M/S Jagadish Advertising vs. Designated Committee

Held

The Court held that the Designated Committee, under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, did not have the jurisdiction to adjudicate upon the entitlement or disentitlement of an assessee to CENVAT credit. Its role was limited to verifying the correctness of the declaration made by the declarant. The insertion of a 'Remarks' column in Forms SVLDRS-2 and SVLDRS-3, used to disallow the petitioner's CENVAT credit of Rs. 4,15,14,081/-, was an act beyond the Committee's jurisdiction. The Court found that the Scheme was designed for minimum interface and electronic dispute resolution, and the Committee's attempt to adjudicate the dispute regarding input credit was contrary to this intent. The Court also held that the prayers in the writ petition had not become infructuous, as the core issue was the quashing of the Forms containing the unauthorized adjudication. The Court quashed the 'Remarks' column in Annexures-A and B and directed the Designated Committee to accept the petitioner's declaration in Form SVLDRS-1 as final, issue a modified Form SVLDRS-3 giving credit for Rs. 4,15,14,081/-, collect the remaining dues, and issue a Discharge Certificate. The ratio is that a dispute resolution scheme's designated committee cannot adjudicate claims but must verify declarations.

Facts

The petitioner, M/s. Jagadish Advertising, an advertising agency, received a Show Cause Notice (SCN) on September 7, 2018, proposing a demand of Rs. 13,06,07,173/- in service tax, appropriation of Rs. 91,87,632/- already paid, and denial of CENVAT credit of Rs. 4,15,14,081/- taken for the period October 2012 to June 2017. The petitioner applied for the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, declaring an estimated tax liability of Rs. 13,38,22,524/-. The Designated Committee issued Form SVLDRS-2, indicating a liability of Rs. 5,62,21,162/-, disallowing the claimed CENVAT credit of Rs. 4,15,14,081/- through a 'Remarks' column. The petitioner disagreed, sought a personal hearing, but the Committee issued Form SVLDRS-3 confirming the higher liability, again disallowing the CENVAT credit. The petitioner challenged these forms.

Key Issues

1. Whether the Designated Committee, under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, had the jurisdiction to adjudicate upon the entitlement or disentitlement of an assessee to CENVAT credit, or was it merely required to verify the correctness of the declaration? (Section 126 of the Finance (No.2) Act, 2019) 2. Whether the prayers made in the writ petition had become infructuous due to the expiration of the Sabka Vishwas Scheme on June 30, 2020? Petitioner's Arguments: The petitioner argued that the Designated Committee lacked jurisdiction to adjudicate entitlement to CENVAT credit, its role being limited to verifying the declaration's correctness. They contended that the disallowance of CENVAT credit through a 'Remarks' column in Forms SVLDRS-2 and SVLDRS-3 was beyond the Committee's powers and constituted an adjudication. They relied on the Scheme's intent for dispute resolution and amnesty, and a clarification in a Circular regarding input credit. Revenue's Arguments: The Revenue contended that the petitioner was not entitled to the CENVAT credit as they had not complied with the CENVAT Credit Rules. They argued that Form SVLDRS-3 was therefore in order. They also argued that the prayers in the writ petition had become infructuous.