M/S. Orissa Stevedores Ltd. Vs Designated Committee Central GST and Customs Bbsr

submits, his client seeks mandamus commanding revenue to issue SVLDRS-4 (discharge certificate) in favour of his client. He submits, there stood issued show cause notice (SCN) dated 15^th October, 2015 demanding ₹5,19,28,080/- as wrongly availed Input Tax Credit (ITC) during financial

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years 2010-11 to 2013-14. Adjudication pursuant to the SCN remained pending, when there was enactment by Parliament introducing Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by Finance (no.2) Act, 2019. His client applied under the scheme on prescribed form SVLDRS-1. In so applying his client indicated payment of entire demand by adjustment of the ITC, disputed by revenue under said SCN. On query made he submits, his client did not opt to claim any part of the ITC as relief under the scheme. It being for purpose of resolution and amnesty, the adjustment must be acknowledged and discharge certificate issued. That will put paid to subsequent adjudication and reiteration of, inter alia, the demand. He submits, circulars issued by revenue are binding on it. He relies on judgment

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of the Supreme Court in Commissioner of Central Excise and Service Tax, Rohtak v. Merino Panel Product Limited reported in (2023) 2 SCC 597 for the proposition.

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2. On query made he submits further, there is no dispute regarding his client having paid tax on the input services. When his client sought to avail the accumulated credit of ITC against output services, revenue disputed by saying that in some cases the output services were entirely ineligible for adjustment and others, partially. So therefore, revenue is in receipt of the tax on the input service, which payment benefit his client was sought to be prevented from utilizing. Revenue’s case of ineligibility amounted to demand of tax. His client had applied under the scheme. He seeks interference.

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3. Mr. Satapathy, learned advocate, Senior Standing Counsel appears on behalf of revenue and submits, petitioner wrongly availed the ITC. Having had done so, it is not entitled to benefit of the scheme. There has been no deposit of tax as could be claimed to have been made under the scheme. To that effect SVLDRS-2 and 3 were duly issued. He relies on paragraph-7 in the counter to submit it is clear, where CENVAT matters are under dispute, same can be settled by paying applicable post-relief duty. In instant case, availing of ITC at ₹5,19,28,080/- has been questioned by the Department and hence, the SCN was issued. Petitioner did not deposit the tax. The matter was pending for adjudication. Petitioner opted for relief under SVLDR Scheme, 2019, in category of ‘Litigation’ and was therefore required to pay 50% of the litigated amount. Petitioner’s claim that it paid the entire disputed amount is a blatant lie. In the meantime adjudication order dated 19^th August, 2024 has been passed confirming the demand, imposing interest and penalty. No interference is warranted. The writ petition be dismissed.

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4. We have perused relevant sections in chapter-V of the Finance Act. Section 120 introduced the scheme. It was duly notified to come into force. Pursuant thereto by circular dated 27^th August, 2019, Central Board of Indirect Taxes and Customs elaborated on it. Petitioner relies on declaration of law made by the Supreme Court in Merino Panel (supra) that circulars issued by revenue are binding on it.

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5. The circular says, dispute resolution and amnesty are the two components of the scheme. It is aimed at liquidating the legacy cases locked

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up in litigation at various forums, whereas the amnesty component gives an opportunity to those who have failed to correctly discharge their tax liability, to pay the tax dues. The circular also says, it may be appreciated that ambit of the scheme is very wide.

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6. Section 125(1) in the Finance Act provides for eligibility of persons to make a declaration under the scheme. There has been no submission made to effect petitioner was or is ineligible to have applied under the scheme. The allegation against petitioner is, it did not make the deposit. That is the effect of forms SVLDRS-2 and 3. So in considering petitioner’s contention, of application of the scheme to it and liquidation of the legacy tax demand in the prior period by adjustment of its ITC, we have to adjudicate whether it is entitled to issuance of discharge certificate SVLDRS-4.

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7. For application of the scheme to petitioner, on its behalf there was reliance on clause(c) in paragraph-10 of the circular. The clause is reproduced below.

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“(c) This Scheme provides for adjustment of any amount paid as predeposit during appellate proceedings or as deposit during enquiry, investigation or audit [Sections 124(2) and 130(2) refer]. In certain matters, tax may have been paid by utilizing the input credit, and the matter is under dispute. In such cases, the tax already paid through input credit shall be adjusted by the Designated Committee at the time of determination of the final amount payable under the Scheme.”

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(emphasis supplied)

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8. As there is no dispute regarding eligibility of petitioner to have applied under the scheme and the application was in respect of the demand under the SCN, petitioner opted to indicate payment of the entire demand by adjustment and not claim any amnesty. Above reproduced clause in the circular mandates adjustment by the designated committee at the time of determination of the final amount payable under the scheme. There has been demonstration that the exact amount demanded under the SCN, petitioner claimed to have paid by adjustment of the ITC. Contention of revenue is omission of required deposit of the wrongly availed ITC, as had been intimated by issuance of SVLDRS-2 and 3. Only then can there be determination of final amount payable under the scheme.

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9. There is no dispute that petitioner was entitled to the accumulated credit. Application of it for utilisation to pay tax on outward services was disputed by revenue as ineligible or partially so. Going by clause(c) in said circular dated 27^th August, 2019, petitioner’s contention fits as a certain matter, where tax was paid by utilizing input credit and the matter is under dispute. The circular requires that in such cases, the tax already

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paid shall be adjusted by the designated committee at the time of determination of the final amount payable under the scheme. In the circumstances revenue is bound to cause the adjustment, which will leave balance tax to be paid, under the scheme, as nil.

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10. The writ petition is allowed. Opposite party no.1 is directed to issue SVLDRS-4 within four weeks of communication of certified copy of this judgment.

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11. The writ petition is disposed of.

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(Arindam Sinha) Judge

(M.S. Sahoo)

Judge

dutta/puspa

Signature Not Verified