Gujarat High Court
M/S Brittman India Pvt. Ltd vs Union Of India on 27 July, 2022
Author: N.V.Anjaria
Bench: N.V.Anjaria, Bhargav D. Karia
C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 9149 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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M/S BRITTMAN INDIA PVT. LTD.
Versus
UNION OF INDIA
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Appearance:
AMAL PARESH DAVE(8961) for the Petitioner(s) No. 1,2
MR PARESH M DAVE(260) for the Petitioner(s) No. 1,2
NOTICE UNSERVED for the Respondent(s) No. 1
PRIYANK P LODHA(7852) for the Respondent(s) No. 2,3,4
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CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 27/07/2022
ORAL JUDGMENT
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C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1.Heard learned advocate Mr. Paresh Dave for the petitioners and learned advocate Mr. Priyank Lodha for the respondents.
2.Having regard to the controversy involved in the petition, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing.
3.Rule returnable forthwith. Learned advocate Mr. Priyank Lodha waives service of notice of rule on behalf of the respondents.
4.By this petition under Article 226 of the Constitution of India, the petitioners have prayed to direct the respondent authorities to issue Discharge Certificate in favour of the petitioners for dues covered under the declaration filed by the petitioners under Sabka Vishwas (Legacy Dispute Resolution) Page 2 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 Scheme (For short "SVLDRS") under the Finance Act, 2019 (For short "the Act") in Form SVLDRS-1 dated 30.12.2019 by quashing and setting aside decision dated 19.03.2020 rejecting the declaration of the petitioner under the said Scheme by the respondent authorities.
5.Brief facts of the case are that the petitioners during the period between April, 2014 to June, 2017 was liable for service tax for a sum aggregating to Rs.7,39,87,730.72 whereas the petitioner paid from time to time a total sum of Rs. 5,88,72,353/- for the said period and there was a short payment of service tax to the tune of Rs.1,51,15,377.72. 5.1) According to the petitioners, the short payment was for various reasons like genuine impression by the petitioner that certain activities were not chargeable to Page 3 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 service tax and that service tax was payable when the clients paid price/value of the service with service tax amount to the petitioners in addition to certain commercial exigencies including severe financial liquidity crunch.
5.2) SVLDRS was introduced by Chapter-V of the Finance Act, 2019 on 21.08.2019 for the benefit of tax payer and with an object to reduce the burden of disputes pending under various Acts including service tax which have been subsumed under GST with effect from 1.07.2017.
5.3) Under SVLDRS a declaration was to be filed by declarant who is eligible under the provisions of the Scheme with willingness for payment of reduced amount of tax dues for its scrutiny by Designated Committee and thereafter on payment of amount determined by Page 4 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 the Designated Committee on the declaration, the case of the tax of the declarant was required to be concluded by issuance of Discharge Certificate. As per Rule 7 of the Sabka Vishwas (Legacy Dispute Resolution) Rules 2019 (For short "the Rules"), the amount determined by the Committee was required to be paid within 30 days of issuance of estimate in Form SVLDRS-3 by the Committee.
5.4) The petitioners filed a declaration in Form SVLDRS-1 on 30.12.2019 under SVLDRS declaring Rs. 1,51,15,378/- as tax dues towards service tax for the period from April, 2014 to June, 2017.
5.5) The Designated Committee formed under SVLDRS issued the estimate in Form SVLDRS-3 for payment of Rs.1,51,15,378/- on 16.03.2020 after scrutiny and verification of Page 5 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 the declaration filed by the petitioners towards the tax dues for settling and concluding the case of outstanding short payment of service tax. As per Rule 7 of the Rules, the petitioner was required to pay the said sum within 30 days i.e. on or before 16.04.2020.
5.6) The Central Government imposed a nationwide lock-down owing to Covid pandemic and therefore, no actions were possible to be taken by any declarants under the Scheme. 5.7) Respondent no.1 Union of India issued a notification dated 14.05.2020 and amended Rule 7 of the Rules by extending the date for payment of amount under SVLDRS upto 30.06.2020.
5.8) It is the case of the petitioners that a mandate challan was generated on Page 6 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 29.06.2020 on Sabka Vishwas Portal for payment of sum of Rs. 1,51,15,378/- to the credit of the Central Government. 5.9) It is also the case of the petitioners that the attempts were made to transfer Rs. 1.51 crores on 29/30.6.2020 in the account of the Government but the amount could not be transferred because of error in the electronic portal. The petitioners therefore, submitted letter dated 30.06.2020 before the Superintendent of the Designated Committee bringing to his notice the technical error on the website and also requested for solution in the matter. 5.10) On 1.07.2020 payment of Rs. 1.51 crores which was debited in the bank account of the petitioner on 30.06.2020 was transferred to the Government account apparently because there was no error any Page 7 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 longer after evening of 30.06.2020. 5.11) The Superintendent of Designated Committee by letter dated 2.07.2020 in response to the letter dated 30.06.2020 filed by the petitioners informed the petitioners to communicate the grievance regarding any error to the CBIC Mitra Help Desk because the scheme was automated.
5.12) The petitioners thereafter, submitted letter dated 6.07.2020 before the Superintendent and informed that the payment was accepted on the portal and transferred to the Government account on 1.07.2020. 5.13) The petitioners also received a show cause notice dated 31.12.2020 for payment of Rs.6,69,05,723/- together with interest and penalty.
Page 8 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 5.14) The petitioner between July 2020 to January 2021 personally contacted and requested the officer of the Designated Committee for issuing Discharge Certificate for concluding and settling the case of tax dues for which the declaration was filed on 30.12.2019, however, there was no response nor any action taken by the Designated Committee.
5.15) The petitioners therefore, filed a detailed representation dated 5.02.2021 explaining the facts and also the error of website portal for which amount of Rs.1.51 crores could not be transferred to Government account during 29th and 30th June, 2020 and requested for issuance of Discharge Certificate.
5.16) It is the case of the petitioners that the representatives of the petitioners Page 9 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 personally met and requested the officers working with Designated Committee from time to time for Discharge Certificate and closure of the pending case.
5.17) It appears that thereafter by letter dated 19.03.2022 (wrongly stated as 19.3.2020), the Assistant Commissioner (O & A) of office of the Principal Commissioner, Central Tax, Ahmedabad-South informed the petitioners with the approval of the Designated Committee that the payment was not made within due date i.e. 30.06.2020 and as such, declaration filed by the petitioners was treated as lapsed and therefore, no Discharge Certificate can be issued in this regard in Form SVLDRS-4.
5.18) Being aggrieved the petitioners have therefore, approached this Court challenging such action on the respondents.
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6.Learned advocate Mr. P.M. Dave for the petitioners submitted that the Supreme Court of India has passed various orders between 27.03.2020 and 27.04.2021 taking cognizance of the situation arising as a result of Covid-19 pandemic in the country in suo motu writ petitions for excluding the period of limitation in all petitions/ applications/ suits/appeals and all other proceedings where limitation period was expiring between 15.03.2020 till 14.03.2021. It was therefore, submitted that it was the case of the petitioners that due date in the proceedings in SVLDRS was 30.06.2020 and therefore, it would be covered as per the order and directions of the Hon'ble Supreme Court and hence, the respondent authorities are required to issue the Discharge Certificate in Form SVLDRS-4.
Page 11 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 6.1) It was further submitted that there was fundamental error on part of the respondents in denying the benefit of SVLDRS to the petitioners only on the ground that due date for making payment under the scheme was 30.06.2020 and as the petitioners did not make payment within such due date, the petitioners are not entitled to the benefit of the scheme. It was pointed out that the petitioners have deposited the amount of Rs.1,51,15,378/- as determined by the Designated Committee and mandate challan was generated on 30.06.2020. However, the attempt made by the petitioners to make payment electronically on 29th and 30th June 2020 was not successful and the amount was not transferred to the account of the Central Government till 1.07.2020 owing to technical glitches and system error which was brought to the notice of the concerned authority in writing immediately on 30.06.2020 itself by Page 12 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 the petitioners.
6.2) Learned advocate Mr. Dave also referred to and relied upon the prima facie documentary evidence in form of bank statement to show that the payment was processed by the bank on 30.06.2020 but the amount was transferred in the Central Government account on the next date on 1.07.2020 because of the system error and therefore, the the action of rejecting the request to issue the Discharge Certificate on the ground that the payment was not made by the petitioners within the due date i.e. 30.06.2020 is without jurisdiction. 6.3) It was submitted that the limitation for depositing the requisite amount under the scheme was to expire on 30.06.2020 as extended by the notification issued under Rule 7 of the Rules and as such, the scheme Page 13 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 was extended by virtue of notification dated 14.05.2020. It was therefore, submitted that once the amount was transferred on 1.07.2020 in the account of the Government, the petitioners could not have been denied the benefit of SVLDRS causing grave injustice because if the tax dues are not ordered to be settled by issuing Discharge Certificate under the Scheme even though the petitioners have paid the entire tax dues as determined by the Designated Committee, it would result in huge liability of payment of tax upon the petitioners.
6.4) It was submitted that the petitioners were not at fault for not transferring the amount to the account of Central Government and it was only because of the system error that such amount was not transferred within the period laid down by the Government under Rule 7 of the Rules. It Page 14 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 was therefore, submitted that delay of one day has been only on account of technical error in electronic portal of the respondent authorities during the last two days of June 2020 and due to such technical error, the statutory right of the petitioners to settle the case under the beneficial scheme by receiving Discharge Certificate could not have been defeated though the amount of Rs. 1.51 crores determined by the Designated Committee was paid by the petitioners in time.
6.5) It was submitted that in cases where break down and glitches experienced in the portal for conducting and reporting transaction which are after July 2017 this Court in case of M/s. Vishnu Aroma Pouch Packing Pvt. Ltd reported in 2019 (26) GSTL 14 (Guj) has held that such technical glitches and technical errors in the system Page 15 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 cannot come in way of the assessee when this Court having passed the order issuing directions for regularizing such cases where payments were not transferred to the credit of the Central Government.
6.6) Reliance was also placed on the orders passed by the Apex Court during Covid- 19 period for granting extension of limitation and it was submitted that petitioners should also be given the benefit of such orders passed by the Supreme Court.
7.On the other hand, learned advocate Mr. Priyank Lodha submitted that the petitioners have remained negligent for making payment of Rs. 1.51 crores, more particularly, when the Designated Committee has issued the estimate in Form SVLDRS-3 for payment of Rs. 1,51,15,378/- on 16.03.2020 and the petitioners on its own waited till the last date for making payment.
Page 16 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 7.1) It was submitted that as per the proviso to section 126(1) of the Finance (No.2) Act 2019, it is clearly stipulated that no verification shall be made in case where a voluntary disclosure of an amount of duty has been made by the declarant. Therefore, the contention of the petitioners that on filing Form of SVLDRS-1 by the petitioners, there was no objection and no discrepancy in amount of tax etc. is baseless and meritless as the concerned authority i.e Designated Committee in cases of voluntary disclosure cannot verify the declaration made by the declarant as per the said provisions. 7.2) It was submitted that for making payment under SVLDRS, CBIC website contained a Tax Payers Manual wherein the manner of generation of challan and payment methods are explained with screenshots and Chapters 7 and 8 of the said Manual also explained the Page 17 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 payment method. It was pointed out from Chapter 8 of the Manual provides that taxpayers will be able to make payments via NEFT/RTGS options only and that net-banking payment facility is not available for making payment in SVLDRS and after generation of the Challan, a mandate Form is required to be generated to make payment through NEFT/RTGS. It was submitted that the petitioners never made payment through NEFT/RTGS and tried to make payment through net-banking on the last date to avail the benefits under the Scheme and therefore, the respondents have rightly rejected the benefit to the petitioners. 7.3) Reliance was also placed on Circular No.1071/4/2019-CX.8 dated 27.08.2019 wherein it is stated that the scheme will be fully automated with a dedicated portal for online filing of the declaration and communication of final decision and therefore, if any Page 18 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 technical error arises in the e-portal, same is required to be communicated by email to CBIC Mitra help-desk. It was submitted that the letter written by the petitioners on 30.06.2020 was replied vide letter dated 2.07.2020 pointing out that many other taxpayers have successfully made payment on 29th and 30th June, 2020 and there was no technical error or issue with respect to payment on website and the petitioners were directed to approach CBIC Mitra helpdesk. 7.4) Learned advocate Mr. Lodha further submitted that the petitioners have failed to demonstrate that there was any technical issue because of which payment was not made like screenshot of the error/issue etc. and in absence of any such material on record to point out that there was some error in making payment, the action of the respondent was justified. It was submitted that the payment Page 19 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 of Rs. 1,51,15,378/- was received in the concerned account on 1.07.2020 at 9:31 am which is correlating to the payment upload status of the bank of the petitioners on 30.06.2020 where it is pointed out that such payment was uploaded at 18:28 hours for first time and thereafter at 20:23 hours on 30.06.2020 and admittedly RTGS was not available from 6:00 pm on 30.06.2020 till 7:00 am on 1.07.2020. It was therefore submitted that payment uploaded by the bank of the petitioners after 6:00 pm on 30.06.2020 cannot be considered to be amount paid as per the provisions of the Rules as well as the Scheme.
7.5) Learned advocate Mr. Lodha thereafter referred to and relied upon the following averments in the affidavit in reply filed on behalf of respondent no.1 to 4:
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C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 "10. I say and submit that payment of an amount of Rs. 1,51,15,378/- is not in dispute, however, the date on which such payment was made was 1/7/2020, which was after the expiry of the last date on which the declared amount was to be paid in accordance with Rule 7 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 as amended vide Notification No. 1/2020-Central Excise (NT) dated 14.5.2020 and therefore, application of the Petitioner was treated as lapsed and therefore, SVLDRS Form-4 (Discharge Certificate) was not issued for such application. The Frequently Asked Questions (FAQ), which were placed on the public domain, also clarified that in case of non-payment of amount within the stipulated time would render the application as lapsed. For ease of reference, the Question and Answer No. 58 of the FAQ is reproduced under:
"Q58. What happens if I do not make the payment of the amount speafied in the statement within 30 days of its issue?
Ans. The declaration shall be treated as lapsed and benefits of the Scheme will no longer be available."
Thus, vide letter dated 19/3/2020, at Annexure L of the Petition, it was informed to the petitioner that Page 21 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 as payment was not made within due date ie. 30/6/2020, the application was treated as lapsed and no SVLDRS
- 4 can be issued in this regard."
7.6) Referring to above averments, it was submitted that the respondent authorities have rightly not issued Discharge Certificate in facts of the case.
8.Having heard learned advocates for the respective parties and having considered the facts emerging from the record, it appears that the payment made by the petitioners of Rs. 1,51,15,378/- on 30.06.2020 in the bank account of the petitioners and received in the concerned Government account on 1.07.2020 is not in dispute. Therefore, the short question which arises for consideration is that whether the respondent authorities were justified in rejecting the declaration of the petitioners by not issuing Discharge Certificate by the Designated Committee under Page 22 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 SVLDRS on the ground that the petitioners did not make payment within the stipulated time as per Rule 7 of the Rules.
9.On perusal of the bank statement furnished by the petitioners, it clearly shows that amount of 1,51,15,378/- was debited from the account of the petitioners on 30.06.2020. Therefore, for all intent and purpose once bank account of the petitioners is debited, it amounts to making payment by the petitioners. Even the payment uploaded status provided by the ICICI bank of the petitioners shows that payment was uploaded by the bank on 30.06.2020 at 18:28 hours and 20:23 hours and file status also shows that the same was processed. Therefore, it cannot be said that the petitioners have failed to make payment of amount of Rs. 1,51,15,378/- as determined by the Designated Committee as per Rule 7 of the Rules. Therefore, the petitioners should have Page 23 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 been granted benefit of the SVLDRS by the respondent authorities by issuing Discharge Certificate.
10. SVLDRS is a benevolent and beneficial scheme for putting an end to the disputes between the taxpayers and the revenue. The petitioners have filed Form SVLDRS-1 to avail the benefit of the scheme as per section 126 of the Finance (No.2) Act, 2019 with regard to the tax dues determined under section 123 to avail the relief as per section 124 of the Act. The Designated Committee after verification of the declaration under section 126(1) issued a statement under section 127 in Form SVLDRS-3 on 16.03.2020 determining the amount of tax payable by the petitioners of Rs. 1,51,15,378/-. Thus the petitioners were found eligible for the benefit of the scheme. Therefore, the petitioners were required to make the payment of Rs. Page 24 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 1,51,15,378/- within 30 days i.e on or before 16.04.2020 which was extended due to Covid-19 pandemic by the Government upto 30.06.2020.
11. From the record, therefore, it emerges that the petitioners have paid the amount from its bank account on 30.06.2020. The petitioners are not at fault for amount not transferred in the account of the Government by the bank on the same day on 30.06.2020. The stand taken by the respondent authorities is therefore, not tenable as once the amount has been debited from the bank account of the petitioners on 30.06.2020, for all intent and purpose, it cannot be said that the petitioners have failed to deposit the amount as required under Rule 7 of the Rules.
12. We are therefore, of the opinion that the petitioners were not at fault for amount not being credited in the account of the Government on 30.06.2020. It is also not in Page 25 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 dispute that there was only time lag between the amount debited in the account of the petitioners and credited in the account of the Government. It is admitted by the respondent authorities in paragraph no.10 of the affidavit in reply extracted here in above that it is not in dispute that amount of Rs. 1,51,15,378/- was received on 1.7.2020 by the Government.
13. In such circumstances, the respondent authorities ought to have issued the Discharge Certificate to the petitioners without raising any dispute.
14. The contentions raised on behalf of the respondent nos.1 to 4 to deny the benefit of SVLDRS to the petitioners are contrary to the basic legislative intent to grant benefits under SVLDRS to put an end to the dispute between the tax payers and the Revenue. The Designated Committee once having issued the Page 26 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 Form SVLDRS - 3 determining the amount of tax payable by the petitioners under the scheme could not have contended that the petitioners were not entitled to the benefit of the scheme on merits.
15. Had the amount of Rs. 1,51,15,378/- credited in the account of the Government before 30.06.2020, respondents would have issued Discharge Certificate as per the scheme. Only because for no fault on part of the petitioners, amount debited from the bank account of the petitioners on 30.06.2020 got credited on 1.07.2020 in the account of the Government, could not be termed as non payment by the petitioners as per Rule 7 of the Rules.
16. In view of the foregoing reasons, the petition succeed and is accordingly allowed. The impugned decision dated 19.03.2022 of the Designated Committee under the Scheme is Page 27 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022 C/SCA/9149/2021 JUDGMENT DATED: 27/07/2022 quashed and set aside and the Designated Committee under the SVLDRS is directed to issue Discharge Certificate in favour of the petitioners for tax dues of Rs. 1,51,15,378/- covered under declaration in form SVLDRS-1 dated 30.12.2019 considering the payment made by the petitioners on 30.06.2020 and credited in the account of the Central Government on 1.07.2020 as valid payment within time as per Rule 7 of the Rules. Such exercise shall be completed within four weeks from the date of receipt of a copy of this order
17. Rule is made absolute to the aforesaid extent. No order as to costs.
(N.V.ANJARIA, J) (BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 28 of 28 Downloaded on : Sat Dec 24 22:04:40 IST 2022