Telangana High Court
M/S. Bricmor Developers vs Union Of India on 8 January, 2025
Author: G.Radha Rani
Bench: G. Radha Rani
THE HONOURABLE SRI JUSTICE SUJOY PAUL
&
THE HONOURABLE Dr. JUSTICE G. RADHA RANI
WRIT PETITION No.16348 of 2021
ORDER (per Hon'ble Dr.Justice G.Radha Rani):
This Writ Petition is filed by the petitioner to issue a writ in the nature of Writ of Mandamus:
(i) Directing the respondents to accept the payment of a sum of Rs.35,23,866/- already made by the petitioner under two demand draft Nos.128010 and 128020 dated 07.01.2021 and 01.03.2021 for Rs.15,00,000/- and Rs.20,23,866/- respectively, both drawn on M/s.Union Bank of India, Gachibowli Branch, Hyderabad, favoring the respondent No.2, as under the Sabka Vishwas (Legacy Dispute Resolution) Scheme (for short "SVLDRS"), 2019, as per the application / declaration vide ARN No.LD0210190000004, dated 02.10.2019 in form-I SVLDRS-I and SVLDRS-3 statement vide No.L081119SV300140, dated 08.11.2019;
(ii) Directing the respondent No.2 not to declare the petitioner as defaulter under the SVLDRS scheme and not to disallow the benefits made available to it under the Scheme;
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(iii) Restraining the respondents from taking any coercive or punitive actions against the petitioner, its partners, directors of partners, officials and others and to close subsequent proceedings of attachment of individual immovable property of director of partner company of the petitioner by raising the attachment, in the interest of justice and pass such other orders as this Court deems fit and proper in the circumstances of the case."
2. The brief facts of the case that led to filing of the Writ Petition by the petitioner are that:
(i) The petitioner was a Managing Partner of the partnership firm by name M/s.BricMor Developers. They started the business of development of immovable properties by way of construction of buildings. The respondents initiated proceedings against the petitioner alleging non-payment of service tax and issued show cause notice, dated 23.11.2017 with a demand of service tax of Rs.1,48,01,197/-. Thereafter, the matter was heard by the Joint Commissioner, Central Taxes on 09.02.2018 and passed the Order-in-Original No.O.I.O.No.20/2017-18-Adjn (JC) ST vide O.R.No.174/2017-Adjn (JC) ST.
(ii) The respondent No.1 concluded & confirmed the demand for payment of service tax for Rs.74,30,019/-, Rs.11,75,556/-, Rs.1,11,663/- and Rs.2,00,849/- along 3 SP, J & Dr. GRR, J wp_16348_2021 with interest, penalty of Rs.10,000/-, further penalty of Rs.200/- per day and further 25 % penalty on the amounts demanded and for appropriation of Rs.24,44,128/-, which was already paid against service tax liability.
(iii) On 27.08.2019, the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs issued Circular No.1071/4/2019-CX.8 vide F.No.267/78/2019/CX-Pt.III termed as Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. As per the said scheme, all cases pending for adjudication or appeal (at any Forum), to an extent of 70% of the duty involved are covered, if it was Rs.50,00,000/- or less.
Subsequently, another Circular No.1072/05/2019-CX dated 25.05.2019 was issued with certain amendments and the case of the petitioner was covered thereof. As per the subsequent circulars, time was extended for compliance. The Parliament also approved the Amnesty Scheme under the Finance Act, 2019 and the Government notified the same on 21.08.2019. The final date for making the above payment was 30.03.2020. Under the circular dated 14.07.2020, the time was further extended till 30.09.2020. Accordingly on 26.09.2019, the petitioner made application with respondent No.1 under the said scheme to settle their case. On 02.10.2019, the petitioner made online application in Form SLVDRS-1 against the Order No.20/2017-18-Adjn (JC) dated 09.02.2018. The petitioner received the confirmation dated 18.10.2019 asking to appear before the designated committee for personal hearing on 22.10.2019. Thereafter, the 4 SP, J & Dr. GRR, J wp_16348_2021 confirmation was issued to the petitioner in SVLDRS-3 statement vide No.L081119SV300140 dated 08.11.2019, as per which, out of the total tax amount of Rs.87,17,238/-, a sum of Rs.23,49,244/- was given as relief. The sum already deposited by the petitioner of Rs.28,44,128/- was adjusted and an amount of Rs.35,23,866/- was stated to be payable by the petitioner. As per the scheme, the petitioner had to pay the balance amount by 31.12.2019, which time was subsequently extended till 30.06.2020.
3. As per the petitioner, while the petitioner was making arrangement for payment of the balance amount, COVID-19 pandemic arrived and the business of the petitioner was completely closed. There was no inflow of funds. They could not even meet their regular expenses and could not generate any funds. As a bolt from the blue, the petitioner, who was looking after the business was infected with COVID-19 along with all his family members, their health suffered serious setback and he could not even attend to the office or to look after the business work and as such could not pay the amount as per the said scheme within the stipulated time. With great difficulty, the petitioner accumulated funds and paid a sum of Rs.15,00,000/- by Demand Draft bearing No.128010 dated 07.01.2021 and Rs.20,23,866/- by Demand Draft bearing No.128020 dated 01.03.2021 completing the payment of balance amount. 5
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4. In the meanwhile, the respondent No.2 passed order dated 15.02.2021 attaching personal property of the director of the Company Sri Nallamilli Srinivas Reddy (the petitioner herein). The petitioner addressed letter to respondent No.1 on 02.03.2021 explaining the facts and requested to raise the attachment. But the said request was not acceded by the respondents. On 15.06.2021, the respondent No.3 issued a letter stating that the department appointed Government Registered Valuer for assessing the value of the property and asked the petitioner to provide the documents of the property. The petitioner rushed to the office of the respondents, but, as they refused to hear him, filed the present Writ Petition.
5. Heard Sri Vedula Srinivas, learned Senior Counsel representing Sri Shyam S. Agrawal, learned counsel for the petitioner on record and Ms.D.Pallavi, learned Senior Standing Counsel for CBIC.
6. Learned Senior Counsel for the petitioner submitted that admittedly the petitioner had already paid the amount ascertained under the scheme. Only due to financial problems and other difficulties, he could not remit the balance amount in time. For the delay, the petitioner could not be subjected to such harsh decision for payment of huge amount. The immovable property belonging to the individual director of the partner company of the petitioner, could not be subjected to attachment as per the provision of the Companies Act, 6 SP, J & Dr. GRR, J wp_16348_2021 1956. The petitioner was ready to pay interest amount for the delay that occurred in paying the balance amount, as ascertained to be payable by the petitioner under the said scheme. The COVID-19 pandemic situation made it difficult for the petitioner to pay the amount thereof and as such prayed to direct the respondents to accept the amount paid by the petitioner towards the amount due under the scheme by extending time thereof and to raise the attachment.
6.1. Learned Senior Counsel for the petitioner further submitted that the petitioner and his partners were facing severe financial crunch having no income from business and that they would get crippled and would not be able to survive due to the harsh punishment imposed upon them. Not only the petitioner, but also its partners, directors and others depending on them would be on roads, if the Court would not come to their rescue by directing the respondents to accept the amount paid towards the amount due under the scheme by extending time and prayed to allow the Writ Petition.
6.2. Learned Senior Counsel placed reliance on a judgment of the Apex Court in M/s.Shekhar Resorts Limited (Unit Hotel Orient Taj) 7 SP, J & Dr. GRR, J wp_16348_2021 v. Union of India 1 and urged that the provision of SVLDRS must be liberally interpreted.
7. Learned Senior Standing Counsel for CBIC submitted that the petitioner failed to pay the amount mentioned in SVLDRS Form - 3 by the due date i.e. 30.06.2020. As such, the recovery proceedings were initiated under Section 87 of the Finance Act, 1994 and notice was issued to the Corporation Bank, Gachibowli on 09.09.2020 for recovery of dues. Reminder letters were issued to Axis Bank and Corporation Bank for recovery of dues on 16.12.2020 (as the accounts of these banks were disclosed by the petitioner for SVLDRS payment) and to the petitioner M/s. BricMor Developers and M/s. BricMor Westpines for payment of pending dues. As the petitioner failed to pay the amount of Rs.35,23,866/- mentioned in SVLDRS Form - 3 by due date i.e. 30.06.2020, the case was placed under recoverable category of arrears. Accordingly, the recovery of Rs.15,00,000/- was made by taking action under Section 87 of the Finance Act, 1994 from Union Bank, Gachibowli from the account of the party and a Demand Draft dated 07.01.2021 along with duly filled GAR-7 challan was submitted to SBI, Treasury Branch, Hyderabad. Further another Demand Draft for Rs.20,23,866/- dated 01.03.2021 was recovered from Corporation Bank under Section 87 of the Finance Act, 1994 and the same was 1 AIR 2023 SC 276 8 SP, J & Dr. GRR, J wp_16348_2021 deposited in SBI Treasury Branch for remittance. Both the demand drafts totalling to Rs.35,23,866/- got remitted on 24.03.2021 in the Government Account after pursuing SBI Treasury Branch. As the amount mentioned in SVLDRS Form - 3 was not paid by due date i.e. 30.06.2020 by the petitioner, the resolution mechanism provided under the scheme and the provisions of the scheme were not applicable to the petitioner. The part amounts recovered under Section 87 of the Finance Act, 1994 could not be adjusted under SVLDRS 2019. Further, the Department issued a letter dated 13.01.2021 to the Sub-Registrar Office, Shankarpally requesting the authority not to entertain any transaction in the immovable property of Sri N.Srinivas Reddy, the Managing Director of partner company of the petitioner. A notice of recovery was also issued to the partner on 19.01.2021 and the same was served in person on 08.02.2021 and 25.02.2021 respectively. Further action of auctioning was being undertaken by the Department. A Government Valuer was also appointed vide letter C.No.HQRS/ARC/21/2020-RR dated 24.05.2021 for valuation of the immovable property attached. 7.1. Learned Senior Standing Counsel for CBIC further stated that as the petitioner had not made the payment within the stipulated period under the scheme, he could not avail the benefit of the scheme. As 9 SP, J & Dr. GRR, J wp_16348_2021 such, the acts of the respondents for recovery were in accordance with the provisions of law and prayed to dismiss the Writ Petition.
8. Perused the record.
9. As seen from the record, admittedly, the petitioners were due payment of service tax of Rs.1,48,01,197/- for the period from 2012- 13 to 2016-17. The same was confirmed by the Order in Original passed by the Joint Commissioner (ST), Rangareddy Commissionerate dated 09.02.2018. The said order was served on the petitioner on 19.09.2018 and recovery proceedings were initiated under Section 87 of the Finance Act, 1994 and an amount of Rs.37,533/- was recovered on 10.03.2019. Meanwhile, the Central Government has introduced SVLDRS, 2019, which came into force on 01.09.2019. In terms of Rule 3 of SVLDRS Rules, 2019 read with Section 125 of the Finance Act, 2019, a declaration shall be made electronically by the declarants in Form SVLDRS-1 on or before 31.12.2019. In terms of Rule 6(2) read with Sections 127(1) and 127(4) of the Finance Act, 2019, the declaration made under Section 125 shall be verified and statement in SVLDRS Form-3 shall be issued by the designated committee electronically within a period of 60 days from the date of receipt of the declaration. In terms of Rule 7 of the said rules read with Section 127(5) of the Finance Act, 2019, the declarant shall pay electronically through internet banking, the amount payable as indicated in the 10 SP, J & Dr. GRR, J wp_16348_2021 statement issued by the designated committee within a period of 30 days from the date of issue of such statement. In terms of Notification No.07/2019 Central Excise-NT dated 31.12.2019, an amendment was carried in the Notification No.05/2019 Central Excise-NT dated 21.08.2019 to extend the due date to 15.01.2020 for filing declaration under Rule 3(1) of SVLDRS Rules, 2019 read with Section 125 of the Finanace Act, 2019. In terms of Notification No.01/2020- Central Excise (N.T) dated 14.05.2020. Rules 6 and 7 of SVLDRS Rules, 2019 were amended extending the due date to 31.05.2020 for verification of declarations filed and to issue statement of account payable by the designated committee and to 30.06.2020 for making the payments electronically through internet banking, the amount payable as indicated in the SVLDRS Form-3 statement issued by the designated committee.
10. As per the SVLDRS 2019, the petitioner filed Sabka Vishwas Scheme application on 02.10.2019 and subsequently SVLDRS Form-3 was issued by the designated committee for payment. The petitioner had to pay an amount of Rs.35,23,866/- by the due date i.e. by 30.06.2020. But he failed to pay the said amount by the said date. The plea taken by the petitioner was that due to COVID-19 pandemic, as the business was completely closed, they could not generate any funds, could not make payment within the said time. However, as per 11 SP, J & Dr. GRR, J wp_16348_2021 the petitioners they accumulated funds and paid a sum of Rs.15,00,000/- on 07.01.2021 and Rs.20,23,866/- on 01.03.2021 and completed the payment of balance amount.
11. As per the contention of the learned Senior Standing Counsel for CBIC, as the petitioner failed to make the payment within the stipulated period, the case was placed under recoverable category of arrears and recovery proceedings were initiated and on the letters issued by the Department to the respective banks, the amount was recovered.
12. Thus, the amounts recovered were not payments made by the petitioner within the stipulated period, but subsequently by the Department in the process of recovery of arrears. As the petitioner could not comply the terms as mentioned in the scheme and had not made the payments within the stipulated period, the petitioner could not avail the benefit offered under the said scheme. The petitioner was required to follow the provisions of the scheme in toto and to pay the amount determined under SVLDRS Form-3 within the stipulated time in terms of Section 127(4) of the Finance Act, 1994. The recovery made by the Department under Section 87 of the Finance Act, 1994 could not be considered as payment made by the petitioner under SVLDRS scheme.
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13. So far as judgment of the Apex Court in M/s.Shekhar Resorts Limited (supra) is concerned, suffice it to say that in para 8.1 on which heavy reliance is placed, the Apex Court dealt with the peculiar fact situation of the said case. The Apex Court recorded as under:
"8.1... As observed hereinabove it is a case where the appellant was unable to make the payment due to the legal impediment and the bar to make the payment during the period of moratorium in view of the provisions of the IBC..."
(Emphasis Supplied)
14. Since there was a legal impediment because of which the petitioner therein could not comply with the requirement, interference was made.
15. This is trite that a singular different fact/point may change the precedential value of a judgment (see Bhavnagar University Vs. Palitana Sugar Mill (P) Ltd. 2 ). The interference was made by the Apex Court in the case of M/s.Shekhar Resorts Limited (supra) because the inability of the petitioner therein was arising out of a legal bar under the provisions of Insolvency and Bankruptcy Code. The said judgment cannot be stretched and made applicable in the instant case.
2 (2003) 2 SCC 111 13 SP, J & Dr. GRR, J wp_16348_2021
16. It is equally settled that the precedential value of a judgment relates to a point which has been actually decided and not what is logically flowing from it (see Dr. (Mrs.) Chanchal Goyal v. State of Rajasthan 3).
17. As the petitioner was having interest in the firm and became Managing Partner of the firm after entering the reconstituted partnership deed dated 26.09.2015, we do not find any need to interfere with the attachment order passed by the Department against the petitioner. As such, we do not find any merit in the contention of the learned Senior Counsel for the petitioner to raise the attachment order and to allow the petition.
18. In the result, the Writ Petition is dismissed. No order as to costs.
As a sequel, miscellaneous applications pending in this petition, if any shall stand closed.
_______________________ JUSTICE SUJOY PAUL ______________________________ Dr. JUSTICE G. RADHA RANI Date: 08.01.2025 Nsk 3 2003 (3) SCC 485