligible under the category of investigation, enquiry or audit. Mr. Lodha would further submit that, the Form SVLDRS­2 was issued to clarify whether the applicant fulfilled the criteria of category or not. Reference was made to the Form SVLDRS­2 to show that, the ample opportunity of hearing was afforded to the petitioner, however, the petitioner could not clarify the note appended with the Form SVLDRS­2 with regard to variance of the amount mentioned in the draft audit report and letter dated 28.06.2019. Therefore, no any error had been committed by the authority on the ground of eligibility while rejecting the application.

13. Mr. Lodha would contend t hat, in the aforesaid circumstances, the petition being devoid of merits and the same may be dismissed.

14. We have heard learned counsel appearing for the respective parties at length and perused the materials placed on record.

15. Before adverting to the rival contentions advanced by both the sides, it is relevant to refer to the relevant provisions and procedure to be followed under the Scheme, 2019.

a) The scheme was introduced by the Finance (No.2) Act, 2019 and notified on 01.08.2019 and was brought into force by way of Notification dated 21.08.2019.

b) The scheme was introduced with the objective of resolution and settlement of legacy cases of Central Excise and Services Act.

c) Sections 120 to 135 under Chapter 5 of the Act, contains the definition, relief available under the Scheme, issuance of statement by the Designated Committee.

d) Under the scheme, the term “amount declared” as defined under Section 121A, means, the amount declared by the declarant under Section 125 of the Act.

e) The term “amount estimated” has been defined under Section 121(d) of the Act, which means the amount estimated by the Designated Committee under Section 127 of the Act.

f) The term “amount payable” as defined under Section 121 (e) means, the final amount payable by the declarant as determined by the Designated Committee and as indicated in the statement issued by it, in order to eligible for the benefits under the Scheme and shall be calculated as the amount of tax dues less the tax reliefs.

g) The term “quantified” defined under Section 121 (r), with its cognate expression means, a written communication of amount of duty payable under the indirect tax enactment.

h) For the purpose of filing the statement, the quantification of amount is necessary. Thus, the term “tax dues” also been clarified under Section 123 (c), which reads as under:

“123(c) – Where an inquiry or investigation or audit is pending against the declarant, the amount of duty payable under the indirect tax enactment, which has been quantified on or before 30th June, 2019.”

i) Section 125 of the Act deals with eligibility of person to make a declaration under the Scheme, which reads as under :

“125. (1) All persons shall be eligible to make a declaration under this Scheme except the following, namely:—

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;

(b) who have been convicted for any offence punishable under any provision of the indirect tax enactment for the matter for which he intends to file a declaration;

(c) who have been issued a show cause notice, under indirect tax enactment and the final hearing has taken place on or before the 30th day of June, 2019;

(d) who have been issued a show cause notice under indirect tax enactment for an erroneous refund or refund;

(e) who have been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before the 30th day of June, 2019;

(f) a person making a voluntary disclosure,—

(i) after being subjected to any enquiry or investigation or audit; or

(ii) having filed a return under the indirect tax enactment, wherein he has indicated an amount of duty as payable, but has not paid it;

(g) who have filed an application in the Settlement Commission for settlement of a case;

(h) persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944.

(2) A declaration under sub­section (1) shall be made in such electronic form as may be prescribed.”

j) Section 127 of the Act empowers the Designated Committee to issue the statement in a prescribed form as provided under the Sabka Vikas (Legacy Dispute Resolution) Scheme Rules, 2019, which reads as under:

“127. (1) Where the amount estimated to be payable by the declarant, as estimated by the designated committee, equals the amount declared by the declarant, then, the designated committee shall issue in electronic form, a statement, indicating the amount payable by the declarant, within a period of sixty days from the date of receipt of the said declaration.

(2) Where the amount estimated to be payable by the declarant, as estimated by the designated committee, exceeds the amount declared by the declarant, then, the designated committee shall issue in electronic form, an estimate of the amount payable by the declarant within thirty days of the date of receipt of the declaration.

(3) After the issue of the estimate under sub­section (2), the designated committee shall give an opportunity of being heard to the declarant, if he so desires, before issuing the statement indicating the amount payable by the declarant:

Provided that on sufficient cause being shown by the declarant, only one adjournment may be granted by the designated committee.

(d) After hearing the declarant, a statement in electronic form indicating the amount payable by the declarant, shall be issued within a period of sixty days from the date of receipt of the declaration.”

16. The procedure to be followed by the applicant for claiming relief under the Rules framed by the Government, which reads thus :

(a) Under the Scheme, an eligible declarant is required to electronically file a declaration in Form SVLDRS­1 as per        Section 125(1)  of the Finance Act read with Rule 3 of the Rules.

(b) Once the declaration is made by the declarant, the Designated Committee will verify the correctness of declaration as per Section 126 of the Finance Act.

(c) Where the amount estimated to be payable by the declarant as estimated by the Designated Committee equals the amount declared by the declarant, the statement in Form SVLDRS ­3 mentioning therein the particulars of the amount payable. [Rule 6(2)]

(d) Where the amount estimated to be payable by the declarant exceeds the amount declared by the declarant, then the Designated Committee shall issue Form SVLDRS­2, an estimate of amount payable by a declarant along with Notice of opportunity of personal hearing [Rule 6(3)].

(e) If the declarant wants to indicate agreement or disagreement with the estimate or wants to make written submission or waive personal hearing, he shall file electronically Form SVLDRS­2A.   Rule 4 further provides that, if declarant does not appear before the Committee for personal hearing, the Committee shall decide the matter based on available records. [Rule 4]

(f) Lastly, the Designated Committee on being satisfied that, the declarant has paid in full amount as indicated in Form SVLDRS­3, shall issue discharge certificate in Form SVLDRS [Rule 9].

17. We have considered the submissions made by both the sides and the materials on record.

18. We take notice of the following facts which are not in dispute between the parties:

(1) The audit was undertaken by the respondent No.1 for a period from June, 2014 to June 2017 and accordingly, during the course of audit, by way of communication dated 28.06.2019, the tax liability under the different head was fixed to the tune of Rs.2,52,95,051/­ and in the same letter, it was directed to discharge the same at the earliest.

(2) On the basis of amount fixed by the authority, the writ petitioner had submitted an application through online in Form SVLDRS­1 declaring an amount of Rs..1,22,18,781.50/­ as being the amount payable towards the tax.

(3) The Designated Committee under sub­section (2) of Section 127 of the Act, determined the amount Rs.1,22,18,781.05/­ payable by the petitioner, which was equivalent to the declaration made by the petitioner in statement in form SVLDRS­1. It is required to be noted that, while issuing the statement in Form SVLDRS­2, there was a note appended to the statement stating that, there was variance in the quantification of the amount under the draft audit report and letter dated 28.06.2019, which reads as under:

“Clarification require regarding quantification as amount of draft audit report is in variation from quantification letter dated 28.06.2019.”

(4) After receipt of statement in Form SVLDRS­2, the petitioner agreed with the demand estimated by the respondent No.1 and communicated its agreement vide Form SVLDRS­2 A dated 10.02.2020.

(5) The Designated Committee had rejected the application vide letter dated 05.05.2020 on the ground that, the application was not eligible under the category of investigation, enquiry or audit and the statement in form SVLDRS­2 was issued to clarify whether the applicable fulfills the criteria of category “Investigation, Enqiry or audit” and no any clarification had been provided in this regard by the writ applicant. The writ applicant had responded the decision of the rejection of the application reiterating the facts that, they had applied against the audit letter dated 28.06.2019 and there was no any mismatch in the amount declared by the writ applicant and estimated by the Designated committee by issuing statement in Form SVLDRS­2.

19. The first contention raised by the writ applicant is that, the writ applicant is eligible to make declaration under the category of investigation, enquiry or audit and had followed the statutory provision as contemplated under the Finance Act, 2019. Therefore the issue raised for our consideration whether the writ applicant was eligible to avail the benefit of the scheme under the category of investigation, enquiry or audit.

20. We take the notice of the fact that, during the course of audit undertaken at the place of the writ applicant, the respondent No.1 vide letter dated 28.06.2019 quantified the amount payable by the writ applicant, in respect of various audit’s para contained  therein and simultaneously, directed to discharge the tax liability with applicable interest and penalty at the earliest. We do not find anything from the letter that the amount quantified was an interim amount and investigation or audit was still continued. Thus, before the cut­off date i.e. 30.06.2019, the respondent No.1 had quantified and communicated the amount of duty involved during the audit undertaken by the respondent No.1. Referring to the letter dated 28.06.2019, it evident that, the respondent No.1 had directed to the writ applicant to pay the amount determined in the letter at the earliest, which shows that the amount of duty payable by the writ applicant was quantified on or before 30.06.2019. It is required to be noted that, at the time of issuing the letter dated 28.06.2019, there is no any whisper by the authority that, the amount fixed as a duty was subject to further audit. We also take the notice of the fact that, while issuing statement in Form SVLDRS­2, after considering the declaration made by the writ applicant, the amount payable Rs.1,22,18,781.05/­ determined and estimated by the authority and the same amount reflected in the impugned Form SVLDRS­2. Therefore, at the one hand, while issuing statement in Form SVLDRS­2 by the Designated Committee estimated the amount equal to the amount declared by the writ applicant in Form SVLDRS­1 i.e. Rs.1,22,18,781.05/­ and on the other hand, without any clarification, one note appended to the Statement in Form SVLDRS­2 mentioning therein that, there was a variance in the quantification of the amount under the draft audit report and letter dated 28.06.2019. If the authority did not have agreed with the amount as declared by the writ applicant, then they should not estimated the amount equal to the amount declared by the writ applicant or they could have been estimated the higher amount against the amount declared by the writ applicant.

21. Thus, in the aforesaid, we are of the view that, the communication dated 28.06.2019 would indicate that the respondent No.1 had quantified the amount by way of written communication. Referring to the Circular of the Board dated 27.08.2019, more particularly para 10 (g) of the said Circular, clarified in the context of various provisions of the Act, 2019, that, “the cases under an enquiry, investigation or audit, where the duty demand has been quantified on or before 30th day of June, 2019 are eligible under the scheme. Section 2(r) defines “quantified” as a written communication of the amount of duty payable under the indirect tax enactment. It is clarified that, such written communication will include a letter intimating duty demand; or duty liability admitted by the person during enquiry, investigation or audit or audit report etc.” Therefore, we hold that, in the instant case, the respondent No.1 had quantified the tax amount payable by the writ applicant and same was communicated by way of letter dated 28.06.2019. Thus, the tax dues were quantified on or before 30th June, 2019. In such circumstances, we have no hesitation to hold that, the writ applicant has duly complied with the eligibility criteria laid down under the SVLDRS Scheme, 2019 and the writ applicant was eligible to file an application as per the Scheme under the category of investigation, enquiry or audit.

22. The next contention raised by the writ applicant is that, the action of the respondent No.1 in issuing statement in Form SVLDRS­2 was against the provisions of the Finance Act, 2019 and Rules thereunder.

23. Before adverting to the aforesaid contention, it is necessary to refer to Section 127 of the Act. Sub­section (1) of Section 127 provides that, where the amount estimated by the Designated Committee equals the amount declared by the declarant, then, the Designated Committee shall issue a statement in Form SVLDRS­3 indicating the amount payable by the declarant. Whereas, Sub­section (2) of Section 127 provides that, where the amount estimated by the Designated Committee exceed the amount declared by the declarant, then, the committee shall issue statement in Form SVLDRS­2. In this circumstances, before insisting on payment of the excess amount or higher amount, then the Designated Committee is required to give an opportunity of hearing. The Section 127 further provides that, after hearing the declarant, a statement in electronic Form indicating the amount payable by the declarant shall require to be issued.

24. Reverting back to the facts of the present case, after filing the application in statement in form SVLDRS­1 intimating the total tax dues of Rs.2,52 95,051/­ based on the amounts quantified and communicated to the writ applicant by letter dated 28.06.2019, the net amount payable by the writ applicant was mentioned Rs.1,22,18,781.05/­and in response to the declaration, the Designated committee had estimated the same amount declared by the writ applicant and the same was confirmed by the writ applicant in issuing the statement in Form SVLDRS­2. Therefore, when the liability of tax amount estimated by the authority equal to the amount declared by the writ applicant, then, there is no reason for the authority to issue statement in Form SVLDRS­2. The respondent No.1 tried to defend the issuance of statement in Form SVLDRS­2 in their reply stating, inter alia that, the statement in Form SVLDRS dated 07.02.2020 was issued for the clarification with regard to the quantification amount was in variation with quantification letter dated 28.06.2019.

25. Referring to the statement in Form SVLDRS­2, the notice for personal hearing reflected in the Form reads as under:­

“Notice for Personal Hearing.

If the declarant does not agree with the estimated amount payable, as determined by the Designated
Committee, he is requested to appear for personal hearing before Designated Committee on 18.02.2020 at 11:00 a.m Am at office of the Commissioner, CGST, Vadodara, to explain the reasons thereof. Please submit form SVLDRS­2A in case any other date and time for personal hearing is desired.”

26. After considering the aspects as referred above with regard to opportunity for personal hearing for the explanation given by the authority, which confined to only estimated amount determined by the Designated Committee. Therefore, as per the provision, if declarant is not agree with the amount determined by the Designated Committee, he having given right to hearing to explain why he is not agree with the estimated amount determined by the Designated Committee.

27. In the instant case, there is no dispute with regard to estimated amount determined by the Designated Committee. Notice for hearing was for the limited issue with regard to agreement or disagreement with the estimated amount determined by the authority. Record shows that, in statement in Form SVLDRS­2, no specific notice for affording the opportunity of hearing was given to the writ applicant with regard to variance of quantified amount. In this circumstances, we do not agree with the stance of the respondent No.1 that, the statement in Form SVLDRS­2 had been issued for the clarification with regard to the quantification amount. In that view of the matter, we have no hesitation in holding that, the action of the respondent No.1 issuing statement in Form SVLDRS­2 is in contravention of the Section 127 (1) read with Rule 6 (2).

28. Now, let us deal with the contention with regard to the rejection of the application vide letters dated 05.05.2020 and 11.06.2020. According to the case of writ applicant, the decision of rejecting was without affording any opportunity of hearing to the writ applicant and would be in violation of principles of natural justice.

29. Before deal with the issue, let us examine the decision of rejection reflected in the impugned communications dated 05.05.2020 and 11.06.2020,

which reads as under:

“To,
M/s. E I DUPONT INDIA PRIVATE LIMITED
Plot no.11,
Manjusar, Vadodara,
Email Address:
venkat­[email protected]

Gentleman,

Subject: Intimation regarding rejection of SVLDRS application m/reg.

In reference to the above mentioned subject, it is to mention that under the Sabka Vishwa Legacy Dispute resolution Scheme, 2019 (SVLRDS) an application was filed by you with following details: ARN No.LD2712190002906 Dated­27­12­2019, Category­Investigation, Enquiry or Audit.

On verification it came to notice of Designated Committee of Vadodara­II Commissionerate that the application is not eligible under the Category of Investigation, Enquiry or Audit. Further SVLDRS 2 was issued to clarify if applicant fulfils criteria of category “Investigation, Enquiry, Audit” No Clarification has been provided by you in this regard. Hence, based on the facts of case Designated Committee­1 Vadodara­II hereby rejects your application under ARN No.LD2712190002906.

Sd/­
(Amit Kumar)
Joint Commissioner
Member, Designated Committee­I
Vadodara­II”

Date:11.06.2020

From: Sabkavishwas Vadodara­II

<[email protected]>

Sent: Thursday, June 11, 2020 12:32 PM To: Mittal, Rohit

Subject: [EXTERNAL]Ref.:Intimation regarding rejection of SVLDRS application m/reg.

Gentleman,

Sub.: Intimation regarding rejection of SVLDRS application m/reg.

Please refer the mail.

On the basis of facts, Designated Committee­1, Vadodara=II had rejected your application under ARN No.LD2712190002906 offline and same has been communicated to you (Designated Committee­1 has rejected, intimation is also attached).

There are some technical glitches in SVLDRS portal therefore, the current status of ARN No.LD2712190002906, could not be updated.

It is once again submitted that application under ARN No.LD2712190002906 is rejected by the Designated Committee­1.

This is for your information pleased.

Regards.
Superintendent.
SVLDRS.
Vadodara­II”

30. We have examined the contents of both the letters as referred to the above. We are of the view that, the decisions of rejecting the application by the respondent No.1 were in violation of principles of natural justice. It appears from the record that, no specific amount of variance being brought into notice of the writ applicant. The only remarks appended to the statement in Form SVLDRS­2 without any specification, is not sufficient to hold that, the principles of natural justice have been complied by the respondent No.1. The contents of the rejection letter would go to show that, in the absence of any clarification on the part of the Designated Committee, the application was rejected. In this circumstances, we are of the view that, no sufficient reason being assigned on the issue of variance of the amount while rejecting the application. It is required to be noted that, the amount of variance with regard to quantification having not specifically mentioned in the statement in form SVLDRS­2, nor being stated in the rejection application. Had the respondent No.1 provided the varied estimate in the statement in Form SVLDRS­2, the writ applicant would have submitted their response and sought a personal hearing. It is pertinent to note that, against the rejection of the letter dated 05.05.2020, the writ applicant had requested twice for process of the application. However, the respondent No.1 did not have assign any reason with regard to varied amount. Therefore, the whole process undertaken in this case was not fair and the mechanical rejection of the application is against the settled principles of natural justice. It is settled that, any order which has civil consequences must be passed after giving an opportunity to be heard. In this regard, we may refer to the case of Prakash Vs. State of Bihar [2009 (4) SCC 690), wherein the Apex Court has observed as under:

“If there is a power to decide and decide detrimentally to the prejudice of a person, duty to act judicially is implicit in exercise of such a power and the rule of natural justice operates in areas not covered by any law validly made. Where there is nothing in the statute to actually prohibit the giving of an opportunity of being heard, the nature of the statutory duty imposed on the decision maker itself implies an obligation to hear before deciding. Whenever an action of a public body results in civil consequences for the person against whom the action is directed, the duty to act fairly can be presumed and in such a case, the administrative authority must give a proper opportunity of hearing to the affected person.”

31. Thus, having regard to the discussion as above, we hold that, the statement in Form SVLDRS­2 dated 07.02.2020 is in contravention of the provisions of the Act and the Rules thereunder and the same deserves to be quashed and set aside and accordingly, it is quashed and set aside. Consequently, the impugned rejection letters dated 05.05.2020 and 11.06.2020 are also quashed and set aside. The Designated Committee is directed to decide the application of the writ applicant afresh after giving an opportunity of hearing to the writ applicant and take appropriate decision and pass reasoned order keeping in mind the discussions made by us in this order within 8 days from the date of receipt of this order.

32. In view of the above terms, present writ application is allowed. However, there shall be no order as to costs. In view of the order passed in the writ application, civil application (for stay) does not survive and the same stands disposed of.