Case Note & Summary
The dispute arose from rejection of declarations filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by JSW Steel Limited, a company engaged in manufacture and supply of steel. The petitioner was subjected to an EA-2000 audit by the office of Commissioner, CGST and CX for the period April 2015 to June 2017. During scrutiny, the audit office sought details regarding CENVAT credit availed and reversed under Rule 4(7) of the CENVAT Credit Rules, 2004 for non-payment to vendors within ninety days. The petitioner supplied information on April 4, 2018. By letter dated September 4, 2018, the office observed that credit re-availed under Rule 4(7) in respect of certain invoices was inadmissible because credit was not reversed in the first place. The office quantified the inadmissible CENVAT credit as Rs.75,64,008/- and communicated it by e-mail on October 31, 2018. An audit report dated August 29, 2019 included the same observation and quantification. The petitioner filed declaration under SVLDRS-1 on December 28, 2019 under the category 'Investigation/Enquiry/Audit', sub-category 'Audit', declaring tax dues of Rs.75,64,008/- in Writ Petition No.970 of 2020. In Writ Petition No.186 of 2021, the petitioner filed another declaration for Rs.2,41,59,708/-. The designated committee issued Form SVLDRS-2 on January 14, 2020 stating the declarations appeared ineligible. After a personal hearing on January 21, 2020, the respondent rejected the declarations by impugned letters dated May 12, 2020, on the ground that tax dues were not quantified before June 30, 2019. The petitioner sought reconsideration on May 21, 2020 and July 21, 2020, but respondent No.4 issued a show cause notice on June 24, 2020 demanding Rs.75,64,008/-. No response was received, leading to the writ petitions. The core legal issue was whether the communications including e-mail dated October 31, 2018 constituted 'written communication' of quantification under Section 121(r) of the Finance Act, 2019, making the petitioner eligible under Section 123 read with Section 124. The petitioner argued that the circular dated August 27, 2019 defined 'quantified' broadly and that restricting written communication to printed letters was impermissible. The respondents contended that the communication of October 31, 2018 was only an excel sheet and not final quantification; final quantification occurred on August 29, 2019, after the cut-off date. The court examined the definitions and scheme provisions, noting that Section 123 treats amount quantified on or before June 30, 2019 as tax dues and Section 121(r) defines 'quantified' as written communication. The judgment excerpt provided ends at paragraph 14 and does not include the final operative order or conclusion. The court was in the process of analyzing the statutory framework and the parties' contentions regarding the cut-off date and the nature of the written communications.
Headnote
A) Indirect Tax - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Eligibility for Declarations in Audit Category - Finance Act, 2019, Sections 121(r), 123, 124 - The petitioner filed declarations under the audit sub-category claiming tax dues of Rs.75,64,008/- and Rs.2,41,59,708/- for the period April 2015 to June 2017. The respondent rejected declarations on the ground that quantification of duty was not made before June 30, 2019; the petitioner contended that e-mail dated October 31, 2018 and earlier communications quantified the amount. The court examined whether such communications constitute written communication of quantification under Section 121(r) and the Scheme's circular dated August 27, 2019 (Paras 11-14). B) Constitutional Law - Judicial Review under Article 226 - Challenge to Administrative Rejection - Constitution of India, Article 226 - The petitioner invoked writ jurisdiction to quash impugned rejection letters alleging factual errors and restrictive interpretation of written communication. The court considered whether the rejection was based on factually incorrect premise that tax dues were not quantified before the cut-off date (Paras 2, 11). C) CENVAT Credit - Re-availment under Rule 4(7) - Admissibility of Credit Where Not Reversed - CENVAT Credit Rules, 2004, Rule 4(7) - During EA-2000 audit, respondent observed that petitioner re-availed CENVAT credit under Rule 4(7) in respect of certain invoices where credit was not reversed in the first place, leading to quantification of Rs.75,64,008/- as inadmissible credit. The dispute on quantification date impacted eligibility under the Scheme (Paras 3-4, 11).
Issue of Consideration
Whether the e-mail dated March 22, 2018, communication dated April 4, 2018, letter dated September 4, 2018 and e-mail dated October 31, 2018 constitute 'intimation' or 'written communication' of quantification of duty for eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019
Final Decision
Not mentioned in the provided text
Law Points
- Section 123 of Finance Act
- 2019 treats duty quantified on or before June 30
- 2019 as tax dues for pending enquiry
- investigation or audit
- Section 124 provides relief to declarants with tax dues linked to audit and quantified before cut-off
- Section 121(r) defines 'quantified' as a written communication of the amount of duty payable under an indirect tax enactment
- circular dated August 27
- 2019 clarifies that the Scheme aims to unload legacy central excise and service tax baggage and allow businesses to focus on GST
- Rule 4(7) of CENVAT Credit Rules
- 2004 requires reversal of credit if payment not made within 90 days and permits re-availment upon payment
