ARCTIC COOLING SOLUTIONS INDIA PVT. LTD. V. UNION OF INDIA

WP(C)/13255/2020

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Arctic Cooling Solutions India Pvt. Ltd., engaged in air-conditioning systems, filed a writ petition against the Union of India and other respondents, challenging the rectification of SVLDRS-3 forms issued under the Sabka Vishwas Scheme. The petitioner had initially filed declarations under the scheme, which were accepted and resulted in the issuance of SVLDRS-3 forms indicating certain tax dues. However, subsequent rectifications were made by the Designated Committee due to non-filing of manual returns and incorrect tax payment claims by the petitioner. The court examined the procedural adherence of the Designated Committee in rectifying the forms and the substantive claims of the petitioner regarding the tax payments and return filings.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 721593 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 06-07-2020
• Assessment Year: misc
• Other Referred Cases: Tanna And Modi vs C.I.T. Mumbai Xxv And Ors. (2007) 7 SCC 434
• Laws Referred To: Finance Act, 1994, Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: SREELAL WARRIER
• Assessee Lawyers: A KUMAR; JOB ABRAHAM; AJAY ANAND
• Keywords: Rectification; Service tax; SVLDRS; Voluntary disclosure; Voluntary disclosure; Fraudulent Declarations
• Section: 125; 128; 127; 129; 126

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL MONDAY, THE 06TH DAY OF JULY 2020 / 15TH ASHADHA, 1942 WP(C).No.13255 OF 2020(F) PETITIONER/S: ARCTIC COOLING SOLUTIONS INDIA PVT. LTD. 63/447, E KRISHNA ARCADE, NEAR BSNL, GANDHINAGAR, KOCHI - 682017 REPRESENTED BY ITS MANAGING DIRECTOR. BY ADVS. SRI.A.KUMAR SHRI.JOB ABRAHAM SRI.AJAY V.ANAND RESPONDENT/S: 1 UNION OF INDIA REPRESENTED BY FINANCE SECRETARY, NORTH BLOCK, NEW DELHI - 110 001. 2 THE PRINCIPAL COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE OFFICE OF THE PRINCIPAL COMMISSIONER, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI - 682018. 3 THE DESIGNATED COMMITTEE-II SABKA VISWAS (LEGACY DISPUTES RESOLUTION) SCHEME (SVLDRS), KOCHI COMMISSIONERATE, OFFICE OF THE PRINCIPAL COMMISSIONER, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI - 682 018. 4 THE JOINT COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE OFFICE OF THE PRINCIPAL COMMISSIONER, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI- 682018. R2, R4 BY SREELAL N. WARRIER, SC, CENTRAL BOARD OF EXCISE & CUSTOMS THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06- 07-2020, THE COURT ON 06-07-2020 DELIVERED THE FOLLOWING: WP(C).No.13255 OF 2020(F) 2 JUDGMENT Dated this the 6th day of July 2020 The petitioner through the instant writ petition has sought the indulgence of this Court for issuance of writ quashing of Exts. P12, P13 and P14 rectified statements in form SVLDRS 03 dated 02.06.2020 issued by the 3rd respondent and directions to the 3rd respondent committee to accept the payment as per Exts.P8, P9, P10 and issue a discharge certificate, in Form SVLDRS-4, to the petitioner. 2. In support of the aforementioned prayer, the facts leading to filing of the writ petitions are the petitioner is a private limited company and engaged in design, sales, installation, preventive and corrective maintenance of air- conditioning systems. It was registered under the provisions of Chapter V , Finance Act, 1994 for the purposes of Service Tax. For the period April 2016 -September 2016; September 2016 - March 2017; and April 2017 - June 2017 alleged to have filed manual returns on 5.6.2019 on account of non -availability of online access. In the meantime the respondent came out with the Scheme 'Sabka Vishwas (Legacy Dispute WP(C).No.13255 OF 2020(F) 3 Resolution) Scheme, 2019 which enables taxpayers to settle their arrears/dues of duties under the Central Excise and Service Tax regimes. 3. The petitioner opted under the scheme and filed three declarations in Form SVLDRS-1 on 31.12.2019 as evidenced from Exts.P5, P6 and P7. In response thereof, the 3rd respondent / Designated Committee -II consisting of Joint Commissioner and Assistant Commissioner, while accepting the declarations made by the petitioner issued statements estimating the amount payable in Form SVLDRS-3 dated 28.2.2020 Exts.P8 to P10. 4. Mr. A.Kumar, learned counsel appearing on behalf of the petitioner submits that the amount payable in terms of Ext.P8 was recorded as '0.00'; Ext.P9 was Rs.4,46,284.40/-; and Ext.P10 was Rs.2,93,254.80/-. The petitioner paid an amount of Rs.2,93,254.80/- as evidenced from Ext.P11 and was about to make payment as reflected in Ext.P9, but astounded to receive , impugned communication Exts.P12 to P14 of 3rd respondent whereby statements were suo motu rectified. Petitioner filed a detailed reply dated 26.6.2020 raising detailed objection. The aforementioned act of respondent is WP(C).No.13255 OF 2020(F) 4 time barred and thus void abinitio under Section 128 of the scheme read with Rule 6(6) the period of 30 days is provided whereas the 3rd respondent rectified it only in March 2020. It is beyond 30 days. The 3rd respondent is required to function under the statute and the time lines prescribed. 5. Per contra, Mr.Sreelal Warrier, learned counsel representing Revenue has submitted objections in the counter. The time originally fixed for issuance of SVLDRS - 2 and SVLDRS - 3 were 30 and 60 days respectively and later in the case of the petitioner would come to end on 28.2.2020. It was impossible for the Range officers concerned to strictly and fully verify the individual records and report within the time available as the reports did not reach the Designated Committee within the said periods of 30 days or even 60 days. It is in that background the designated committee had to act in good faith by quantifying the Tax dues and the tax reliefs etc., relying upon the verified declaration and affirmation as to truth of the declarations made, as to the nature of category and sub category as 'Arrears - Declared in Return but not paid' etc, failing within category and sub category under Section 125(1)(f)(ii) of the Act. In the instant case as in many WP(C).No.13255 OF 2020(F) 5 other cases, acting within the constraints, the electronic form SVLDR 3 were issued in all three cases relying upon the contents of Exts.P5 to P7 declarations electronically submitted by the petitioner herein acting on the verified affirmations and declarations. It was noticed that as in many cases, the Applicants had been adopting a 'modus operandi' by making a claim of filing/attempting to file a manual return which was an unusual and a non-prevalent practice ever after the introduction of mandatory e-filing of ST3 returns with effect from 1.10.2011 as per the Departmental Notification No.43/2011-ST dated 25.8.2011. The alleged returns Exts.P1 to P3 claimed to have been filed manually were not filed by the petitioner at all and the full tax required to have been paid as declared in Ext.P5 was false as discovered and confirmed from the records. Requests from departmental officials to produce details of alleged payment of full tax amounts, if any, were also not ignored. There is nothing to show that the same were filed or the alleged payments were made. There is not even a whisper of any substantiating evidence for alleged manual filing of such important documents. On perusal of the petitioner's SVLDRS-1 declarations contained willful mis- WP(C).No.13255 OF 2020(F) 6 declarations for the purpose of fraudulently availing the better benefits than what the petitioner would have been entitled and thus defeating the larger Government's / public interest. Keeping in view the objects of the scheme, issued Rectified electronic Exts.P12 to 14 SVLDR Form 3 purportedly under Section 128 of the Act. Even the petitioner has opted not to avail the Personal Hearing. The Hon'ble Apex Court, by its various judgments, it is well settled that fraud vitiates all solemn acts and that fraudulent actions shall render the act including any proceedings of authorities nullity. In support of the aforementioned contentions it was relied upon the judgment of Hon'ble Supreme Court in Tanna And Modi vs C.I.T. Mumbai Xxv And Ors. (2007) 7 SCC 434. It is contended that it was a case of opting of Voluntary Disclosure Scheme where the Commissioner of Income Tax had issued certificate after recording satisfaction. But subsequently, it was found that there were search and seizure carried out which was not declared by an assessee. It is in that background the assessee was not entitled to avail the benefit of scheme. Serious questions of facts including commission of fraud arise for consideration in the present writ petition, WP(C).No.13255 OF 2020(F) 7 which may not be within the purview of the writ jurisdiction under Article 226 of the Constitution of India and urging this Court for dismissal of the writ petition. 6. I have heard the learned counsel for the parties and apprised the paper book. For adjudication of controversy, it would be expedient to extract relevant provisions of the scheme to answer the questions raised by respective parties. 125. (1) All persons shall be eligible to make a declaration under this Scheme except the following, namely:— (a) 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 WP(C).No.13255 OF 2020(F) 8 Schedule to the Central Excise Act, 1944. (2) A declaration under sub-section (1)shall be made in such electronic form as may be prescribed. 126. (1) The designated committee shall verify the correctness of the declaration made by the declarant under section 125 in such manner as may be prescribed: Provided that no such verification shall be made in case where a voluntary disclosure of an amount of duty has been made by the declarant. (2) The composition and functioning of the designated committee shall be such as may be prescribed. 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 sub- section (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. (4) 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. (5) The declarant shall pay electronically through internet banking, the amount payable as indicated in the statement issued by the designated committee, within a period of thirty days from the date of issue of such statement. (6) Where the declarant has filed an appeal or WP(C).No.13255 OF 2020(F) 9 reference or a reply to the show cause notice against any order or notice giving rise to the tax dues, before the appellate forum, other than the Supreme Court or the High Court, then, notwithstanding anything contained in any other provisions of any law for the time being in force, such appeal or reference or reply shall be deemed to have been withdrawn. (7) Where the declarant has filed a writ petition or appeal or reference before any High Court or the Supreme Court against any order in respect of the tax dues, the declarant shall file an application before such High Court or the Supreme Court for withdrawing such writ petition, appeal or reference and after withdrawal of such writ petition, appeal or reference with the leave of the Court, he shall furnish proof of such withdrawal to the designated committee, in such manner as may be prescribed, along with the proof of payment referred to in sub-section (5). (8) On payment of the amount indicated in the statement of the designated committee and production of proof of withdrawal of appeal, wherever applicable, the designated committee shall issue a discharge certificate in electronic form, within thirty days of the said payment and production of proof. 128. Within thirty days of the date of issue of a statement indicating the amount payable by the declarant, 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 the designated committee. 7. A complete procedure and eligibility has been prescribed for availing the benefit of the scheme. However, as per Section 128 within 30 days of issuance of statement, designated committee, suo motu, is empowered to correct an arithmetical and clerical error, which is apparent on the face of record. No doubt in the instant case while accepting the WP(C).No.13255 OF 2020(F) 10 declarations submitted by the petitioner issued statements vide Exts.P8, P9 and P10 dated 28th February 2020. The rectification orders Exts.P12 to P14 dated 2.6.2020 are beyond 30 days. Though Petitioner was entitled to the benefit of the scheme as per originally issued SVLDRS-3 but, this Court cannot remain oblivious that many assesses availed the benefits of scheme and owing to such fact, the designated committee could not notice the manual returns Exts.P1 to P3 were ever filed and by accepting declarations, SVLDRS-3 were issued. The petitioner had also attempted to pay tax as reflected in Ext.P8. But on noticing non filing of the return by taking the aid of the provisions 128 or general law of the rectification, rectified SVLDRS-3 was issued. The factum of non filing of the manual return has not been controverted. The expression may will not take away the right of the designated committee to rectify even beyond the period of 30 days being not mandatory in nature. Even Section 129 of Scheme envisages that every discharge certificate issued under 126 with respect to the amount payable shall be conclusive but sub Section 2(c) of Section 129 opens with a non obstante clause that in a case of a voluntary disclosure WP(C).No.13255 OF 2020(F) 11 where any material 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. For the sake of brevity, Section 129, 2(c) is extracted herein below: (c) in a case of voluntary disclosure where any material 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 and proceedings under the applicable indirect tax enactment shall be instituted. I am in agreement with the argument of Mr.Sreelal Warrier that the misstatement vitiates everything. It is in that background the designated committee found ie., the absence of any returns or payment of tax, the earlier declarations were issued. By rejecting the argument of Mr.A.Kumar, I do not find any merit in the writ petition. Writ petition is devoid of any merit and is accordingly dismissed. Sd/- AMIT RAWAL sab JUDGE WP(C).No.13255 OF 2020(F) 12 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE SERVICE TAX RETURNS FOR PERIOD APRIL 2016- SEPTEMBER 2016. EXHIBIT P2 TRUE COPY OF THE SERVICE TAX RETURNS FOR PERIOD OCTOBER 2016-MARCH 2016. EXHIBIT P3 TRUE COPY OF THE SERVICE TAX RETURNS FOR PERIOD APRIL 2017-JUNE 2017. EXHIBIT P4 TRUE COPY OF THE SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME ALONG WITH THE RULES FRAMED THERE UNDER WITH FORMS. EXHIBIT P5 DECLARATION LD3112190019930 IN FORM SVLDRA-01 DATED 31/12/2019. EXHIBIT P6 DECLARATION LD3112190017411 IN FORM SVLDRA-01 DATED 31/12/2019. EXHIBIT P7 DECLARATION LD3112190017599 IN FORM SVLDRA-01 DATED 31/12/2019. EXHIBIT P8 TRUE COPY OF FORM SVLDRA-3 RELATING TO DECLARATION LD3112190019930 DATED 28/02/2020. EXHIBIT P9 TRUE COPY OF FORM SVLDRA-3 RELATING TO DECLARATION LD3112190017411 DATED 28/02/2020. EXHIBIT P10 TRUE COPY OF FORM SVLDRS-3 RELATING TO DECLARATION LD3112190017599 DATED 28/02/2020. EXHIBIT P11 TRUE COPY OF THE MANDATE FORM (CHALLAN) DATED 18/03/2020. EXHIBIT P12 TRUE COPY OF FORM SVLDRA-3 (RECTIFIED) RELATING TO DECLARATION LD3112190019930 DATED 2/6/020. EXHIBIT P13 TRUE COPY OF FORM SVLDRA-3 (RECTIFIED) RELATING TO DECLARATION LD3112190017411 DATED 2/6/2020. EXHIBIT P14 TRUE COPY OF FORM SVLDRA-3 (RECTIFIED) RELATING TO DECLARATION LD3112190017599 DATED 2/6/2020. WP(C).No.13255 OF 2020(F) 13 EXHIBIT P15 TRUE COPY OF THE LETTER DATED 22/06/2020. EXHIBIT P16 TRUE COPY OF THE LETTER AFFORDING PERSONAL HEARING DATED 29/06/2020. EXHIBIT P17 TRUE COPY OF THE TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN PROVISIONS) ORDINANCE, 2020 (NO.2 OF 2020). "