Case Note & Summary
The Bombay High Court dealt with a petition under Article 226 of the Constitution filed by a limited liability partnership firm and its partners challenging the rejection of their declarations under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme) for settlement of indirect tax disputes. The first declaration (No. LD2612190005231) pertained to a show cause notice dated 8th August 2007 demanding duty of Rs.4,97,618/-, redemption fine of Rs.21 lakh, and penalty of Rs.4,97,618/-. The firm had already settled the duty under the SVLDR Scheme for another show cause notice and sought waiver of penalty and redemption fine. The Revenue rejected the application on the ground that waiver of redemption fine is not covered under the Scheme. The Court analyzed Sections 121(d), 123, 124, and 129 of the SVLDR Scheme and held that 'tax dues' means 'amount of duty' which is central excise duty, not redemption fine. Once the applicant pays the prescribed percentage of central excise duty, Section 129 grants immunity from further duty, interest, or penalty, which includes redemption fine. The Court relied on decisions of the Gujarat High Court in Synpol Products Pvt. Ltd. v. Union of India, the Allahabad High Court in M/s. Jay Shree Industries v. Union of India, and its own decision in HP Adhesives Limited v. Union of India, as well as CBIC flyers and a Ministry of Finance press note clarifying that fine is waived. The Court quashed the rejection and directed issuance of Form SVLDRS-4 within four weeks. The second declaration (No. LD2612190005177) was rejected on the ground that the firm had requested withdrawal, but the Revenue admitted in its affidavit that the remark was erroneous and no withdrawal was made. The Court directed the Revenue to accept the application, issue Form SVLDRS-2, and upon payment, issue Form SVLDRS-4. The partners' declarations were consequential to the firm's, and the Court directed the Revenue to process them in accordance with the Scheme within four weeks.
Headnote
A) Indirect Tax - SVLDR Scheme - Waiver of Redemption Fine - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, Sections 121(d), 123, 124, 129 - The issue was whether redemption fine imposed under Section 34 of the Central Excise Act, 1944 is eligible for waiver under the SVLDR Scheme. The Court held that the Scheme requires payment of 'tax dues' defined as 'amount of duty' which means central excise duty, not redemption fine. Once the applicant pays the prescribed percentage of central excise duty, Section 129 grants immunity from further duty, interest, or penalty, which includes redemption fine. The Court relied on decisions of Gujarat High Court in Synpol Products Pvt. Ltd. v. Union of India, Allahabad High Court in M/s. Jay Shree Industries v. Union of India, and its own decision in HP Adhesives Limited v. Union of India, as well as CBIC flyers and Ministry of Finance press note clarifying waiver of fine. (Paras 3.5-3.9) B) Indirect Tax - SVLDR Scheme - Rejection on Erroneous Ground - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - The second declaration was rejected on the ground that the petitioner had requested withdrawal, but the Revenue admitted in affidavit that the remark was erroneous and no withdrawal was made. The Court directed the Revenue to accept the application and process it by issuing Form SVLDRS-2, followed by payment and issuance of final certificate. (Paras 4.1-4.4)
Issue of Consideration
Whether redemption fine is covered under the SVLDR Scheme for waiver, and whether the rejection of a declaration on the ground of withdrawal is valid when no withdrawal was made.
Final Decision
The Court quashed the rejection of declaration No. LD2612190005231 and directed issuance of Form SVLDRS-4 within four weeks. For declaration No. LD2612190005177, the Court directed acceptance, issuance of Form SVLDRS-2, payment within 30 days, and issuance of Form SVLDRS-4 within four weeks thereafter. The partners' declarations are to be processed accordingly within four weeks.
Law Points
- Sabka Vishwas (Legacy Dispute Resolution) Scheme
- 2019
- waiver of redemption fine
- tax dues definition
- amount of duty
- Section 121(d)
- Section 123
- Section 124
- Section 129
- Central Excise Act
- 1944
- Section 3
- Section 34
