The Circular altered the definition of 'amount in arrears' as defined under Section 121(c) of the Scheme, and the action of the Designated Committee in first deducting the amount of deposit made by the petitioners during enquiry, investigation, or audit and then extending relief by computing the tax due on the outstanding amount was not in line with the mandate of the Scheme.

JUDGMENT :

Deepak Roshan, J. -

1. Since identical issues for determination is involved in both these writ petitions as such both are heard together and being disposed of by this common Judgment.

2. In the writ petitions, following issues arise for adjudication:-

(i) Whether amount paid as pre-deposit and/or deposit during enquiry, investigation or audit is required to be deducted after extending the relief available to a declarant u/s 124 of SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 (for short ‘Scheme’) , or the said amount of pre-deposit/deposit is first required to be adjusted while determining the amount of ‘tax dues’ u/s 123 of the Scheme and, thereafter, relief u/s 124 of the Scheme is to be extended to a declarant ?

(ii) Whether clause 2(iv) of Circular No. 1072/05/2019/CX dated 25.09.2019 has an effect of altering the definition of ‘tax dues’ as defined u/s 123 of the Scheme, to the extent said Circular provides that the amount of pre-deposit/deposit made by a declarant is to be first adjusted against the ‘tax dues’ of the declarant and, thereafter, benefit of relief as provided u/s 124 of the Scheme is to be extended to a declarant?

3. The brief facts of the case in [W.P.(T) No. 1405 of 2020)] is that the petitioner is a Proprietorship Firm and is engaged in the business of providing services of Cargo Handling and Supply of Tangible goods taxable under the Finance Act, 1994. On allegation of improper discharge of service tax liability, Directorate General of Central Excise Intelligence, Regional Unit, Jamshedpur (in short ‘DGCEI’) initiated enquiry/investigation against the petitioner and, during the process of such enquiry, an amount of Rs. 2,45,24,953/- was deposited by petitioner and/or recovered by the Department by issuing garnishee notices to its customers. A show cause notice dated 25th July, 2018 was issued asking the petitioner to show cause as to why service tax amounting to Rs. 4,69,12,227/- be not demanded from the petitioner under the Proviso to Section 73(1) of the Finance Act, 1994 along with interest, penalty, late fee. Further, in the show-cause notice, petitioner was directed to show cause as to why the amount paid by petitioner during investigation and/or recovered u/s 87 of the Finance Act, 1994 be not appropriated against the service tax demanded from the petitioner.

4. Petitioner appeared pursuant to issuance of the show cause notice and submitted its reply and, thereafter, an Order-in-Original No. 07/S.Tax/Commr./2019 dated 11.07.2019 was passed by Respondent No.3, wherein a demand of Rs. 4,69,12,227/- towards service tax for the period January, 2013 to March, 2016 was raised against the petitioner and, further, penalty of equivalent amount u/s 78 of the Finance Act, 1994 was also imposed upon the petitioner. Further, penalty of Rs. 10,000/- u/s 77(2) of the Finance Act and Late Fee of Rs. 1,19,400/- was also ordered to be recovered from the petitioner.

5. The Parliament, in the meantime, vide Chapter V of the Finance Act, 2019 dated 1st August, 2019, incorporated therein provisions of SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 (in short Scheme), which was notified vide Notification dated 21st August, 2019 with effect from 1st September, 2019. Pursuant to the Notification of the said Scheme, petitioner applied in terms of Section 124(1)(a)(ii) (Litigation Category) on the ground that as on 30th June, 2019, show cause notice issued against the petitioner was pending adjudication. Declaration was filed by petitioner in statutory Form SVLDRS-1 in category-Litigation on 31.10.2019. However, petitioner was issued show cause notice in Form SVLDRS-2 by the Designated Committee under the Scheme, wherein petitioner was, in substance, directed to show cause as to why its declaration be not treated under category ‘Arrears’ and, accordingly, relief be not extended to the petitione