Commissioner Of Central Excise And Service Tax Dehradun vs. Patnajali Ayurveda LTD.

Facts

The respondent, Patanjali Ayurveda Ltd., had deposited Rs. 3,19,69,680/- under protest on January 18, 2014, towards Central Excise Duty and interest. Subsequently, the appellant, Commissioner of Central Excise and Service Tax, Dehradun, issued a show cause notice on March 28, 2014, demanding Central Excise Duty of Rs. 56,00,00,135/- for clearances between October 2009 and September 2013, along with interest and penalty. While the show cause notice was pending, the respondent applied under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The appellant issued Form SVLDRS-3, disclosing an estimated payable amount of Rs. 11,02,49,115/-. The respondent disputed this estimate, asserting that the entire Rs. 3,19,69,680/- deposited under protest should be adjusted. The appellant contended that only the amount deposited towards Central Excise Duty, not interest, was adjustable. The respondent filed a writ petition challenging the SVLDRS-3 and seeking adjustment of the full deposit and refund of any excess.

Held

The Court held that the impugned judgment of the learned Single Judge, which allowed the writ petition, did not call for interference. The Court found that the decision of the Punjab and Haryana High Court in Schlumberger Solutions Pvt. Ltd. squarely covered the issue in favour of the assessee, and the department had accepted that judgment without filing a Special Leave Petition. The Court agreed with the respondent that the appellant department was not justified in estimating the duty payable while ignoring the amount deposited under protest. The Court reasoned that the amount deposited under protest had no specific colour, as it was made before the crystallization of liability as duty or interest. The show cause notice was issued after the deposit, and the issues regarding duty and interest were at large. Furthermore, the circular issued by the CBIC supported the adjustment of the entire amount deposited under protest prior to adjudication, whether towards duty or interest. Therefore, the appeal was dismissed.

Key Issues

1. Whether the amount of Rs. 3,19,69,680/-, deposited by the respondent under protest, which included amounts towards Central Excise Duty and interest, is liable to be adjusted against the tax liability payable under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, as per Section 124(2) of the Finance Act, 2019? Petitioner's arguments: The respondent argued that the entire amount deposited under protest, irrespective of whether it was for duty or interest, should be adjusted towards the liability under the scheme. They relied on the judgment of the Punjab and Haryana High Court in Schlumberger Solutions Pvt. Ltd. Vs. Commissioner Central GST and Others, and a circular issued by the CBIC dated December 12, 2019, which clarified that deposits made under protest during enquiry, investigation, or audit should be adjusted. Revenue's arguments: The appellant contended that only the amount deposited towards Central Excise Duty was adjustable under the scheme, and not the amount deposited towards interest. They argued that the Punjab and Haryana High Court judgment was only persuasive and not binding. They also stated that the scheme, as per Section 124(1), only provided relief on tax dues.