M/S. S.N. Jyoti Associates vs. Union Of INDIA

Facts

The Petitioners, M/s. S. N. Jyoti Associates, challenged a communication dated February 27, 2020, from the Joint Commissioner, GST & Central Excise, Bhubaneswar. This communication demanded Rs. 13,05,125/- for their application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme). The Petitioners had applied on December 23, 2019, and agreed to a departmental calculation of Rs. 51,62,527/- as payable. However, they had already deposited Rs. 56,37,449/- against an original demand of Rs. 1,03,25,054/- (including duty and interest) at the first appeal stage before the CESTAT. The dispute arose because the Department treated only Rs. 38,57,402/- as duty and the remaining Rs. 17,80,047/- as interest, which they argued was not adjustable for the SVLDRS pre-deposit.

Held

The Court held that the expression 'tax dues' as defined in Section 123(a)(i) of the Finance Act, 1994, for the SVLDR Scheme, includes both the 'duty' component and the 'interest' component, especially when an appeal is pending before an appellate forum. The Court disagreed with the Revenue's submission that 'duty' and 'tax dues' were interchangeable, noting that the legislature used distinct terms with purpose. The Court found that Section 123(a)(i) refers to the 'total amount of duty which is being disputed in the said appeal,' and in this case, the disputed amount of Rs. 1,03,25,054/- before the CESTAT clearly included both duty and interest. Therefore, the Petitioners' deposit of Rs. 56,37,449/- was considered sufficient towards the 'tax dues' as defined. The impugned communication demanding further payment was set aside, and the Department was directed to consider the SVLDR Scheme application without insisting on further deposit. The Petitioners were to be given a hearing, and the final order communicated within three months.

Key Issues

1. Whether the expression 'tax dues' as defined under Section 123(a)(i) of the Finance Act, 1994 (FA), for the purposes of the SVLDR Scheme, encompasses only the 'duty' amount or includes 'interest' as well, when an appeal is pending before an appellate forum? Petitioner's contention: The Petitioners argued that they had already paid Rs. 56,37,449/-, which exceeded the Rs. 51,62,527/- computed by the Department for the SVLDR Scheme. They contended that the 'tax dues' for the purpose of Section 124(2) FA should include the entire amount paid, as the appeal before CESTAT involved a total demand of Rs. 1,03,25,054/-, which included both duty and interest. Revenue's contention: The Revenue argued that 'duty' and 'tax dues' were interchangeable. They contended that only Rs. 38,57,402/- corresponded to the duty amount, and the remaining Rs. 17,80,047/- deposited by the Petitioners was adjustable against interest and not considered for the SVLDRS pre-deposit requirement. They relied on Section 124(1)(a) FA, stating that 50% of the duty amount (since it was over Rs. 50 Lakhs) had to be paid.