Padmavathi Srinivasa Vs Joint Commissioner of GST & Central Excise (Madras High Court)
Conclusion: Authority / power to revoke or cancel the Discharge Certificate on the premise that the material particulars furnished in the Discharge Certificate was false, lied with the exclusive jurisdiction of the Designated Committee.” Joint Commissioner of GST & Central Excise could not proceed until the Sabka Vishwas Discharge Certificate Revoked by Designated Committee.
Held: Assessee-a partnership firm involved in executing works contracts, received a show cause notice in November 2019 alleging non-filing of returns and non-payment of appropriate service tax. Subsequently, the SLVDRS was introduced by the Central government to resolve long-pending disputes. Assessee filed a declaration under the Scheme for the period from April 2014 to June 2017 and paid the disclosed tax dues. A Discharge Certificate was issued on 12.07.2020. Despite this, an order of adjudication was passed on 27.03.2021, rejecting assessee’s submission that adjudication should be dropped due to their participation in the SVLDRS. The issue before the Court was whether the adjudicating authority, i.e., the Central Excise Officer, had the authority to proceed with adjudication for a period and subject for which a Discharge Certificate had been issued under the SVLDRS. Assessee filed a declaration under the Scheme for the period from April 2014 to June 2017 and paid the disclosed tax dues. A Discharge Certificate was issued on 12.07.2020. Despite this, an order of adjudication was passed on 27.03.2021, rejecting assessee’s submission that adjudication should be dropped due to their participation in the SVLDRS. Assessee argued that the subsequent order of adjudication, lacking the revocation or cancellation of the Discharge Certificate issued under the SVLDRS by the Designated Committee—the body authorised to do so—lacked jurisdiction. It was held that once the Discharge Certificate was issued by the Designated Committee it was not open to proceed with adjudication. The authority / power to revoke or cancel the Discharge Certificate on the premise that the material particulars furnished in the Discharge Certificate was false, lied with the exclusive jurisdiction of the Designated Committee. To assume Adjudicating Authority / Central Excise Officers to have the power to revoke or cancel Discharge Certificate issued by the Designated Committee which might comprise of officers superior in rank to that of the Central Excise Officers carrying out adjudication would result in distortion of Administrative / Institutional Hierarchy. In the absence of the Discharge certificate being revoked / cancelled by the Designated Committee, adjudication by the Central Excise officers could result in plurality of orders on the same subject conflicting with each other, which ought to be avoided. Therefore, the adjudicating authority’s jurisdiction was limited under the SVLDRS, and the power to revoke or cancel a Discharge Certificate lied exclusively with the Designated Committee. It was added that the adjudicating authority could not independently determine the falsity of particulars in the declaration. Therefore, the impugned order was set aside, and the writ petition was disposed of with no costs.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present writ petition is filed challenging the impugned order in Original No.11 & 12/2021 – JC dated 27.03.2021, for the period April 2014 to June 2017 on the premise that for the period 01.04.2014 to 30.06.2017 the petitioner was issued Discharge Certificate in Form No.SVLDRS-4 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 (hereinafter referred to as “SVLDRS”) and thus the impugned order of adjudication made without revoking or cancelling the Discharge Certificate by the appropriate authority is without jurisdiction.
2. The question that arises for consideration in this writ petition is whether it is open to the adjudicating authority i.e., Central Excise Officer to proceed to adjudicate for the period and the subject in respect of which a Discharge Certificate has been issued in Form No.SVLDRS4 under the Sabka Viswas (Legacy Dispute Resolution) Scheme Rules, 2019.
3. Brief Facts:
3.1. The petitioner is a partnership firm engaged in execution of works contract and obtained a registration under the provisions of erstwhile Chapter V of the Finance Act, 1994. A show cause notice No.30 of 2019 dated 11.11.2019 was issued on the premise that verification of financial documents revealed that the petitioner received income towards provision of works contract services, however, the petitioner had not filed periodical returns in form ST-3 nor have they paid appropriate service tax. The notice proposed to treat the income disclosed under the income tax return as representing the value of taxable services in the absence of contract copies, agreements, customer details, completion certificate etc., without extending any abatement. The notice also proposed to levy interest, penalty and late fee under the Finance Act, 1994.
3.2. While so, the Central government introduced a scheme viz., Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019, with an intention to close the long pending litigation in respect of certain class / categories of disputes enumerated in Section 125 of the Scheme.
3.3. The Petitioner filed a declaration under the Scheme of the tax dues payable on account of voluntary disclosure for the period 01.04.2014 to 30.06.2017 in Form SVLDRS-1 under Section 125 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019. The petitioner paid the tax dues voluntarily disclosed under the Scheme. A Discharge Certificate in Form SVLDRS-4 was issued on 12.07.2020.
3.4. Thereafter, a reply dated 02.09.2020 was also filed by the petitioner to the show cause notice dated 02.09.2020 wherein it was submitted that the petitioner had made a declaration under SVLDRS Scheme for the period in dispute, while enclosing a copy of the acknowledgment along with the detailed summary of taxes paid under the SVLDRS Scheme . The petitioner also submitted that they are eligible for abatement of 60% for the material portion involved in the execution of works contract and thus the levy of tax on the entire receipts is illegal. Apart therefrom it was also submitted that the liability of the petitioner in terms of Notification No.30 of 2012 – Service Tax dated 20.06.2012 is only to the extent of 50% of the tax liability, since the remaining 50% is to be discharged by the service receipt.
3.5 The impugned order of adjudication dated 27.03.202 1 came to be passed rejecting the submission made by the petitioner that the adjudication ought to be dropped inasmuch as the petitioner had opted under the SVLDRS Scheme, on the premise that the assessee was subjected to investigation and the amount of duty involved pursuant to the enquiry was not quantified before 30.06.2019 i.e., the cut off date under SVLDRS. It is this order which is under challenge in this writ petition.
4. It was submitted by the learned counsel for the petitioner that the impugned order of adjudication is without jurisdiction inasmuch as the respondent herein does not have the authority / jurisdiction to proceed with adjudication unless and until the Discharge Certificate is revoked or cancelled. The power / authority to revoke or cancel the Discharge Certificate is vested only with the Designated Committee constituted under the Scheme and not the respondent herein.
5. To the contrary it was submitted by the learned counsel for the respondent placing reliance upon the counter that the petitioner being ineligible to even file a declaration under the scheme in view of the fact that an investigation was pending as on 30.06.2019 and thus hit by Section 125 (f)(i), the Discharge Certificate ought to be treated as non- Reliance was placed on Section 129(2)(c) which provides that in the case of voluntary disclosure where any material or particular furnished in the declaration is subsequently found to be false within a period of one year of issue of the Discharge Certificate, it shall be presumed as if the declaration was never made. It is the submission of the learned counsel for the respondent that once the declaration contains particulars which are false, Section 129(2)(c) would automatically become operational giving rise to a statutory presumption, as if the declaration under the scheme was never made thereby enabling the authorities under the Act to proceed with adjudication. It was thus submitted that the contention of the petitioner that the Discharge Certificate ought to be revoked / cancelled before proceeding with the adjudication is without any merit.
6. Against the above background, question arises whether the respondent herein i.e., adjudicating officer has the power / authority to proceed to adjudicate in respect of a subject / matter and time with regard to which a discharge certificate has been issued by the Designated Committee on the premise that the adjudicating authority is of the view that the Declaration contains material particulars which are false.
7. In the present case the impugned order proceeds on the basis that the Discharge Certificate is obtained on the basis of false particulars furnished by the Declarant inasmuch as an investigation was initiated on 18.06.2019 when a notice was issued on 18.06.2019 wherein it was stated that verification of Service Tax payment was being conducted for the period 2014 -15 and the petitioner was called upon to produce the documents such as reconciliation statement for the taxable income between ST-3 returns and I.T. returns for the period 2014-15, Balance Sheet, Form 26AS etc. The impugned order proceeds to find that the assessee having been subjected to investigation and the amount of duty involved in the enquiry having not been quantified before 30.06.2019, the petitioner is not eligible to apply under the scheme and has proceeded to pass the impugned order of adjudication dated 27.03.2021.
8. I am of the considered view that the reasoning contained in the impugned order suffers from the following infirmities which are fatal to its validity:
(i) Lack of jurisdiction to proceed with adjudication without cancelling / revoking the Discharge Certificate – Absence of Jurisdiction with the respondent to revoke / cancel Discharge Certificate :
Before proceeding further it may be relevant to note the object of the SVLDRS Scheme as explained by the Central Board of Indirect Taxes and Customs (CBIC) in its Official Website as under :
Finance Minister Speech
GST has just completed two years. An area that concerns me is that we have huge pending litigations from pre-GST regime. More than Rs. 3.75 lakh crore is blocked in litigations in service tax and excise. There is a need to unload this baggage and allow business to move on. I, therefore, propose, a Legacy Dispute Resolution Scheme that will allow quick closure of these litigations. I would urge the trade and business to avail this opportunity and be free from legacy litigations.
Introduction :
The Sabka Vishwas (Legacy Dispute Resolution) Scheme is a one time measure for liquidation of past disputes of Central Excise and Service Tax as well as to ensure disclosure of unpaid taxes by a person eligible to make a declaration. The Scheme shall be enforced by the Central Government from a date to be notified. It provides that eligible persons shall declare the tax dues and pay the same in accordance with the provisions of the Scheme. It further provides for certain immunities including penalty, interest or any other proceedings under the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994 to those persons who pay the declared tax dues.
Objectives :
