Bombay High Court Quashes Order of Designated Committee of Rejecting Declaration under SVLDR Scheme

Bombay High Court Quashes Order of Designated Committee of Rejecting Declaration under SVLDR Scheme

The Bombay High Court (HC) on 8 March 2021 in the case titled Morde Foods Pvt. Ltd. & another (Petitioners) v. Union of India & others (Respondents) quashed the decision of the Designated Committee wherein it rejected the declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS).

The HC division bench comprising of Justices Ujjal Bhuyan and Abhay Ahuja observed that the decision of the designated committee rejecting the declaration of the petitioner under the litigation category on the ground of ineligibility was not correct and is liable to be interfered with.

The factual background of the case is that in May 2014, an investigation was initiated against the petitioner by the Directorate General of Central Excise Intelligence.

It was alleged that the goods supplied by the petitioners to industrial/institutional consumers through distributors were not covered under the exemption provided in Rule 3 of the Legal Metrology (Packaged Commodity) Rules, 2011 and therefore, excise duty was payable on such goods on MRP basis under Section 4A of the Act.

During investigation, the petitioners paid Rs.1,65,00,000 under protest. The show-cause notice (SCN) was issued to the petitioner for recovering the differential excise duty payable by the petitioner along with interest and penalty.

The adjudicating authority passed order-in-original confirming the demand of differential central excise duty amounting to Rs.4,06,47,261 along with interest and penalty in respect of goods cleared.

The said order was challenged by the petitioners through an appeal before the CESTAT. The appeal was finally heard by the CESTAT wherein it set aside the order-in-original and remanded the matter back to the original authority for a fresh decision after hearing the petitioners.

The respondents contended that the CESTAT had confined re-hearing by the original authority upon remand to the question of limitation only, petitioners have contended that CESTAT had set aside the order-in- original and thereafter had remanded the matter for de novo decision.

The petitioner had challenged the order-in-original on the ground of erroneous computation in determining duty liability resulting in higher duty liability; impropriety in the imposition of penalty, etc.

It was argued during the hearing that the SCN was barred by limitation. The CESTAT concluded that the adjudicating authority did not apply its mind to the essential aspect of limitation which has a bearing on the outcome of the process initiated by the show cause notice.

It set aside the impugned order and the matter was remanded back to the original authority for a fresh decision on the point of limitation after granting an opportunity to the appellant to be heard on all the submissions made in the appeal.

A writ petition was filed before the HC against the order of the CESTAT wherein it set aside the decision of the designated committee and remanded the matter back to the designated committee to take a fresh decision by law.

It relied on the judgment of a division bench of the HC in the case of Thought Blurb v. Union of India, 2020 (10) TMI 1135, wherein the HC after examining the budget speech of the Finance Minister while introducing the scheme and considering the statement and objects of the scheme and the views expressed by the Board held that a liberal view is required to be taken to make the scheme successful.

The Court while allowing the writ petition directed that the petitioner should be given a due opportunity of hearing by treating its declaration under the litigation category as a valid declaration.