Carpet Export Promotion Council vs. Union Of INDIA & Anr.

Held

The Court held that the rejection of the petitioner's SVLDR Scheme application was unjustified and in violation of the principles of natural justice. The Court found that the petitioner had already deposited the tax dues and had sought waiver of interest and penalty prior to the scheme's commencement. The Court noted that the petitioner would not have benefited from not disclosing the amounts, and the errors in the declaration were curable. The Court concurred with the Bombay High Court's view in *Thought Blurb v. Union of India & Ors.* that summary rejection without an opportunity to be heard violates natural justice. The Court reasoned that the SVLDR Scheme should be interpreted liberally to achieve its object of resolving disputes. Therefore, the rejection was considered arbitrary and unreasonable, offending Article 14 of the Constitution. The impugned order was set aside, and the designated authority was directed to process the petitioner's declaration.

Facts

The petitioner, Carpet Export Promotion Council, filed an application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme). The application was rejected by the designated authority on the grounds of "ineligibility" with remarks "incomplete and selective declaration". The respondents contended that the petitioner's declaration was incomplete as it failed to include certain amounts related to wrongful availment of cess, short payment of service tax, and wrongful availment of Cenvat Credit, along with outstanding interest and penalty. The petitioner had previously reversed certain amounts but interest and penalty remained due. The petitioner had also deposited some amounts but interest and penalty were outstanding. The petitioner argued that there was a consensus for waiver of interest and penalty if the amounts were deposited before a certain date.

Key Issues

1. Whether the rejection of the petitioner's SVLDR Scheme application on the ground that the amount declared under duty details and duty paid did not include specific amounts related to audit objections is justified? Petitioner's arguments: The petitioner contended that the rejection was arbitrary and violated principles of natural justice. They argued that the errors in the declaration were curable and did not affect the estimation of the payable amount under the scheme. The petitioner had already deposited the tax dues and sought waiver of interest and penalty, which they claimed was agreed upon. They relied on the legislative intent of the SVLDR Scheme to resolve legacy disputes and argued for a liberal interpretation. Revenue's arguments: The respondents argued that the petitioner's declaration was incomplete and selective, as it did not account for all outstanding liabilities, including interest and penalty, related to the identified audit objections. They maintained that the declaration was factually incorrect regarding the duty details and pre-deposit of duties.