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IN THE HIGH COURT OF ALLAHABAD
Naheed Ara Moonis, Saumitra Dayal Singh, JJ.
Unitech Machines Limited and Ors. – Appellants
Versus
Union of India and Ors. – Respondents
Civil Misc. Writ Petition (Tax) No. 443 of 2020
Decided On : 22-09-2021
Central Excise Act, 1944 - Sections 11, Section 121(c), 123(e), 124(1)(c) read with Section 124(2), Section 128 and Section 133 - Customs Act, 1962 - - sub-section (1) Of Section 105, Section 110, Section 115 [excluding clauses (a) and (e) of sub-section (1)] clause (a) of Section 118, Sections 119, 120, 121 and 124, clause (b) and sub-clause (ii) of clause (c) of sub-section (1) of Section 142 and 150 - Sought to re-compute amount payable under Scheme - Excise duty liability was admitted - Service Tax liability - Counter-affidavit - Delayed payment is stated to be financial distress suffered by petitioner No. 1. It is also on record that auto division of petitioner No. 1 came to be transferred by way of slump sale, in favour of the petitioner No. 2, under the Business Transfer Agreement assets and liability of the auto division are stated to have been transferred by petitioner No. 1, to petitioner No. 2 - no demand of interest or penalty could be pressed against the petitioners without being preceded by any order of adjudication passed under Section 11 of the Central Excise Act, 1944 - Specifically stated that no such adjudication had taken place - Averment has not been denied by means of of counter-affidavit filed by respondent - Business Transfer Agreement entered into between the parties, interest or penalty liabilities, if any, would have to be split up between two petitioners with respect to auto division and the engineering division - Exercise could only be done by carrying out proper adjudication. Insofar as that adjudication has not been done till date, the recovery of interest and penalty is wholly without jurisdiction or authority of law – Held, Ministry of Finance Central Government hereby declares that the provisions of sub-section (1) Of Section 105, Section 110, Section 115 [excluding clauses (a) and (e) of sub-section (1)] clause (a) of Section 118, Sections 119, 120, 121 and 124, clause (b) and sub-clause (ii) of clause (c) of sub-section (1) of Section 142 and 150 of the Customs Act, 1962, (52 of 1962), relating to matters specified shall be applicable in regard to like matters in respect of the duties imposed by Section 3 of the first mentioned Act, subject to the following modifications and alterations which the Central Government considers necessary and desirable to adapt those provisions to circumstances - Section 142(1)(d) of Customs Act, 1962 had not been borrowed either by reference or by incorporation or otherwise made applicable to the provisions of Central Excise Act, 1944 - Garnishee proceeding instituted against the petitioners with respect to duty liability under Central Excise Act is wholly without jurisdiction - Business Transfer Agreement dated 14.3.2017, we do not record any conclusion in that regard and that issue may remain to be examined in appropriate proceedings, at appropriate stage. We further leave it open to the revenue authorities to initiate a valid adjudication proceeding with respect to penalty and interest - Writ petition stands partly allowed.
JUDGMENT :
1. Heard Sri Dharmendra Kumar Rana alongwith Sri Tanmay Sadh, learned counsel for the petitioners; Sri Ashok Singh and B.K.S. Raghuvanshi, learned counsel for the revenue.
2. Present writ petition has been filed to challenge the computation/made on Form SVLDRS-3 dated 6.12.2019, issued for the periods September 2016 to February 2017 and, April 2017 to June 2017, by the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinafter referred to as the 'Scheme') and rejection of SVLDRS-1 dated 27.12.2019 both, for the periods September 2016 to February 2017 and, April 2017 to June 2017. Also, challenge has been raised to the communications dated 17.3.2020 and 7.4.2020 issued by the Assistant Commissioner, Central GST Division/respondent No. 6, seeking recovery of interest and penalty Rs. 74,36,934/-.
3. Further, mandamus has been sought to re-compute the amount payable under the Scheme as also for refund claimed. Insofar as challenge to the validity of Rule 8(3A) of the Central Excise Rules, 2002 is concerned, the same has not been pressed.
4. Present writ petition has been filed by M/s. Unitech Machines Ltd. petitioner No. 1 and M/s. UM Autocomp Pvt. Ltd. petitioner No. 2. It has been submitted, earlier, M/s. United Machines Ltd. had two manufacturing divisions, namely an auto division and an engineering division. It had incurred liabilities both under the Central Excise Act, 1944 and also towards Service Tax, under the Finance Act, 1994.
5. According to the petitioners, petitioner No. 1 filed its return under the Central Excise Act on Form ER-1 on time, for the period September 2016 to February 2017 and also for the period April 2017 to June 2017. Thus, total excise duty liability was admitted at Rs. 26,62,16,761/-. Of that, it discharged Central Excise duty liability to the extent of Rs. 16,68,84,918/-, by the due date. The balance Central Excise duty was discharged belatedly, during the period 23.11.2016 to 11.9.2018.
6. Similarly, petitioner No. 1 filed its return under the Finance Act, 1994 with respect to its Service Tax liability, for the period April 2016 to June 2017, on or before the due date. It admitted Service Tax liability, Rs. 1,98,34,281/-. That petitioner did not discharge any part of that liability within the due date and it discharged that liability after the due date, between the period 21.9.2018 to 13.6.2019.
7. The reason for the delayed payment is stated to be financial distress suffered by petitioner No. 1. It is also on record that the auto division of petitioner No. 1 came to be transferred by way of slump sale, in favour of the petitioner No. 2, under the Business Transfer Agreement dated 14.3.2017. Thus, all assets and liability of the auto division are stated to have been transferred by petitioner No. 1, to petitioner No. 2.
8. It is a fact that no interest or penalty came to be adjudicated before introduction of the Scheme. Infact, no adjudication notice was issued in that regard. Upon issuance of the disputed SVLDRS-3 on 6.12.2019 and on rejection of the (second) SVLDRS-1 dated 27.12.2019, the present (two) petitions have been filed. Insofar as the Writ Petition No. 443 of 2020 is concerned, the same arises from Central Excise duty for the periods September 2016 to February 2017 and, April 2017 to June 2017, both for auto division and engineering divisions of petitioner No. 1. Similarly, Writ Petition No. 444 of 2020 pertains to Service Tax liability for the tax period April 2016 to June 2017.
9. First, learned counsel for the petitioners submits, the Designated Committee has completely erred in making the computation on Form SVLDRS-3, by its order dated 6.12.2019. Here, reliance has been placed on the provisions of Section 121(c), 123(e), 124(1)(c) read with Section 124(2), Section 128 and Section 133 of the Scheme. Reliance has also been placed on the Explanation (b) appended to Rule 3 read with Rule 6(6) of the Sabka Vishwas (Legacy Dispute Resolution) Schem
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