2025 Supreme(Online)(Del) 46432

IN THE HIGH COURT OF DELHI AT NEW DELHI
VARNER RETAIL SERVICES SOUTH ASIA PVT. LTD. – Appellant
Versus
ASSISTANT COMMISSIONER DIVISION - OKHLA CENTRAL GOODS AND SERVICE TAX (DELHI SOUTH) & ORS. – Respondent
W.P.(C)-12049/2023

The SVLDR Scheme strictly requires that a show cause notice must be received on or before 30th June, 2019 to be eligible; a later notice, even if related to earlier proceedings, cannot be considered a continuation and is ineligible.

Headnote:(A) Finance Act, 1944 - Sections 73(2), 76(1), 77(2) - Sabka Vishwas Legacy Dispute Resolution (SVLDR) Scheme, 2019 - Definition of 'tax dues' under Section 123 - SBIC Circular No. 1074/07/2019-CX dated 12th December, 2019 - CENVAT Credit Rules, 2004.

(B) SVLDR Scheme - Eligibility - Strict adherence to cut-off date - A show cause notice issued after 30th June, 2019 cannot be brought within the Scheme even if it relates to the same subject matter as an earlier notice - The Scheme does not permit treating a subsequent SCN as a continuation of a prior SCN - Merely because the subsequent SCN references the earlier SCN does not make it eligible. (Paras 15-17)

(C) Limitation - Appellate remedy - Where a writ petition challenging a demand remains pending, the court may permit the filing of an appeal beyond the normal limitation period, provided the appeal is filed within a specified extended date - Such appeal shall not be dismissed on limitation grounds and shall be adjudicated on merits. (Paras 20-21)

Facts of the case:
The petitioner had filed refund claims under the CENVAT Credit Rules for accumulated/unutilised credit for periods from January 2016 to June 2017. The refund was rejected on 7th September, 2018. A show cause notice (SCN-I) dated 18th October, 2018 was issued demanding service tax of Rs.33,64,946/- for October 2015 to September 2016 on the ground that services did not qualify as 'export of services'. The petitioner applied under the SVLDR Scheme for SCN-I and was granted relief on 31st December, 2019. Meanwhile, a second show cause notice (SCN-II) dated 19th December, 2019 was issued for periods October 2016 to March 2017 and April 2017 to June 2017. The petitioner filed another application under SVLDR Scheme for SCN-II, but it was rejected by order dated 2nd March, 2020 on the ground that SCN-II was issued after the stipulated date prescribed in the Scheme (30th June, 2019). SCN-II was adjudicated and a demand of Rs.46,86,276/- along with interest and penalty was confirmed by order dated 30th June, 2023.

Findings of Court:
The court held that the SVLDR Scheme prescribes a clear cut-off date of 30th June, 2019 for receipt of a show cause notice. SCN-II was issued on 19th December, 2019, beyond that date. The fact that SCN-II made reference to SCN-I did not make it a continuation of the earlier proceedings; it stood on its own legs as the demand was quantified in SCN-II. The CBIC FAQs under the Scheme also confirm that only SCNs received on or before 30th June, 2019 are eligible. Therefore, the rejection of the petitioner's application with respect to SCN-II was justified. However, since the writ petition had remained pending since September 2023, the petitioner was permitted to file an appeal against the impugned demand order by 31st January, 2026, and such appeal would not be dismissed on limitation.

Issues: Whether SCN-II dated 19th December, 2019 could be considered as a continuation of SCN-I for the purpose of eligibility under the SVLDR Scheme? Whether the rejection of the application under the Scheme was correct?

Ratio Decidendi: The SVLDR Scheme's eligibility condition is strictly based on the date of receipt of the show cause notice (on or before 30th June, 2019). A subsequent SCN, even if arising out of the same underlying refund claims, is a separate proceeding and cannot be brought within the Scheme. The court cannot extend the Scheme's benefits beyond its express terms. Result : Petition disposed of. Petitioner permitted to file an appeal against the order dated 30th June, 2023 by 31st January, 2026; if so filed, the appeal shall not be dismissed on limitation and shall be adjudicated on merits. Pending applications also disposed of.

Prathiba M. Singh, J. (Oral)

1. This hearing has been done through hybrid mode.

2. The present petition has been filed challenging the impugned order dated 30th June, 2023 passed by the Assistant Commissioner Division- Okhla, Central Goods and Service Tax (Delhi South) (hereinafter, 'the impugned order') by which a demand of service tax to the tune of Rs. 46,86,276/- under Section 73(2) of the Finance Act, 1944, has been confirmed against the Petitioner, along with certain penalties under Section 76(1) and Section 77(2) of the Finance Act, 1944. The petition also challenges the order dated 2nd March, 2020 passed by the Designated Committee, Sabka Vikas Legacy Dispute Resolution Scheme (hereinafter, 'SVLDR Scheme')

3. The petition has a history that deserves to be captured in the present order. During March to December, 2017 the Petitioner had filed certain refund applications under the CENVAT Credit Rules, 2004, for accumulated/ unutilised CENVAT credit. The credit being sought by the Petitioner was for the following period:

Sr. No.	Period	Under Notification No.	Due Date for filing of Refund Claim (One Year from the receipt of consideration)	Date of filing of Refund Claim	Claimed Amount (in ‘Rs.’)
1	January 2016 to March 2016	27/2012	20.04.2017	29.03.2017	1,81,386/-
2	April 2016 to June 2016	27/2012	27.06.2017	17.04.2017	1,42,915/-
3	October 2016 to December 2016	27/2012	31.10.2017	13.07.2017	2,49,731/-
4.	January 2017 to March 2017	27/2012	19.04.2018	13.07.2017	1,51,468/-
5.	April 2017 to June 2017	27/2012	22.06.2018	19.12.2017	1,70,076/-
Total					8,95,576/-

4. The said CENVAT credits were rejected on 7th September, 2018 by the Department for the entire period.

5. A show cause notice dated 18th October, 2018 (hereinafter, ‘SCN-I’) was the issued to the Petitioner, raising a demand of service tax amounting to Rs. 33,64,946/-. The period covered in the said SCN-I was October, 2015 to September, 2016. The said SCN-I was issued on the premise that the services rendered by the Petitioner do not qualify as ‘export of services’.

6. The Petitioner also challenged the Order in Original dated 7th September, 2018, before the Commissioner of Central Excise (Appeals) wherein it was held vide order dated 6th March, 2019 that the Petitioner’s services cannot be treated as export of services as the Petitioner was held to be an intermediary. This order of the Commissioner of Central Excise (Appeals) was challenged before CESTAT and the prayer before CESTAT was to quash the demand and to allow the refund claim of Rs. 8,95,576/-.

7. In the meantime, the Government announced the SVLDR Scheme on 1st September, 2019. The Petitioner, wishing to take advantage of the said Scheme, filed an application in respect of SCN-I under the Scheme. In respect of the said first application, the Department accepted the application of the Petitioner on 31st December, 2019, and relief of Rs. 23,55,462/- was granted to the Petitioner.

8. In the meantime, a second SCN was issued on 19th December, 2019 (hereinafter, ‘SCN-II’) for the following two periods:

● October, 2016 to March, 2017;

● April, 2017 to June, 2017.

9. The Petitioner then filed another application under the SVLDR Scheme with regard to SCN-II. This was, however, rejected by the impugned order dated 2nd March, 2020 on the following grounds:

“The impugned SCN has been issued on 18.12.2019 (which is beyond the stipulated date prescribed in the Scheme) and is pending for adjudication.”

10. In the meantime, SCN-II also got adjudicated vide the impugned order dated 30th June, 2023 wherein the demand of Rs. 46,86,276/- along with interest and penalty has been confirmed against the Petitioner.

11. The case of the Petitioner is that the rejection of the application filed with respect to SCN-II under the SVLDR Scheme is incorrect, inasmuch as, as per Mr. Aggrawal, though the cut off date under the scheme is 30th June, 2019 and the SCN-II was issued on 19th December, 2019, the said SCN-II was merely a continuation of SCN-I itself. According to ld. Counsel, SCN-II

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