Gujarat High Court
M/S Ons Buildtech Llp vs Principal Commissioner on 10 January, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/502/2020 ORDER DATED: 10/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 502 of 2020
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M/S ONS BUILDTECH LLP
Versus
PRINCIPAL COMMISSIONER & ORS.
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Appearance:
MR D K TRIVEDI(5283) for the Petitioner(s) No. 1
MR SIDDHARTH H DAVE(5306) for the Respondent(s) No. 1,2
NOTICE SERVED BY DS for the Respondent(s) No. 3
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 10/01/2025
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. D.K.Trivedi for
the petitioner and learned advocate
Mr. Siddharth Dave for the respondents.
2. Rule returnable forthwith. Learned
advocate Mr. Siddharth Dave for the
respondents waives service of notice of
Rule.
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3. Having regard to the controversy arising
in this petition in narrow compass, with
the consent of the learned advocates for
the respective parties, the same is taken
up for final hearing.
4. By this petition, under Articles 226 and
227 of the Constitution of India, the
petitioner has challenged the action of
the designated committee formed under the
Sabka Vishwas (Legacy Dispute Resolution)
Scheme, 2019 [‘SVLDRS’ for short] by
issuing Form No. SVLDRS-3 dated
04.12.2019.
5. This Court passed the following order on
08.01.2020.
“1. Mr.D.K.Trivedi, the learned
counsel appearing for the writ
applicant, after obtaining
instructions from his client, makes aPage 2 of 31
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statement that his client will
deposit an amount of Rs.31,36,551.60
Paisa, with the respondent No.2,
within a period of two weeks from
today.
2. In view of such statement, being
made by the learned counsel appearing
for the writ applicant and the writ
applicant having undertaken to
deposit the amount, referred to
above, with the respondent No.2, let
Notice be issued to the respondents,
returnable on 29th January, 2020.
Direct service is permitted to the
respondent Nos.1 and 2. So far as the
respondent No.3 is concerned, service
may be affected by Registered Post
with Acknowledgment Due.
3. We direct the respondent No.2 to
accept the amount, referred to above,
without prejudice to its rights and
contentions. The amount shall be
accepted towards service tax
arrears.”
6. Pursuant to the aforesaid order, the
petitioner has deposited the amount of
Rs. 31,36,551.60 as per the Form SVLDRS-1
on 21.01.2020 and has placed the challan
on record.
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7. Brief facts of the case are as under:
7.1 The petitioner, who is engaged in
providing Taxable Service under category of
‘Construction Service in respect of Commercial
Industrial Building and Civil Structures’ was
subject to proceedings under the provisions of
Finance Act,1994. A show-cause notice dated
18.12.2018 was issued by the respondent-
Assessing Officer to show cause as to why the
amount of service tax and interest of Rs.
12,23,19,106/- alleged to have been not paid
under ‘Construction Service in respect of
Commercial and Industrial Building and Civil
Structure’ during the period from April 2014
to June 2017 should not be demanded and
recovered from the petitioner along with
interest and penalty under sections 78, 77(1)
(a) and 77(2) of the Finance Act,1994.
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7.2 After considering the reply filed by
the petitioner, the Assessing Officer
vide Order-in-original dated 31.03.2019
held that the service tax amounting to
Rs.43,03,591/-and Rs. 9,23,995/- is
recoverable from the petitioner along
with interest and penalty and dropped a
demand of service tax amounting to Rs.
9,64,31,900/-.
7.3 The petitioner therefore, was
subjected to pay the demand of service
tax of Rs. 52,27,586/- exclusive of
interest and penalty.
7.4 It is the case of the petitioner
that the petitioner has accepted the
Order-in-Original and has not challenged
the same by preferring an appeal and
before the petitioner could pay demand of
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Rs. 52,27,586/- along with interest and
penalty, SVLDRS was introduced by Finance
(2) Act,2019 (23/19) vide Chapter-V in
the Gazzete of India Extraordinary and 1st
day of September,2019 was notified to be
the date on which, it came into force as
per the Notification No. 4/2019 dated
21.08.2019.
7.5 By Notification No. 5/2019 dated
21.08.2019, Sabka Vishwas (Legacy Dispute
Resolution) Scheme Rules, 2019 [‘SVLDRS
Rules’ for short] was published in
extraordinary powers conferred vide under
sections 1(1) and (2) of section 132 of
Finance (2) Act,2019.
7.6 The petitioner therefore,
submitted declaration in Form SVLDRS-1
dated 04.10.2019 as per the provision of
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section 125 of SVLDRS read with Rule 3 of
SVLDRS Rules.
7.7 As the petitioner did not prefer
an appeal challenging the demand as per
the Order-in-original amounting to Rs.
52,27,586/- along with interest and
penalty, the petitioner filed declaration
in the category of “arrears” as provided
under section 121(c) read with section 124
of the SVLDRS. The petitioner claimed the
relief of 40% by agreeing to pay 60% of
the arrears of Rs. 52,27,586/- amounting
to Rs. 31,36,551.60. Accordingly, Form
SVLDRS-2 was issued in terms of Rule 6(3)
dated 22.11.2019.
7.8 The designated committed formed
under the provision of the SVLDRS-2,
taking into consideration the appeal filed
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by the department on 6th August 2019, had
opined that the case of the petitioner
falls in the category of 123(a) of the
SVLDRS to determine tax dues and not in
category of 123(e) which prescribes that
where the amount in arrears relating to
the declarant is due, the amount in
arrears to be the ‘Tax Dues’. The
petitioner, therefore, was called upon to
pay amount of Rs. 1,55,32,324/-
considering the appeal filed by the
department against the relief granted in
the Order-in-original to the petitioner as
the amount of tax dues and notice for
personal hearing was issued.
7.9 In response to the aforesaid
notice for personal hearing in Form SVLDRS
2, the petitioner filed reply dated
29.11.2019 contending inter alia that the
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petitioner is not liable to pay the amount
stated in Form SVLDRS-2 as the case of the
petitioner falls in the arrears and the
tax dues would be covered by clause (e) of
section 123 of the SVLDRS and not clause
(a) which is pressed into service by the
Designated Committee. However, the
Designated Committee comprising of the
respondent Nos. 1 and 2 herein, issued the
Form SVLDRS-3 dated 04.12.2019 as per the
provisions of section 127(iv) of SVLDRS
dated 04.12.2019 determining the amount of
payable at Rs. 1,55,32,324/- considering
the tax dues of
Rs. 2,58,87,206/- by granting relief of
Rs.1,03,54,882/-.
7.10 On receipt of the aforesaid Form
SVLDRS-3 the petitioner has affirmed this
petition on 01.01.2020 challenging From
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SVLDRS-3 which, according to the
petitioner, is contrary to the provisions
of the SVLDRS.
7.11 This Court, vide order dated
08.01.2020, as extracted here-in-above
directed the petitioner to pay the
undisputed amount of Rs. 31,36,551.60
which is deposited by the petitioner on
20.01.2020.
8. Learned advocate Mr. D.K.Trivedi for the
petitioner submitted that the provision of
section 121(c) provides that “the amount
in arrears” means the amount of duty which
is recoverable as arrears of duty under
the Indirect Tax Enactment on account of
(I), no appeal having been filed by the
declarant against an Order-in-appeal
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before the expiry of the period of time
for filing appeal.
8.1 It was submitted that admittedly,
the petitioner has not filed any appeal
challenging the demand raised as per the
Order-in-original passed by the
respondent-authority. Therefore, amount
payable by the petitioner as per the
Order-in-original becomes “the amount in
arrears” as per the provision of section
121(c)(i) of the SVLDRS.
8.2 It was thereafter referred to the
provision of section 122(a) to point out
that the provisions of the Finance
Act,1994 are covered by the Scheme.
Thereafter, learned advocate Mr. Trivedi
referred to the provisions of sections
123(a) and 123(e) to submit that the case
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of the petitioner would fall under the
clause (e) and not under clause (a) of
section 123 of SVLDRS.
8.3 Thereafter learned advocate Mr.
D.K.Trivedi referred to clause (c) of sub-
section (ii) of section 124 to submit that
the petitioner is liable to deposit 60% of
the ‘tax dues’ as the amount of arrears of
duty payable by the petitioner forming
‘tax dues’ exceeds Rs. 50 lakhs.
8.4 Thereafter, learned advocate Mr.
Trivedi invited attention of the Court to
the inward stamp on the appeal filed by
the respondent-department which shows that
the appeal was preferred after 30.06.2019
i.e. on 06.08.2019. It was therefore
submitted that admittedly, as on
30.06.2019, no appeal was pending either
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filed by the petitioner or the respondent-
department against the Order-in-original
therefore, the demand raised as per the
Order-in-original would fall within the
scope of “amount in arrears” which would
be tax dues payable as per the Scheme and
accordingly, the petitioner would be
entitled to the benefit of 40% of the
relief as per the section 124(c)(ii) of
the SVLDRS.
8.5 It was submitted that the
respondent-designated authority has not
applied the provisions of the SVLDRS for
issuing the Form SVLDRS-3 and therefore,
the same is liable to be quashed and set
aside and the respondent-authority may be
directed to issue SVLDRS-3 as per the From
SVLDRS 1 filed by the petitioner. In
support of his submissions, reliance was
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placed on the decision of Om Prakash
Kashyap vs. Union of India reported in
2023 (70) GSTL 439 (Jharkhand)more
particularly, paras 5 and 11 thereof which
reads as under:
“5. Learned counsel further pointed
out to the supplementary counter
affidavit filed by the respondents, in
particular para-9 and 10 which are
quoted hereunder :-
“9. That the respondents states and
submits that Section 125 of the
Finance (No.2) Act, 2019 (SVLDRS,
2019) prescribed eligibility to
make a declaration under the
scheme, Section 125 of the Finance
(No.2) Act, 2019 provides for
eligibility of declaration except
for selected exclusions. In
litigation cases, it prohibits
those cases where the appeal has
been finally heard on or before
30.06.2019 and in enquiry/
investigation/ audit, where the
duty has not been quantified before
30.06.2019. Tax dues have been
defined in clause (a), (b), (c),
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(d) and (e) of Section 123 which
also refer to the cut-off date of
30.06.2019 in case of litigation
and enquiry/ investigation/ audit.
However, “amount of arrear” as
defined in sub-clause (i) and (ii)
of clause (c) of Section 121 of the
Act, does not provide any such cut-
off date. The said clause reads as
under:-
“(c)” amount in arrears” means
the amount of duty which is
recoverable as arrears of duty
under the indirect tax enactment,
on account of–
(i) No appeal having been filed
by the declarant against an order
or an order in appeal before
expiry of the period of time for
filing appeal; or
(ii) An order in appeal relating
to the declarant attaining
finality; or
(iii) The declarant having filed
a return under the indirect tax
enactment on or before the 30th
day of June, 2019, wherein he has
admitted a tax liability but not
paid it;
The same is also provided in the
definition of ‘tax dues’ in clause
(e) of section 123 of the Act. From
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a consolidated reading of Section
121 and 123 of the Act, it can be
ascertained that the cases where
the show-cause notices were issued
on or after 01.07.2019 and tax dues
having not been quantifies on or
before 30.06.2019, shall not be
eligible under litigation or
enquiry/investigation/audit
category but under “arrears”
category, provided all statutory
requirements pertaining to appeal
and review have been fulfilled.
Clause 2(viii) of the Circular
No.1074/07/2019-CX dated
12.12.2019, only elaborated this
provision, which was well provided
in the Act. The said clause also
clearly states that it was to
reduce litigation, which was one of
the objectives of the scheme.
Accordingly, the said circular is
within the scope of the SVLDRS,
2019.
In addition, Section 133 of the Act
provides that for proper
administration of the scheme, the
Central Board of Indirect Taxes and
Customs may issue orders;
instructions and directions.
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10. That the petitioner is not
entitled to any equitable
relief/reliefs from this Hon’ble
Court & the Writ Application is fit
to be dismissed inlimine.”
It is submitted that as per the
statements made in the supplementary
counter affidavit the declaration of
the petitioner would fall in the
category of “Litigation”, if any
appeal had been preferred by 30th June
2019 only, otherwise the case of the
declarant such as petitioner would
fall under the category “amount in
arrears” as defined in Sub-clause (i)
of Sub-section (c) of Section 121 of
the Act which does not provide any
such cut-off date. It is submitted
that in that view of the matter the
categorization of the case of the
petitioner in “Litigation” category
only on contemplation of filing of an
appeal by the Department beyond the
time limit and that too after
rejection of SVLDRS-1 on 5th May 2020
was not proper in the eyes of law as
there was no appeal pending as on 30th
June 2019 contemplated in terms of
Section 123 of the Scheme. It is
submitted that the declaration made by
the petitioner was therefore within
time covered under Circular dated 12th
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December 2019 but rejected on
misconception that it fell under
“Litigation” category and not “amount
in arrears”. It is submitted that
under Section 121 Sub-section (i)(c)
an appeal, if any, could be filed only
by the declarant and not on the part
of the respondent Department. So on a
holistic construction of the entire
Scheme and even applying the relevant
provisions of Section 123 read with
Section 125 of the Scheme, the
declaration made by the petitioner
under “amount in arrears” category
could not have been rejected on the
ground that the respondent
contemplated preferring the appeal
against the order in original and that
too beyond the period of limitation.”
11. It further transpires that crux of
the case revolves around the category
i.e., arrears or litigation under
which the case of the Petitioner will
fall. From bare perusal of the
aforesaid provisions of Scheme, it
would transpire that the nature of
cases falling under Section 121(c) is
categorized under “arrears category”.
Section 123(a), 123(b) and 123(c)
deals with cases falling under
“litigation category” for determining
tax dues under the Scheme. The said
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provisions of Section 123 are not
applicable to the case of the
Petitioner, as admittedly, no Appeal
was pending as on 30.06.2019 and the
show cause notice was received by the
Petitioner on 10.08.2019 i.e., after
the cut-off date of 30.06.2019.
Further, no enquiry or investigation
or audit was pending against the
Petitioner as on 30.06.2019. Thus,
calculation of Tax payable under
Section 124(1)(a) by the Designated
Committee is unwarranted.
On the contrary, Section 121(c) to be
read with Clause 2(viii) of the
Circular dated 12.12.2019 the case of
the Petitioner would fall under
“arrears category” as vide aforesaid
Circular dated 12.12.2019 has
specifically provided, inter alia,
that since the main object behind the
scheme is to liquidate legacy cases
under Central Excise and Service Tax
even if Show Cause Notice was issued
on or before 01.07.2019 and such cases
are also not covered under any of
categories under the Scheme, then also
such cases would became eligible under
the Scheme in ‘arrears category” for
the purpose of availment of the
benefit of the Scheme. Further, the
word “order” occurring in Section
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125(1)(c) will mean the order of
determination under Indirect Tax
enactment as per Section 121 (o) of
the Scheme.
From bare perusal of Section 121(c) &
124(1)(c), it would be evident that
the case of Petitioner will fall under
the “arrears category” nonetheless
litigation category. At the cost of
repetition, admittedly, the Show Cause
Notice was issued on 28.10.2019 i.e.,
after 30th June, 2019, and the same
was adjudicated on 14th January, 2020.
It further appears that, even if it is
to be accepted that Respondent-
Department was intended to file Appeal
against the Order-in-Original dated
14.01.2020, then also, such plea or
ground of Respondents would not change
the nature of category of the
Petitioner-company. Admittedly, as per
respondents they themselves have
contended in their counter affidavit
that they have filed an Appeal before
the Appellate Tribunal on 25.06.2020.
Thus, as on the date of filing of the
declaration form by the Petitioner, no
Appeal was filed and/or pending before
the Appellate Forum. Indeed, for the
purpose of determination of tax dues,
the case of the petitioner does not
fall under Section 123 of the scheme
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of 2019 as Department had not
preferred an Appeal against the Order-
in-Original as on the said date. It
further appears that the appeal of the
Department has been filed after the
expiry of period of limitation
prescribed under Section 86(3) of the
Finance Act as the said provision
provides a period of limitation of
three months which has expired on
14.04.2020. Thus, it transpires that
in the opinion of the respondent
filing of the appeal has led to change
in the category of petitioner from
“arrear category” to “litigation
category” which view is beyond the
letter and spirit of the scheme.”
9. Per contra, learned advocate Mr. Siddharth
Dave for the respondent submitted that
admittedly, the petitioner did not pay
the amount required to be paid as per Form
SVLDRS-3 within 30 days or within the
extended period of time and as such, as
per the provision of section 126 read with
the provision of section 127(4) of the
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SVLDRS and as such, the petitioner is not
liable to any relief.
9.1 It was further submitted that the
designated authority has considered the
pending appeal filed by the respondent-
department and thereafter issued Form
SVLDRS-2 and SVLDRS-3 which is as per the
provisions of the Scheme as per the
pending appeal petitioner would be
covered by the provision of section
SVLDRS.
10. Having heard learned advocates for the
respective parties and having considered
the facts of the case, it would be germane
to refer to the relevant provisions of
SVLDRS:
“121. In this Scheme, unless the
context otherwise requires,–
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(i) no appeal having been filed by the
declarant against an order or an order
in appeal before expiry of the period
of time for filing appeal; or……..
123. Tax Dues
For the purposes of the Scheme, “tax
dues” means–
(a) where–
(i) a single appeal arising out of an
order is pending as on the 30th day
of June, 2019 before the appellate
forum, the total amount of duty which
is being disputed in the said appeal;
(ii) more than one appeal arising out
of an order, one by the declarant and
the other being a departmental
appeal, which are pending as on the
30th day of June, 2019 before the
appellate forum, the sum of the
amount of duty which is being
disputed by the declarant in his
appeal and the amount of duty being
disputed in the departmental appeal:
Provided that nothing contained in
the above clauses shall be applicable
where such an appeal has been heard
finally on or before the 30th day of
June, 2019……..
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(b) where a show cause notice under
any of the indirect tax enactment has
been received by the declarant on or
before the 30th day of June, 2019,
then, the amount of duty stated to be
payable by the declarant in the said
notice:
Provided that if the said notice has
been issued to the declarant and
other persons making them jointly and
severally liable for an amount, then,
the amount indicated in the said
notice as jointly and severally
payable shall be taken to be the
amount of duty payable by the
declarant;
(c) where an enquiry or investigation
or audit is pending against the
declarant, the amount of duty payable
under any of the indirect tax
enactment which has been quantified
on or before the 30th day of June,
2019;
(d) where the amount has been
voluntarily disclosed by the
declarant, then, the total amount of
duty stated in the declaration;
(e) where an amount in arrears
relating to the declarant is due, the
amount in arrears.
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124. Relief available under the
Scheme:-
(1) Subject to the conditions
specified in sub-section (2), the
relief available to a declarant under
this Scheme shall be calculated as
follows:–
(a) where the tax dues are relatable
to a show cause notice or one or more
appeals arising out of such notice
which is pending as on the 30th day of
June, 2019, and if the amount of duty
is,–
(i) rupees fifty lakhs or less, then,
seventy per cent. of the tax dues;
(ii) more than rupees fifty lakhs,
then, fifty per cent. of the tax dues;
………….
126. Verification of declaration by
designated committee.
(1) The designated committee shall
verify the correctness of the
declaration made by the declarant
under section 125 in such manner as
may be prescribed: Provided that no
such verification shall be made in
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case where a voluntary disclosure of
an amount of duty has been made by the
declarant.
(2) The composition and functioning of
the designated committee shall be such
as may be prescribed.
127. Issue of statement by
designated committee.
(1) Where the amount estimated to be
payable by the declarant, as estimated
by the designated committee, equals
the amount declared by the declarant,
then, the designated committee shall
issue in electronic form, a statement,
indicating the amount payable by the
declarant, within a period of sixty
days from the date of receipt of the
said declaration.
(2) Where the amount estimated to be
payable by the declarant, as estimated
by the designated committee, exceeds
the amount declared by the declarant,
then, the designated committee shall
issue in electronic form, an estimate
of the amount payable by the declarant
within thirty days of the date of
receipt of the declaration.
(3) After the issue of the estimate
under sub-section (2), the designated
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committee shall give an opportunity of
being heard to the declarant, if he so
desires, before issuing the statement
indicating the amount payable by the
declarant: Provided that on sufficient
cause being shown by the declarant,
only one adjournment may be granted by
the designated committee.
(4) After hearing the declarant, a
statement in electronic form
indicating the amount payable by the
declarant, shall be issued within a
period of sixty days from the date of
receipt of the declaration……..
(8) On payment of the amount indicated
in the statement of the designated
committee and production of proof of
withdrawal of appeal, wherever
applicable, the designated committee
shall issue a discharge certificate in
electronic form, within thirty days of
the said payment and production of
proof.”
11. Considering the above provisions of the
SVLDRS, it is apparent and crystal clear
that the case of the petitioner would fall
in the category of “amount in arrears” as
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admittedly the petitioner has not
preferred any appeal before 30.06.2019
challenging the Order-in-original and the
demand raised in the Order-in-original
amounting to Rs.32,27,856/-has achieved
finality so far as the petitioner is
concerned and accordingly, the petitioner
would be entitled to the benefit of the
SVLDRS which has a basic feature of
reducing the disputes and create an
atmosphere of trust between the assessee
and the respondent-department.
12. However, in the facts of the case it
appears that, the designated committee,
contrary to the provision of the SVLDRS
and with total non-application of mind has
issued Form SVLDRS-2 and without taking
into consideration reply of the petitioner
29.11.2019 has issued Form SVLDRS-3 in a
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undefined
mechanical manner. The petitioner has been
vigilant to challenge such SVLDRS-3
immediately by preferring this petition
and this Court has directed the petitioner
to deposit 60% of the tax arrears
amounting to Rs. 31,32,551.60 which
petitioner has already deposited.
13. Therefore, in the facts of the case, when
there was no appeal pending filed by the
petitioner, the amount of demand raised in
the Order-in-original would become the tax
dues being the amount in arrears as per
clause (e) of section 123 of SVLDRS and
accordingly, the petitioner is entitled to
get the benefit of the provision of
section 124 of the SVLDRS by paying 60% of
the amount in arrears as tax dues which
the petitioner has already deposited.
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14. In view of the above facts, the
respondent-authority is required to issue
revised Form SVLDRS-3 along with Form
SVLDRS-4 as per the provision of SVLDRS
accepting the amount of Rs. 31,32,551.60
deposited by the petitioner as eligible
amount for granting the benefit of SVLDRS.
All subsequent proceedings would therefore
be of no consequence and are accordingly
required to be set aside.
15. In view of foregoing reasons, the
petition succeeds and is allowed. The
respondents are therefore, directed to
issue Form SVLDRS-3 accepting the amount
of Rs. 31,32,551.60 deposited by the
petitioner as eligible amount for granting
the benefit of SVLDRS along with Form
SVLDRS-4, and consequently all subsequent
proceedings would be of no avail and are
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accordingly set aside. Such exercise shall
be completed within twelve weeks from the
date of receipt of copy of this order.
Rule is made absolute to the aforesaid
extent. No order as to costs.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
JYOTI V. JANI
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