Full Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS TUESDAY, THE 30TH DAY OF NOVEMBER 2021 / 9TH AGRAHAYANA, 1943 PETITIONER : PRASANTH M.G., AGED 42 YEARS MULLAYIL HOUSE, PUTTUMANOOR, PUTHENCRUZ P.O., ERNAKULAM-682 308. BY ADVS. JOSE JACOB JAZIL DEV FERDINANTO RESPONDENTS:
1 UNION OF INDIA REPRESENTED BY SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI-110001. 2 THE ASSISTANT DIRECTOR (COST), OFFICE OF THE ASSISTANT COMMISSIONER OF CENTRAL TAX & CENTRAL EXCISE (AUDIT), COCHIN CIRCLE V, CENTRAL EXCISE BHAVAN, KATHRIKADAVU, KALOOR P.O., COCHIN-17. 3 THE ASSISTANT COMMISSIONER (SVLDRS), OFFICE OF THE COMMISSIONER OF CENTRAL TAX & CENTRAL EXCISE, KOCHI, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI-682018. 4 THE ASSISTANT COMMISSIONER, OFFICE OF THE ASSISTANT COMMISSIONER OF CENTRAL TAX & CENTRAL EXCISE, PERUMBAVOOR DIVISION, G-ARCADE, THOTTUMKAL ROAD, PERUMBAVOOR-683542. 5 THE COMMISSIONER OF CENTRAL TAX & CENTRAL EXCISE, OFFICE OF THE COMMISSIONER OF CENTRAL TAX & CENTRAL EXCISE, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI-682018.
ADV.SREELAL.N.WARRIER-R2 TO R5 ADV.P.VIJAYA KUMAR, ASGI THIS WRIT PETITION (CIVIL) HAS COME UP FOR ADMISSION ON 25.11.2021, THE COURT ON 30.11.2021 DELIVERED THE FOLLOWING:
BECHU KURIAN THOMAS, J.
======================= W.P.(C) No.21357 of 2021 --------------------------------------- Dated this the 30 th day of November, 2021
JUDGMENT
An inadvertent error while filling up a column in a form is costing the petitioner dearly. He seeks this Court's interference to render justice by issuing appropriate directions, including quashing of orders in original, imposing demand of service tax already paid by him.
2. Petitioner is engaged in the service of execution of
works contract. He committed short payment of service tax, for the financial years 2014-2015, 2015- 2016 and 2016-2017, quantified at Rs.12,30,621/-. The amount of short payment was intimated to the petitioner pursuant to an audit. Immediately on intimation,petitioner cleared the entire liability along with late fee as per four challans, copies of
which are produced as Ext.P1 and Ext.P1(a) to Ext.P1(c).
3. Subsequent to the aforesaid payment, a show cause
notice dated 14.10.2019 was issued to the petitioner proposing to impose interest and penalty under Sections 75, 76, and 77 of the Finance Act, 1994 (for short, 'the Act') for the non-payment of the service tax.
4. In the meantime, the Sabka Vishwas - (Legacy
Dispute Resolution) Scheme, 2019 [for short, 'the Scheme, 2019'] was introduced in exercise of the powers under section 132 of the Act. The Scheme, 2019 facilitated settlement of arrears and resolution of disputes relating to the erstwhile Service Tax and Central Excise Act. Even though petitioner had cleared the liability under the short assessment, disputes remained as initiated under the show- cause notice. Therefore petitioner opted for the
benefit under the Scheme, 2019 by submitting Form SVLDRS-1.
5. Petitioner claimed that while submitting Form
SVLDRS-1, an inadvertent mistake crept in, at the hands of the consultant of the petitioner. In the column specified for 'pre-deposit/any other deposit of duty' in Form SVLDRS-1, instead of filling the amount of duty of Rs.12,30,621/- already paid by the petitioner, it mistakenly was written as “Nil”. In view of the mistaken entry in the form submitted, petitioner was intimated to pay an amount of Rs.3,69,186/- towards settlement of duty, due under the Scheme, 2019.
6. Petitioner claims that, even though he had
discharged the entire liability, as evidenced by Ext.P1 challans, which was even endorsed in the show-cause notice, the department ought not to have demanded any amount from the petitioner.
7. As the mistake in the form submitted came to the
knowledge of the petitioner only when notice of demand was received, petitioner sought for rectification of the form submitted. In spite of petitioner's attempts to rectify the error in the Form SVLDRS-1 submitted by him, the same was rejected. By Ext.P10 letter dated 22.09.2021, it was informed that petitioner had failed to verify the correctness of the form submitted by him. It was further stated that petitioner's application for rectification was not filed within the stipulated time and since, the declaration under Form SVLDRS-1 submitted by the petitioner lapsed, petitioner was not entitled to get even the benefit of the Scheme, 2019.
8. It is interesting to mention that, in the meantime, pursuant to the show cause notice, the 4 th respondent proceeded to pass an order, imposing
penalty of Rs.2,000/- under Section 77, and a further penalty of Rs.12,30,621/- under Section 78(1) of the Act. Penalty under Section 76 of the Act was avoided. It is on account of the aforesaid circumstances that petitioner has approached this Court, claiming the benefit of extension of limitation as ordered by the Supreme Court In Re : Cognizance for Extension of Limitation (2021 (5) KLT 689) , for ignoring the delay in filing the rectification petition apart from challenging the
order in original, imposing penalty upon the
petitioner as per Ext.P8.
9. Adv.Jose Jacob, the learned counsel for the
petitioner contends that the Scheme, 2019 facilitates settlement of arrears of resolution of disputes and an assessee, who wishes to settle the pending tax disputes ought to be provided an option for such a settlement. The rejection of the application of the
petitioner on account of hypertechnicalities does not augur well in the nature of the scheme propounded and further, respondents themselves ought to have identified the absence of liability whatsoever. The learned counsel contended that the application to rectify Form SVLDRS-3 filed by the petitioner on 31.08.2021 was within time in view of the Supreme Court Judgment and therefore, Ext.P10, to the extent it rejects the petitioner's application for rectification, that too, on the ground of limitation is perse invalid in the eye of law.
10. I have heard Adv.Jose Jacob, the learned counsel for the petitioner, learned ASGI as well as Adv.Sreelal N.Warrier, the learned Standing Counsel for respondents 2 to 5.
11. A perusal of the documents produced before this Court shows that petitioner had cleared the entire liability of Rs.12,30,621/- as on 08.10.2018
and thereafter no liability remained other than penalty and interest, if any. However, due to the final audit report and the consequent show cause notice issued, liabilities remained due. Petitioner had offered to settle all his liabilities under the Scheme, 2019 as per the declaration submitted. Unfortunately, petitioner committed a mistake of incorporating an entry 'Nil' in Form SVLDRS-1 submitted by him in the column for pre-deposit. Consequently, when Ext.P5 Form SVLDRS-3 was issued, liability of the petitioner was shown as Rs.3,69,186/- for obtaining the benefit under the Scheme, 2019. Indisputedly, petitioner had any liability at all for the assessment years 2014-2015 to 2016-2017 and that, the entry in the column was a mistake.
12. A perusal of the Scheme, 2019 reveals that once Form SVLDRS-1 is submitted declaring the
option of the assessee, the particulars are required to be verified by the Designated Committee constituted under Rule 5 of the Scheme, 2019. The verification is to be carried out, as provided in Rule 6 of the Scheme, 2019. The said rule mandates that the Designated Committee verifies the declaration submitted based on the particulars furnished by the declarant as well as the records available with the Department.
13. Rule 6 of the Scheme, 2019 is extracted as
below: “6. Verification by designated committee and issue of estimate, etc.-(1) The declaration made under section 125, except when it relates to a case of voluntary disclosure of an amount of duty, shall be verified by the designated committee based on the particulars furnished by the declarant as well as the records available with the Department.
(2) The statement under sub-sections (1) and (4) of section
127, as the case may be, shall be issued by the designated committee electronically, within a period of sixty days from the date of receipt of the declaration under sub-rule(1) of rule 3, in Form SVLDRS-3 setting forth therein the
particulars of the amount payable: Provided that no such statement shall be issued in a case where the amount payable, as determined by the designated committee is nil and there is no appeal pending in a High Court or the Supreme Court. (3)Where the amount estimated to be payable by the declarant exceeds the amount declared by the declarant, then, the designated committee shall issue electronically within thirty days of the date of receipt of the declaration under sub-rule (1) of rule 3, in Form SVLDRS- 2, an estimate of the amount payable by the declarant along with a notice of opportunity for personal hearing.
(4) If the declarant wants to indicate agreement or
disagreement with the estimate referred to in sub-rule (3) or wants to make written submissions or waive personal hearing or seek an adjournment, he shall file electronically Form SVLDRS-2A indicating the same: Provided that if no such agreement or disagreement is indicated till the date of personal hearing and the declarant does not appear before the designated committee for personal hearing, the committee shall decide the matter based on available records.
(5) On receipt of a request for an adjournment under sub-
rule (4), the designated committee may grant the same electronically in Form SVLDRS-2B: Provided if the declarant does not appear before the designated committee for personal hearing after adjournment, the committee shall decide the matter based on available records.
(6) Within thirty days of the date of issue of Form SVLDRS-
3, the designated committee may modify its order only to correct an arithmetical error or clerical error, which is apparent on the face of record, on such error being pointed out by the declarant or suo motu by issuing electronically a revised Form SVLDRS-3.”
14. Rule 6 of the Scheme, 2019 envisages the
Designated Committee to ascertain the veracity of the particulars furnished in Form SVLDRS-1 with the records available with the Department. This mandate cannot be ignored and creates a duty upon the Designated Committee. If the verification as contemplated under Rule 6 of the Scheme, 2019 was carried out, it would have obviously revealed the mistake in the declaration submitted. The Designated Committee ought to have noticed that the declarant had already paid the duty of Rs.12,30,621/-. The mistake would have been noticed and while issuing Form SVLDRS-2 or Form
SVLDRS-3, as the case may be, entries to that effect would have been incorporated. In cases where the amount payable is nil, a statement itself is not required to be issued.
15. Thus, at the stage of verification itself, a mistake was committed by the Designated Committee and it failed to abide by the obligations imposed upon.
16. Of course, petitioner had an opportunity to
rectify the mistake by filing a rectification petition as per Section 128 of the Act which stipulated a limitation period of 30 days. Petitioner filed the application for rectification as Ext.P9. However, the same was filed only on 31.08.2021, which is beyond the period of limitation of 30 days contemplated under Section 128 of the Act.
17. Though petitioner relies upon the Supreme Court judgment in In Re : Cognizance for
Extension of Limitation (2021 (5) KLT 689) , claiming benefit of condonation of the limitation, the said question need not be considered, since I have already found that the Designated Committee itself had committed a mistake under Rule 6.
18. If the Designated Committee had properly
verified the records relating to the petitioner, it could have noticed that as per the Scheme, 2019, petitioner was not liable to pay any amount. The column for filling duty already paid, ought to have reflected Rs.12,30,621/-, which is the entire amount of short assessment of duty liable to be paid by the petitioner. If no amount of duty is payable, then all what remains is penalty and interest, which is waived as per the Scheme, 2019. Thus, petitioner should not have been mulcted with any liability under the Scheme, 2019.
19. The factual circumstances of this case being as
mentioned above, it is not necessary for relegating the petitioner back to the Designated Committee, in view of the peculiar situation that presently exists. The Designated Committee has practically become functus offico, by the lapse of the Scheme, 2019 and if the said committee is asked to reconsider petitioner's case, the procedural requirements and the technical arrangements would be far too many. Thus, in order to render justice to the petitioner in exercise of the jurisdiction under Article 226 of the Constitution of India, it is declared that the petitioner is not liable to pay any amount in accordance with the terms of the Scheme, 2019.
20. Therefore, Ext.P5 Form SVLDRS-3 issued in
respect of the petitioner, Ext.P8 Order-in-Original No.07/2021-ST dated 05.08.2021 and Ext.P10 communication dated 22.09.2021 shall stand set aside. The 3 rd respondent shall issue a discharge certificate to the petitioner, in a time bound manner, in accordance with law, based on the observations mentioned in this judgment. The writ petition is allowed as above. Sd/- BECHU KURIAN THOMAS, JUDGE AMV/30/11//2021
APPENDIX OF WP(C) 21357/2021 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF CHALLAN NO.00116 DATED 27.7.2018. Exhibit P1(A) TRUE COPY OF CHALLAN NO.00009 DATED 14.9.2018. Exhibit P1(B) TRUE COPY OF CHALLAN NO.00020 DATED 5.10.2018. Exhibit P1(C) TRUE COPY OF CHALLAN NO.00145 DATED 8.10.2018. Exhibit P2 TRUE COPY OF AUDIT REPORT IN APR NO.627/ST/55/2017-18-361/18 DATED 9.10.2018. Exhibit P3 TRUE COPY OF SHOW CAUSE NOTICE NO.16/2019(ST) DATED 14.10.2019 Exhibit P4 TRUE COPY OF FORM SVLRDS-1 ISSUED ON 26.12.2019 ARN LD2612190000463 Exhibit P5 TRUE COPY OF FORM SVLRDS-3 NO.L270220SV300901 DATED 27.2.2020. Exhibit P6 TRUE COPY OF LETTER NO.PMG/ST 2020-21 DATED 26.10.2020. Exhibit P7 TRUE COPY OF OFFICE LETTER C.NO.V/ST/3018/2019ADJN./602/21 DATED 29.3.2021. Exhibit P8 TRUE COPY OF ORDER -IN-ORIGINAL NO.07/2021-ST DATED 5.8.2021. Exhibit P9 TRUE COPY OF APPLICATION FOR RECTIFICATION OF EXT.P5 FORM SVLDRS-3 DATED 31.8.2021. Exhibit P10 TRUE COPY OF LETTER C.NO.SVLDRS/COM2/1629/2019/799/9/2021 DATED 22.9.2021. RESPONDENTS EXHIBITS NIL TRUE COPY