Gujarat High Court
Gujarat Steel Industries vs Union Of India on 27 September, 2023
Author: Biren Vaishnav
Bench: Biren Vaishnav, Bhargav D. Karia
NEUTRAL CITATION
C/SCA/18153/2021 ORDER DATED: 27/09/2023
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 18153 of 2021
==========================================================
GUJARAT STEEL INDUSTRIES
Versus
UNION OF INDIA & 2 other(s)
==========================================================
Appearance:
KAIVAN M DASTOOR(9322) for the petitioner(s) No. 1,2,3,4
MR PY DIVYESHVAR(2482) for the Respondent(s) No. 1,2
NOTICE SERVED for the Respondent(s) No. 3
==========================================================
CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 27/09/2023
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV)
1. By way of the present petition, the petitioners have prayed for the following reliefs:
"(A)That Your Lordships may be pleased to admit this Petition.
(B) That Your Lordships may be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, direction or order, quashing and setting aside orders of the Designated Committee (Annexure-I & J) issued under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, thereby directing the Respondents, their servants and agents to treat the declarations / applications filed by the petitioners under the Sabka Vishwas (Legacy Dispute Page 1 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined Resolution) Scheme, 2019, as valid declaration;
(C) That Your Lordships may be pleased to issue a Writ of Mandamus or a writ in the nature of mandamus or any other appropriate writ, direction or order, directing the Respondents, their servants and agents to accept the declarations filed by the petitioners, which have been rejected vide Orders submitted at Annexure-I & J to the Petition and further directing the Respondents, their servants and agents to issue 'Statement of estimated amount payable by the petitioner in the Scheme' in Form SVLDRS-3 under Section 127 of the Finance (No. 2) Act, 2019 and thereafter, on payment of the estimated amount by the petitioner no.1, to issue Discharge Certificates in Form SVLDRS-4 under Section 127(8) of the Finance (No. 2) Act, 2019 to petitioner nos. 1 to 4;
(D) Such Further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice;"
2. Facts of the present case are as under:
2.1 The petitioner no.1 is a partnership firm, having place of business at Near Bhikshuk Gruh, Vallabh Nagar, Odhav Road, Odhav, Ahmedabad, Page 2 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined Gujarat - 382410. The petitioner nos.2 to 4, during the period around 1995-96, were the Partners of petitioner no.1 firm namely Gujarat Steel Industries. The petitioner nos.3 and 4 have retired from the partnership firm Gujarat Steel Industries and Smt. Rajudevi Vijaysingh Bafna has been admitted as a partner in the said firm with effect from 31.03.2011. Subsequently, Smt. Rajudevi Vijaysingh Bafna also retired as Partner of the firm w.e.f. 01.04.2013, the partnership firm was dissolved on 01.04.2023 and thereafter Gujarat Steel Industries became the proprietary firm and its proprietor is petitioner no.2.
2.2 The petitioner no.1 was a Small Scale Industry, engaged in manufacture of goods like M.S. Round Bars, which were excisable goods falling under Chapter 72 of the First Schedule to the Central Excise Tariff Act, 1985.Page 3 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023
NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined 2.3 The petitioner no.1 being a Small Scale Industry, was eligible for SSI exemption of Notification No. 1/1993-CE dated 28.02.1993 issued under the Central Excises Act, 1944, and accordingly, the petitioner no.1 availed the benefit of said Notification during the years 1994-95 and 1995-96 and no Central Excise duty was paid by the petitioner no.1 during these two years.
2.4 The Central Excise authorities conducted inquiries and investigation against the petitioner no.1 in September, 1995 which resulted in issuance of show cause notice F.No. V.72/15-156/ OA/95 dated 08.03.1996 wherein total Central Excise duty of Rs.39,65,667/- (Rs.39,40,861/- + Rs.24,806/-) was demanded from the petitioner, besides proposing imposition of penalty and confiscation of seized goods. Action was also Page 4 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined proposed against the petitioner No.2 to 4. 2.5 The petitioners and other noticees of the aforesaid show cause notice participated in the departmental adjudication proceedings, which resulted in passing of the Order-in-Original No. 42/Commr/Ahd-I/97-98 dated 27.2.1998 (issued on 29.5.1998) wherein duty demand of Rs. 39,65,667/- (Rs. 39,40,861/- + Rs. 24,806/-) was confirmed against petitioner no.1, penalty of Rs. 30,00,000/- was imposed on the petitioner no.1 and goods seized at the premises of the petitioner no.1 were ordered to be confiscated, however, the said goods were allowed to be redeemed on payment of a Redemption Fine of Rs. 22,500/- in lieu of confiscation. Penalty of Rs. 20,00,000/- each was imposed on petitioner nos.2 to 4 i.e. three partners of petitioner no.1. Penalty of Rs. 20,00,000/- was also imposed on M/s. Janta Page 5 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined Steel Traders and Penalty of Rs. 1,40,000/- was imposed on M/s. Shalin Corporation and Goods seized at the premises of M/s. Shalin Corporation were also ordered to be confiscated, however, these goods were allowed to be redeemed by M/s. Shalin Corporation on payment of a redemption fine of Rs. 40,000/-. 2.6 Being aggrieved by the Order-in-Original, filed an appeal before the Hon'ble Customs, Excise and Gold Appellate Tribunal, Bombay (CEGAT), against the said Order-in-Original. 2.7 During the pendency of appeal before the Hon'ble CEGAT, provisions for the Customs and Central Excise, Settlement Commission were introduced in the Central Excise Act, 1944 and Section 32PA was also introduced with effect from 12.5.2000 providing that any person who Page 6 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined had filed an appeal to the Appellate Tribunal on or before 29.2.2000 and which was pending would also be entitled to make an application to the Settlement Commission to have his case settled.
2.8 The petitioners, after withdrawing the appeal from the Hon'ble CEGAT, filed application before the Hon'ble Settlement Commission. Petitioner no.1 initially admitted duty liability of Rs. 15,44,914/-. During the course of proceedings before the Hon'ble Settlement Commission, the petitioner no.1 revised the accepted duty liability to Rs. 39,40,861/-, thereby accepting the entire duty demand raised in show cause notice and confirmed in Order-in-Original, but also claimed the benefit of Modvat Credit to the extent of Rs. 23,45,006/-.
Page 7 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023
NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined 2.9 The learned Settlement Commission passed Final Order No. 12/CEX/2002 dated 24.5.2002 and settled the case of the petitioner no.1 at duty of Rs.32,17,340/- and penalty of Rs.10 Lakh. A fine of Rs.25,000/- in lieu of confiscation of goods was also imposed on the petitioner no.1. Payment of interest @ 18% on the amount of Rs.13,96,800/- deposited by the petitioner no.1, when the case was pending before the CEGAT was also ordered, while allowing adjustment of the said deposit towards the finally settled amount of Rs.32,17,340/-. Penalties of Rs.1 Lakh each were imposed on petitioner nos.2 to 4, i.e.three partners of the petitioner no.1 firm. 2.10 The Central Government, in exercise of the powers conferred by section 132 of the Finance (No. 2) Act, 2019, made the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 Page 8 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined vide Notification No. 5/2019-Central Excise (NT) dated 21.8.2019.
2.11 The Central Government, vide Notification No. 4/2019-Central Excise (NT) dated 21.08.2019 appointed 01.09.2019 as the date on which the SVLDR Scheme, 2019 would come into force. 2.12 The petitioner nos.1, 2 and 3 filed separate applications on 14.10.2019 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, in the prescribed Form SVLDRS-1. Petitioner no. 4 could not file application due to some technical glitches in the system for filing application SVLDRS. The member of the Designated Committee issued a notice dated 13.11.2019 to the petitioner no.1. 2.13 The member of the Designated Committee also issued separate notices dated 13.11.2019 to petitioner nos.2 and 3.
Page 9 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023
NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined 2.14 The petitioner no.1 appeared before the Designated Committee on the date and time fixed for personal hearing on 19.11.2019 and also submitted written reply to the show cause notice dated 13.11.2019, inter-alia, pleading that the Redemption Fine of Rs. 25,000/- has already been paid by the petitioner no.1 vide TR-6 Challan, there was no amount of Redemption Fine pending for recovery against the petitioner, as such, the question of granting of relief from confiscation and Redemption Fine did not arise in the case of the petitioner no.1. It was, therefore, requested that the application of the petitioner under SVLDRS may be considered and processed further.
2.15 The petitioners nos.2 and 3 also appeared before the Designated Committee on the date and time fixed for Personal Hearing on 19.11.2019 and also submitted written reply to Page 10 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined the show cause notice dated 13.11.2019, inter- alia pleading that the provisions of Section 124(1)(b) of the Finance (No.2) Act, 2019 do not provide any condition that the co-noticee can't avail the benefits of the scheme till such time that the duty demand is not settled by the main noticee.
2.16 The Designated Committee rejected the applications filed by the petitioner no.1 in Form SVLDRS-1 dated 14.10.2019 on the ground of ineligibility with the remarks 'Confiscation and decided by Settlement Commission'. The Designated Committee also rejected the applications filed by the petitioners No. 2 and 3 in Form SVLDRS-1 dated 14.10.2019 on the ground of ineligibility with the remarks 'Co- noticee, main noticee involves confiscation'. Page 11 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023
NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined 2.17 The petitioners No.1, 2 and 3 again filed applications and petitioner No.4 also filed an application on 06.12.2019, under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
2.18 The petitioners appeared before the Designated Committee on the date and time fixed for Personal Hearing on 26.12.2019 and also submitted written replies to the show cause notices dated 26.12.2019.
2.19 The Designated Committee, however, rejected the application of the petitioner no.1 in Form SVLDRS-1 vide ARN LD0612190001621 on the ground of ineligibility by stating that the application is not eligible under Section 125(1)
(g). As per Section 125(1)(g) of the Finance (No.
2) Act, 2019, all persons shall be eligible to make Page 12 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined a declaration under this Scheme except the following, namely who have filed an application in the Settlement Commission for settlement of a case.
3. Mr.Kaivan Dastoor learned advocate for the petitioners submitted that the application before the Settlement Commission has been decided. No application of the petitioners was pending with the Hon'ble Settlement Commission when the petitioners filed applications under SVLDR Scheme. As per the SVLDR Scheme and clarifications and directions issued by the Central Board of Indirect Taxes & Customs in this regard, the cases which are pending before the Hon'ble Settlement Commission are not eligible under SVLDR Scheme. Therefore, the decision of the Designated Committee to reject the application of the petitioner no.1 under Page 13 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined SVLDR Scheme under Section 125(1)(g) of the Finance (No. 2) Act, 2019, even though the case of the petitioner no.1 was not pending before the Hon'ble Settlement Commission, is wholly without jurisdiction, arbitrary and illegal. 3.1 Mr.Dastoor further submitted that the petitioner no.1 and other petitioners are not ineligible under Section 125(1)(g) of the Finance (No.2) Act, 2019.
3.2 Mr.Dastoor would submit that the applications filed by the petitioners, specifically by petitioner no.1 before the learned Settlement Commission is not pending. The Settlement Commission had issued Final Order No.12/CEX/2002 dated 24.5.2002. Learned Settlement Commission, vide Order No. 3/SC/CE/ 2004 dated 20.7.2004 also disposed of the Miscellaneous Application filed by the petitioner. Page 14 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023
NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined The Writ Petition being Special Civil Application No. 11961 of 2006 filed by the petitioners before this Hon'ble Court against the order of the learned Settlement Commission was rejected by this Hon'ble Court vide Order dated 16.7.2008. The petition for Special Leave to Appeal No. 25380 of 2008 filed by the petitioners before the Hon'ble Supreme Court also came to be dismissed as withdrawn on 24.10.2008. Thus, the case or the application of the petitioners is not pending before the learned Settlement Commission. Therefore, the application of the petitioner no.1 is not ineligible under Section 125(1)(g) of the Finance (No. 2) Act, 2019.
4. On the other hand, Mr.Parth Divyeshwar learned advocate for the respondents would submit that Section 125(1)(g) of the Finance (No.2) Act, 2019 simply stipulates that the person who has filed an Page 15 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined application in the Settlement Commission is not eligible to make a declaration under the scheme. 4.1 Mr.Divyeshwar would further submit that in the instant case, it is an undisputed fact that the petitioner had filed an application before the Settlement Commission for settlement of the case and therefore he is not eligible to make the declaration under the scheme in terms of the above provisions of law. As regards the reliance on the Board's clarifications and directions is concerned, the same is misplaced for the reason that the Circular No.1071/4/2019-CX.8 dated 27.8.2019 clarifies that only those applications which have been rejected by the Settlement Commission is eligible for SVLDR Scheme. ANALYSIS
5. The reasons for rejecting the application apparently was the ground that the issue was Page 16 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined pending before the Settlement Commission. In the perception of the respondents, the petitioner no.1 was held ineligible in light of Section 125(1)
(g) of the Finance Act (No.2) of 2019. The stand of the respondents is misconceived. Though the petitioners had filed application before the Settlement Commission, the said application was already decided by the Settlement Commission in the year 2002. The Central Board of Direct Taxes and Customs, has, by a circular dated 27.08.2019 clarified as under:
"10(f) Section 125(g) excludes the cases where an application has been filed before the Settlement Commission for settlement. However, in many such cases, proceedings before the Commission may abate due to reasons such as rejection of the application by the Commission or due to order of the Commission not being passed within the prescribed time etc. It is clarified that all such cases which are outside the purview of the Settlement Commission shall be covered under the Scheme under the relevant category of adjudication or appeal or arrears as the case may be provided the eligibility is otherwise established under Page 17 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined this Scheme. Further, any pending appeals, reference or writ petition filed against or any arrears emerging out of the orders of Settlement Commission are also eligible under the Scheme."
6. Reading the same in its entirety it indicates that when there are arrears emerging out of orders of the Settlement Commission, the assessee is eligible under the scheme.
7. Therefore though no appeal or reference were pending, here was a case where the Settlement Commission had passed a Final Order on 24.05.2002. MA was also disposed of on 20.07.2004, thus no case was pending. Even reading of the communication dated 06.03.2020 under the RTI Act would reveal that the benefit of the circular particularly para 10 has been extended to others. Once we hold that the petitioner no.1 was entitled to the benefit of the Page 18 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023 NEUTRAL CITATION C/SCA/18153/2021 ORDER DATED: 27/09/2023 undefined scheme, petitioner nos.2 to 4 would automatically be held entitled to the benefit thereof.
8. In view of the above, the petition is allowed. The respondents are directed to accept the declarations filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 and issue consequential statements of estimated amount payable in Form SVL DRS-3 and on payment of the estimated amount by petitioner no.1 issue discharge certificates in Form SVLPRS-4 to the petitioner nos.1 to 4.
(BIREN VAISHNAV, J) (BHARGAV D. KARIA, J) ANKIT SHAH Page 19 of 19 Downloaded on : Wed Oct 04 20:30:34 IST 2023