# M/s Fashion Dezire & Anr v. U.O.I. & Ors

- **Citation:** (2021) 9 ILRA 1359
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-08-26
- **Case number:** Writ Tax No. 220 of 2020
- **Bench:** Naheed Ara Moonis, Saumitra Dayal Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-fashion-dezire-anr-v-u-o-i-ors-47532
- **Pages:** 9

## Headnote

A. Tax Law - Central Excise Duty - Sabka
Vishwas
(Legacy
Dispute
Resolution)
Scheme, 2019 - Sections 121(c), 121(c)(i),
123,
123(a)(i),
124,
127(5),
127(3).
1360 INDIAN LAW REPORTS ALLAHABAD SERIES
127(4),
127(8)
&
129(1)(a);
Sabka
Vishwas
(Legacy
Dispute
Resolution)
Scheme Rules, 2019: Rule 6(2).

Sabka
Vishwas
(Legacy
Dispute
Resolution) Scheme, 2019 - Sections
121(c), 123 & 124 - There is a complete
absence of any statutory intent to allow
for
change
of
case
category
from
'Litigation' or 'Arrears' or to redetermine
of the 'tax dues' and EAP upon an
adjudication order coming into existence
during the pendency of proceedings under
the Scheme. (Para 14, 16)

The computation of the 'tax dues' and
consequently determination of the EAP would
depend on the case category 'Litigation' or
'Arrears'. The computation of the EAP under
'Litigation'
i.e.
pending
adjudication
case
category, would be substantially lower than that
computed
under
the
'Arrears'
category.
Therefore, once the petitioner had (rightly) filed
the (first) declaration on 10.10.2019 under the
case category 'Litigation', determination of the
EAP amount would be governed accordingly. It
cannot be changed, thereafter. (Para 14)

B. The proceedings under the Scheme
must necessarily take precedence over the
regular adjudication proceedings under
the Act. If the adjudication proceedings is
allowed to continue and be concluded during
the
pendency
of
a
Discharge
Certificate
proceeding, arising from a valid declaration filed
under the Scheme, it would defeat the
declaration made and, therefore, defeat the
object of reform i.e. to end 'legacy disputes'.
(Para 16)

Any interpretation given to the Scheme as
may defeat its purpose and object of the
reform, must be rejected. A purposive
interpretation must be adopted. (Para 17)

The statute having prescribed the manner
to raise the demand of EAP and to pay
that amount by a particular method, it
could not have been demanded or paid
otherwise. (Para 18)

C. In absence of any statutory risk to the
adjudication proceedings being hit by any
rule
of
limitation,
those
proceedings
should necessarily have been kept in
abeyance
till
the
conclusion
of
the
proceedings under the Scheme. The order
dated 30.12.2019 was tainted with impropriety,
to the extent that order was passed during
thirty (30) days from issuance of the SVLDRS-2
on 4.12.2019. Therefore, in the first place, it
could not have been enforced till 03.01.2020, in
view of the language of S.127(2) and Section
127(5) of the Scheme. (Para 19, 20)

Till 03.01.2020, the Order-in-Original dated
30.12.2019 remained in a state of suspended
animation. Thereafter, it has continued in that
state, till date. It is so, since, the petitioner
disputed the computation of 'tax dues' and filed
written
objections/arguments
to
the
EAP
demanded on the (first) SVLDRS-2 dated
04.12.2019. In view of those objections filed
and by virtu

## Text

9 All M/s Fashion Dezire & Anr. Vs. U.O.I. & Ors.
1359
dispute. The conciliation proceedings had
started, which ended in failure. Thereafter,
the appropriate Government referred the
matter regarding validity of termination of
the petitioner for adjudication.

34. The principles enunciated in
Prabhakar show that contextually, it was
a case with striking similarity to the case
in hand. The workman commenced
conciliation proceedings after a period of
14 years and for the delay, the only
explanation given by him was a repeat
approach to the Management on several
occasions with a request to reinstate him
in service. The Labour Court had
answered the reference in favour of the
workman, ordering his reinstatement in
service without back-wages. The learned
Single Judge of the High Court had
upheld the award. The Division Bench of
the High Court thought that it was a case
where there was no industrial dispute
alive worth adjudication, and quashed the
award. Their Lordships of the Supreme
Court upheld the view taken by the
Division Bench, considering the period of
time elapsed and the action of the
workman in merely representing his case
with the employers to explain his delayed
approach for conciliation under the Act of
1947.

35. In the present case also, this
Court finds that the workman spent too
long a period of time, if at all he is to be
believed, in going back to the employers
time over again, where it was apparent
that the same would elicit no meaningful
response. At best, the workman was
flogging a dead horse, from which the
only inference that can be drawn is one of
a dead industrial dispute. That apart, this
Court reiterates, at the cost of some
repetition, that the evidence in the case
does not inspire confidence about the
workman actually representing his case
with the employers through all the
applications that he has placed on record.

36. In view of all, that has been
noticed hereinabove, this Court is of
opinion that the industrial dispute that
was referred for adjudication to the
Labour Court, was indeed stale and a
dead dispute.

37. In the result, this writ petition
succeeds and is allowed. The impugned
award dated 27.01.2012, published on
12.04.2012 passed by the Presiding Officer,
Labour Court, Lucknow in Adjudication
Case no.252 of 2005 is hereby quashed.

38. There shall be no order as to costs.
----------
(2021)09ILR A1359
ORIGINAl JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 26.08.2021

BEFORE

THE HON'BLE NAHEED ARA MOONIS, J.
THE HON'BLE SAUMITRA DAYAL SINGH, J.

Writ Tax No. 220 of 2020

M/s Fashion Dezire & Anr. ...Petitioners
Versus
U.O.I. & Ors. ...Respondents

Counsel for the Petitioners:
Sri Nishant Mishra, Sri Tanmay Sadh

Counsel for the Respondents:
A.S.G.I., Sri Krishna Kant Shukla, Sri
Ramesh Chandra Shukla

A. Tax Law - Central Excise Duty - Sabka
Vishwas
(Legacy
Dispute
Resolution)
Scheme, 2019 - Sections 121(c), 121(c)(i),
123,
123(a)(i),
124,
127(5),
127(3).
1360 INDIAN LAW REPORTS ALLAHABAD SERIES
127(4),
127(8)
&
129(1)(a);
Sabka
Vishwas
(Legacy
Dispute
Resolution)
Scheme Rules, 2019: Rule 6(2).

Sabka
Vishwas
(Legacy
Dispute
Resolution) Scheme, 2019 - Sections
121(c), 123 & 124 - There is a complete
absence of any statutory intent to allow
for
change
of
case
category
from
'Litigation' or 'Arrears' or to redetermine
of the 'tax dues' and EAP upon an
adjudication order coming into existence
during the pendency of proceedings under
the Scheme. (Para 14, 16)

The computation of the 'tax dues' and
consequently determination of the EAP would
depend on the case category 'Litigation' or
'Arrears'. The computation of the EAP under
'Litigation'
i.e.
pending
adjudication
case
category, would be substantially lower than that
computed
under
the
'Arrears'
category.
Therefore, once the petitioner had (rightly) filed
the (first) declaration on 10.10.2019 under the
case category 'Litigation', determination of the
EAP amount would be governed accordingly. It
cannot be changed, thereafter. (Para 14)

B. The proceedings under the Scheme
must necessarily take precedence over the
regular adjudication proceedings under
the Act. If the adjudication proceedings is
allowed to continue and be concluded during
the
pendency
of
a
Discharge
Certificate
proceeding, arising from a valid declaration filed
under the Scheme, it would defeat the
declaration made and, therefore, defeat the
object of reform i.e. to end 'legacy disputes'.
(Para 16)

Any interpretation given to the Scheme as
may defeat its purpose and object of the
reform, must be rejected. A purposive
interpretation must be adopted. (Para 17)

The statute having prescribed the manner
to raise the demand of EAP and to pay
that amount by a particular method, it
could not have been demanded or paid
otherwise. (Para 18)

C. In absence of any statutory risk to the
adjudication proceedings being hit by any
rule
of
limitation,
those
proceedings
should necessarily have been kept in
abeyance
till
the
conclusion
of
the
proceedings under the Scheme. The order
dated 30.12.2019 was tainted with impropriety,
to the extent that order was passed during
thirty (30) days from issuance of the SVLDRS-2
on 4.12.2019. Therefore, in the first place, it
could not have been enforced till 03.01.2020, in
view of the language of S.127(2) and Section
127(5) of the Scheme. (Para 19, 20)

Till 03.01.2020, the Order-in-Original dated
30.12.2019 remained in a state of suspended
animation. Thereafter, it has continued in that
state, till date. It is so, since, the petitioner
disputed the computation of 'tax dues' and filed
written
objections/arguments
to
the
EAP
demanded on the (first) SVLDRS-2 dated
04.12.2019. In view of those objections filed
and by virtue of Sections 127(3) and 127(4) of
the Scheme, the Designated Committee was
obligated to deal with the same and necessarily
raise an appropriate final demand of EAP, on
SVLDRS-3, preferably on or before 29.12.2019.
(Para 21, 24)

D. In absence of consequences being
provided, the time limit/provisions would
remain
directory.
In
absence
of
any
consequence of abatement etc. being prescribed
either by the Scheme or the Rules, the time limit
of sixty (60) days under Section 127(4) of the
Scheme is purely directory. The statutory
authority/Designated Committee having failed to
act within time contemplated under the Scheme,
it cannot escape its obligation - to issue the
appropriate final demand of EAP on form
SVLDRS-3. (Para 23)

E. The principle "competence of a Court to
try a case goes to the very root of the
jurisdiction, and where it is lacking, it is a
case of inherent lack of jurisdiction". Either
the appeal from such order must have been
filed on or before 30.06.2019 or the limitation to
file that appeal must have expired (at the time
of filing the declaration). In the present case,
neither condition was fulfilled on 31.12.2019.
Therefore the (second) declaration filed by the
petitioners arising from the adjudication order
dated 30.12.2019 was non-est. It was not
maintainable in law. It was entertained and a
9 All M/s Fashion Dezire & Anr. Vs. U.O.I. & Ors.
1361
demand of EAP dated 17.01.2020 was raised
thereon, without any jurisdiction. (Para 25)

Writ petition partly allowed, with direction
upon the Designated Committee. Challenge to
adjudication
order
dated
30.12.2019
not
entertained. (Para 27, 28)

Writ petition partly allowed. (E-4)

Precedent followed:

1. M/s Jay Shree Industries Vs U.O.I. & anr.,
Writ Tax No. 832 of 2020, decided on
06.08.2021 (Para 17)

2. R.E.M.S. Abdul Hameed Vs Govindaraju &
ors., (1999) 4 SCC 663 (Para 17)

3. Patna Improvement Trust Vs Smt.Lakshmi
Devi, AIR 1963 SC 1077 (Para 18)

4. Sharif-Ud-din Vs AbduL Gani Lone, (1980)
SCC 403 (Para 23)

5. Hiralal Patni Vs Sri Kali Nath, AIR 1962 SC
199 (Para 25)

Present petition assails estimate on the
Form SVLDRS-2 dated 04.12.2019 and
adjudication order dated 30.12.2019.

(Delivered by Hon'ble Naheed Ara
Moonis, J.
 &
Hon'ble Saumitra Dayal Singh, J.)

1. Heard Shri Nishant Mishra, learned
counsel for the petitioners and Shri Ramesh
Chandra Shukla, learned counsel for the
Revenue. Shri Shukla has placed on record
the written instructions received by him.
The same has been marked as ''X' and
retained on record.

2. Present petition has been filed to
challenge the estimate furnished to the
petitioners on the Form SVLDRS-2 dated
04.12.2019, under the Sabka Vishwas
(Legacy Dispute Resolution) Scheme, 2019
(hereinafter referred to as 'the Scheme'), to
the extent, the Estimate Amount Payable
('EAP' in short) has been determined at Rs.
70,11,055.50 against total disputed ''tax
dues' taken at Rs. 1,40,22,111/-. According
to the petitioners, the net EAP amount
should have been computed at Rs.
15,37,816.00 against the total disputed ''tax
dues' Rs. 80,75,626/- only, after adjusting
the amount of Rs. 25,00,000/- predeposited by the petitioners to maintain
their appeals, filed earlier. A further
consequential mandamus has been sought,
effectively to issue the final SVLDRS-3,
etc. Last, challenge has been raised to the
adjudication
order
dated
30.12.2019
passed, pending the proceedings under the
Scheme.

3. Undisputedly, the petitioners were
earlier issued a Show Cause Notice dated
05.06.2015 proposing a demand of central
excise duty, Rs. 1,40,22,111/-, under the
Central Excise Act, 1944 (hereinafter
referred to as 'the Act'). That proceeding
culminated in the Order-in-Original dated
26.09.2016. Thereby, the central excise
duty demand was confirmed at Rs.
80,75,626/- only. Thus, the central excise
demand, Rs. 59,46,648/-, as proposed by
the Show Cause Notice dated 5.6.2015 was
not
confirmed
by
the
Adjudicating
Authority under the Act. Against the order
dated 26.09.2016, the two petitioners filed
their
individual
appeals
before
the
Customs, Excise and Service Tax Appellate
Tribunal (in short 'CESTAT'). Those two
appeals came to be allowed vide order
dated
15.05.2019.
The
order
dated
26.09.2016
was
set
aside
and
the
adjudication proceedings remitted to the
Adjudicating Authority. That order attained
finality and the adjudication proceedings
became pending (in remand).
1362 INDIAN LAW REPORTS ALLAHABAD SERIES

4. In that fact background, on
01.09.2019,
the
Central
Government
introduced the Scheme by Finance (No.2)
Act, 2019. The petitioner no.1 filed its
(first) declaration under the Scheme, on
30.10.2019, disclosing disputed ''tax dues'
Rs. 80,75,626/-, under the case category
'Litigation'.

5. It is the case of the petitioners that
in the proceeding before the Designated
Committee (under the Scheme), respondent
no.3 was a member and simultaneously, he
was the Adjudicating Authority under the
Act - with respect to the Show Cause
Notice dated 05.06.2015 (upon remand).
Further, despite the order of the CESTAT
dated
15.05.2019,
the
Designated
Committee, at the insistence of respondent
no.3 sought to treat the entire proposed
demand (under Show Cause Notice dated
05.06.2015) Rs.1,40,22,111/- as the 'tax
dues' under the Scheme. This prompted the
petitioner no. 1 to file a Clarification
Application before the CESTAT, on
1.11.2019, with respect to its final order
dated 15.05.2019.

6.

While
that
Clarification
Application filed by the petitioners was
pending,
on
4.12.2019
itself,
the
Designated Committee (under the Scheme)
disagreed with the computation of 'tax dues'
and EAP disclosed by the petitioners on the
(first) SVLDRS-1. It issued an estimate of
'tax dues' to the petitioners on the (first)
Form SVLDRS-2 computing the EAP at
Rs. 70,11,055.50, based on the excise duty
liability Rs. 1,40,22,111/-, as proposed vide
the Show Cause Notice dated 05.06.2015.
The petitioners did not agree to the demand
of EAP thus made. Thereupon, undeniably,
the Designated Committee issued a notice
dated
05.12.2019,
fixing
the
date
06.12.2019, for final hearing. Accordingly,
the
petitioners
filed
their
written
objections/arguments dated 09.12.2019 and
26.12.2019. These facts and documents are
on record. They have not been denied by
the revenue. Some hearing also appears to
have taken place. However, no final
demand of EAP on SVLDRS-3, was issued
by the Designated Committee.

7. While that proceeding remained
thus pending, the Clarification Application
filed by petitioner no. 1 came to be allowed
by the Tribunal, on 7.1.2020. The Tribunal
clarified
that
the
subject
matter
of
adjudication
proceedings
(in
remand),
pending before the Adjudicating Authority,
was only with respect to the proposed
demand Rs.80,75,626/-, as no appeal had
been filed by the revenue against the Orderin-Original dated 26.09.2016.

8. On 30.12.2019, respondent no.3
passed the Order-in-Original, ostensibly in
compliance of the Tribunal's order dated
15.5.2019 and adjudicated the Show Cause
Notice dated 5.6.2015, on merits. It
confirmed the disputed duty liability of the
petitioner at Rs. 80,75,626/- and dropped
the duty liability to the extent Rs.
59,46,648/-.

9. The Scheme that was to originally
expire on 31.12.2019, was extended by the
Central Government up to 15.01.2020. On
31.12.2019, the petitioner no.1 filed a
(second) declaration disclosing the ''tax
dues'
Rs.80,75,626/-,
under
the
case
category 'Arrears'. The (second) declaration
filed was also processed by the Designated
Committee
and
accordingly,
on
17.01.2020, a second estimate of EAP was
issued to the petitioner on form SVLDRS2,
computing
that
demand
at
Rs.
58,45,379.20. Admittedly, the petitioner
no.1 did not deposit the amount of EAP
9 All M/s Fashion Dezire & Anr. Vs. U.O.I. & Ors.
1363
estimated on (first) form SVLDRS-2 issued
on
4.12.2019
[against
the
(first)
declaration], or on 17.01.2020 [against the
(second) declaration].

10. Submission of learned counsel for
the petitioner is: (i) in view of the Order-inOriginal dated 29.06.2016 read with the
order of the Tribunal dated 15.05.2019 and
the further order dated 07.01.2020, the 'tax
dues' pending adjudication were only
Rs.80,75,626/-. Therefore, the EAP could
be computed on that amount alone, under
the case category 'Litigation'; (ii) since the
(first)
SVLDRS-2
was
issued
on
04.12.2019, respondent no.3 could not have
passed
the
adjudication
order
on
30.12.2019; (iii) last, it has been submitted,
the fact that petitioner no.1 filed its
(second) declaration would be of no
consequence and, in any case, it did not
prejudice the rights of the petitioners
arising under the (first) declaration, that
had to be considered on its own merits.

11. The petition has been vehemently
opposed by learned counsel for the
revenue. He would contend, there is no
error in the issuance of either of the two
forms SVLDRS-2 and that the rights of the
petitioners would be determined and
governed by the proceedings on the second
declaration filed by the petitioner no.1. The
proceeding
arising
from
the
(first)
declaration stood withdrawn or not pressed
upon the petitioner no.1 filing and pursuing
the
(second)
declaration.
Since,
the
petitioners have not complied with either of
the SVLDRS-2 issued to them, the writ
petition lacks merit.

12. Having heard learned counsel for
the parties and having perused the record,
we proceed to consider the second
submission advanced by learned counsel
for the petitioner, first. The Scheme does
not contain any express provision to stay a
pending adjudication proceeding, by way
of a legal effect/fiction arising from any
declaration
filed
thereunder.
Second,
neither the petitioners nor the revenue
challenged the earlier order of the Tribunal
dated 15.05.2019 and there was no specific
stay order operating against the same, in
any proceeding.

13. Therefore, the proceedings in
remand, arising under that order did not
suffer from any inherent lack of jurisdiction
or authority. At the same time, by
necessary
implication,
springing
from
section 127(5)1 of the Scheme, the
petitioner no. 1 had time till 03.01.2020 to
deposit the net EAP amount communicated
to it vide the (first) SVLDRS-2, issued on
04.12.2019, or to object to the same under
section 127(3)2 read with section 127(4)3
of the Scheme. If deposited, it would
foreclose the decision in the pending
adjudication proceeding. It is so, because,
under section 127(6)4 of the Scheme, upon
that deposit made in compliance of the
EAP demand, the reply filed by the
petitioner no. 1 to the Show Cause Notice
dated 05.06.2015 would stand withdrawn,
on deemed basis.

14. Then, under section 1235 read
with section 1246 and section 121(c)7 of
the Scheme, the computation of the ''tax
dues' and consequently determination of the
EAP would depend on the case category
''Litigation' or ''Arrears'. The computation
of the EAP under ''Litigation' i.e. pending
adjudication case category, would be
substantially lower than that computed
under the ''Arrears' category. There is a
complete absence of any statutory intent to
allow for change of case category from
''Litigation' to ''Arrears' or to redetermine of
1364 INDIAN LAW REPORTS ALLAHABAD SERIES
the
''tax
dues'
and
EAP
upon
an
adjudication order coming into existence
during the pendency of proceedings under
the Scheme. Therefore, once the petitioner
had (rightly) filed the (first) declaration on
10.10.2019
under
the
case
category
''Litigation', determination of the EAP
amount would be governed accordingly. It
cannot be changed, thereafter.

15. Also, by virtue of section 127(8)8
read with Section 129(1)(a)9 of the
Scheme, any demand of duty, even if
created in the meanwhile, would not
survive
the
issue
of
the
Discharge
Certificate. Again, issue of that certificate
is a mandatory consequence of, deposit of
the EAP amount.

16. Therefore, if the adjudication
proceedings is allowed to continue and be
concluded during the pendency of a
Discharge Certificate proceeding, arising
from a valid declaration filed under the
Scheme, it would defeat the declaration
made and, therefore, defeat the object of
reform i.e. to end ''legacy disputes'.
Therefore, the proceedings under the
Scheme must necessarily take precedence
over the regular adjudication proceedings
under the Act.

17. In view of that implied overriding
effect arising to the Discharge Certificate
(issued under section 127(8)8 of the
Scheme), over the duty, interest and
penalty, determined under the Act and; the
limited time of ninety (90) days (from the
date
of
filing
of
the
declaration),
contemplated
under
the
Scheme,
to
conclude the proceedings - to issue that
Discharge Certificate, there is inherent
logic and purpose in the nature of things
arising
under
the
Scheme,
as
may
commend to the Adjudicating Authority
and or the Appeal Authority, as the case
maybe to not conclude such proceeding
before expiry of the time granted to deposit
the EAP, under the relevant SVLDRS-2. In
Writ Tax No. 832 of 2020, M/s Jay Shree
Industries Vs. Union of India & Anr,
decided on 06.08.2021, we have opined
that the Scheme is a piece of reform
legislation. In that case, relying on
R.E.M.S. Abdul Hameed v. Govindaraju
& Ors. (1999) 4 SCC 663, we have looked
at the intention of the legislature to
interpret the meaning of the word ''penalty'
appearing in Section 129(1)(a)9 of the
Scheme. Here also, if we allow the
Adjudicating Authority to conclude an
adjudication
proceeding
during
the
pendency of
a
Discharge
Certificate
proceeding, it would run contrary to the
intention of the Scheme to bring an end to
the
disputes
under
the
Act.
Any
interpretation given to the Scheme as may
defeat its purpose and object of the reform,
must therefore be rejected. A purposive
interpretation must therefore be adopted.

18. Then, under section 127(5)1 read
with Rule 6(2)10 of the Sabka Vishwas
(Legacy
Dispute
Resolution)
Scheme
Rules, 2019 (hereinafter referred to as the
Rules), only that amount could be paid by
the petitioner, electronically, as may be
first communicated to it by the Designated
Committee, on form SVLDRS-3. Here,
under the (first) SVLDRS-2 form dated
04.12.2019,
that
time
existed
till
03.01.2020. Moreover, upon notice for
hearing issued on 05.12.2019 and upon the
objections filed by the petitioner on
09.12.2019 and 26.12.2019 and in view of
the date of hearing fixed for 06.12.2019,
that time did not run out since the
Designated Committee failed to issue the
mandatory final demand of EAP on
SVLDRS-3 under section 127 (4)3 of the
9 All M/s Fashion Dezire & Anr. Vs. U.O.I. & Ors.
1365
Scheme read with Rule 6(2)10 of the Rules,
on or before 29.12.2019 or thereafter. The
statute having prescribed the manner to
raise the demand of EAP and to pay that
amount by a particular method, it could not
have been demanded or paid otherwise.
That rule stands long settled since a four
Judge Supreme Court decision in Patna
Improvement Trust Vs. Smt. Lakshmi
Devi, AIR 1963 SC 1077.

19. For the above reasons and in
absence of any statutory risk to the
adjudication proceedings being hit by any
rule of limitation, those proceedings should
necessarily have been kept in abeyance till
the conclusion of the proceedings under the
Scheme. We cannot contemplate, what
useful
purpose
could be
served
by
continuing and concluding the adjudication
proceeding during the pendency of the
proceedings arising upon filing of the (first)
declaration on SVLDRS-1, under the
Scheme, on 30.10.2019. In fact, by their
conduct the authorities under the Act could
not have defeated the object of an
otherwise valid proceedings under the
Scheme.

20. That said, we are unable to reach a
conclusion that the respondent no. 3 lacked
inherent jurisdiction to pass the Order-inOriginal dated 30.12.2019. As discussed
above, we conclude that the said order was
tainted with impropriety, to the extent that
order was passed during thirty (30) days
from issuance of the SVLDRS-2 on
04.12.2019. Therefore, in the first place, it
could
not
have
been
enforced
till
03.01.2020, in view of the language of
section 127(2)11 and section 127(5)1 of the
Scheme.

21. Thus, till 03.01.2020, the Orderin-Original dated 30.12.2019 remained in a
state of suspended animation. Thereafter, it
has continued in that state, till date. It is so,
since, as noted above, the petitioner
disputed the computation of ''tax dues' and
filed written objections/arguments to the
EAP demanded on the (first) SVLDRS-2
dated 04.12.2019. In view of those
objections filed and by virtue of sections
127(3)2 and 127(4)3 of the Scheme, the
Designated Committee was obligated to
deal with the same and necessarily raise an
appropriate final demand of EAP, on
SVLDRS-3,
preferably
on
or before
29.12.2019.

22. That is so, since the Designated
Committee fixed the date of post-decisional
hearing on 06.12.2019 and entertained
written objections dated 09.12.2019 and
26.12.2019, yet, it did not pass any order
on those written objections/arguments filed
by the petitioner. It also did not issue the
revised/final statement in electronic form,
being SVLDRS-3 under section 127(4)3 of
the Scheme read with Rule 6(2)10 of the
Rules. Since no communication was made
to the petitioners on SVLDRS-3, the time
provided under section 127(5)1 of the
Scheme has not started running, yet.
Therefore, the proceedings arising from the
(first) declaration filed by the petitioner
dated 30.10.2019 are still pending under
the Scheme.

23. In absence of any consequence of
abatement etc. being prescribed either by
the Scheme or the Rules, the time limit of
sixty (60) days under section 127(4)3 of the
Scheme is purely directory. The statutory
authority/Designated Committee having
failed to act within time contemplated
under the Scheme, it cannot escape its
obligation - to issue the appropriate final
demand of EAP on form SVLDRS-3. This
conclusion we base on the principle
1366 INDIAN LAW REPORTS ALLAHABAD SERIES
enunciated by the Supreme Court in
Sharif-Ud-din Vs. Abdul Gani Lone,
(1980) SCC 403 that in absence of
consequences being provided, the time
limit/provisions would remain directory.

24.

Therefore,
the
Designated
Committee continues to be obliged to issue
the final demand of EAP on form
SVLDRS-3. That not done, the Order-inOriginal, though it exists, continues in a
state of animated suspension. It has not
come to life. It cannot be given effect to. It
confers
no
enforceable
rights
or
obligations, at present. Only, if the
petitioners fail to deposit the final EAP
amount that may be demanded within thirty
(30) days of issue of the demand on form
SVLDRS-3, by the Designated Committee,
the said order may come to life (in future)
and become enforceable with rights of
recovery and appeal etc., at that stage, in
that contingency, only. Therefore, at
present, EAP may be computed only on the
basis of the (first) declaration on SVLDRS1 dated 30.10.2019.

25. Coming to the third submission
advanced by learned counsel for the
petitioner, the (second) declaration filed by
the petitioner, arising from the Order-inOriginal
dated
30.12.2019
first,
as
discussed above, even today, that order
continues in a state of animated suspension,
on account of the continued pendency of
the(first) declaration filed on SVLDRS-1
dated 30.10.2019 filed by the petitioners. It
serves no practical or legal purpose, at
present. Therefore, it could not have given
rise to the (second) declaration on form
SVLDRS-1, filed on 31.12.2019. Even
otherwise,
by virtue
of
the
section
121(c)(i)7 read with section 123(a)(i)5 of
the Scheme, the cut-off date 30.06.2019
exists - to file a declaration with respect to
any order that may have been passed upon
conclusion of adjudication proceedings
under the Act. Either the appeal from such
order must have been filed on or before
30.06.2019 or the limitation to file that
appeal must have expired (at the time of
filing the declaration). In the present case,
neither
condition
was
fulfilled
on
31.12.2019.
Therefore
the
(second)
declaration filed by the petitioners arising
from
the
adjudication
order
dated
30.12.2019 was non-est. It was not
maintainable in law. Thus, the (second)
declaration, though filed by the petitioners,
causes no legal effect. It was entertained
and a demand of EAP dated 17.01.2020
was
raised
thereon,
without
any
jurisdiction. It must therefore be ignored,
notwithstanding the contention of the
petitioners that it was filed by way of
abundant
caution.
The
principle
"competence of a court to try a case goes to
the very root of the jurisdiction, and where
it is lacking, it is a case of inherent lack of
jurisdiction", laid down by a Constitutional
Bench of the Supreme Court in Hiralal
Patni Vs. Sri Kali Nath, AIR 1962 SC
199, in the context of regular civil
proceedings applies with equal force to the
present quasi-judicial proceeding.

26. As to the first submission
advanced by learned counsel for the
petitioner, in view of the discussion made
above, first, we are of the view, once a
valid (first) declaration dated 30.10.2019
had been filed on SVLDRS-1, it had to be
processed by the Designated Committee. In
fact, that Committee did not accept the
petitioner's
disclosure
thus
made.
Accordingly, it issued demand of EAP on
SVLDRS-2 on 04.12.2019 and fixed
06.12.2019 as the date for the postdecisional hearing, in terms of section
127(3)2 of the Scheme. The Designated
9 All M/s North End Food Marketing Pvt. Ltd. Vs. State of U.P. & Ors.
1367
Committee also took on record written
objections/arguments
filed
by
the
petitioners
dated
09.12.2019
and
26.12.2019 and it also appears to have
heard the matter at some length. However,
it did not discharge its statutory obligation
and it did not respond to the same as
mandated under section 127(4)3 of the
Scheme. Having failed to issue the revised
EAP demand on form SVLDRS-3, the
(first) declaration of SVLDRS-1 (filed by
the petitioners on 30.10.2019) is still
pending. Since, the matter is still pending
before the Designated Committee, we are
not required to answer the question of
determination of the EAP, at this stage.

27. In view of the above, we allow the
writ petition, in part, with a direction upon
the Designated Committee to necessarily
consider the written objections/arguments
filed by the petitioners dated 09.12.2019
and 26.12.2019, in response to the
SVLDRS-2 dated 04.12.2019 and to issue
the appropriate final demand of net EAP on
form SVLDRS-3 to the petitioners within a
period of thirty (30) days from the date of
communication of this order, after hearing
the parties and considering their respective
contentions as to computation of the correct
EAP amount. All further rights and
liabilities will arise and be governed
accordingly.

28. For reasons, given above, there is
no occasion to entertain the writ petition
with respect to the challenge raised to the
adjudication order dated 30.12.2019, at this
stage. To that extent, interference is
declined.

29. Accordingly, the writ petition is
allowed in part. No order as to costs.
----------
(2021)09ILR A1367
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 31.08.2021

BEFORE

THE HON'BLE MAHESH CHANDRA
TRIPATHI, J.

Writ Tax No. 309 of 2021

M/s North End Food Marketing Pvt. Ltd.
 ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Nishant Mishra, Sri Tanmay Sadh, Sri
Rahul Agarwal, Sri Navin Sinha ( Senior
Adv.)

Counsel for the Respondents:
C.S.C.

A. Tax Law - Input tax credit - Warehouse
(Development and Regulation) Act, 2007 -
Erstwhile Central Excise Rules, 2002 -
Rule 10 - GST Act, 2017 - Section 35 -
Central Goods and Services Tax Rules,
2017 - Rules 56 & 57 - SGST Act, 2017 -
Sections 17 & 108 - Uttar Pradesh Goods
and Services Tax Rules, 2017 - U.P. Krishi
Utpadan Mandi Niyamawali, 1965 - Rule
50A - CGST Act - Section 49(4) - Central
Excise Rules, 1944 - Rule 57-F - Bombay
Municipal Corporation Act, 1888 - Section
314.

SGST Rules, 2017 - Rule 86A - The rule is
based on "reason to believe". "Reason to
believe" must have a rational connection
with or relevant bearing on the formation
of the belief. It is a subjective term and
can be interpreted differently by different
individuals. (Para 33)

The powers, as conferred u/Rule 86A,
could not have been exercised merely on
the ground that an inquiry has been
initiated as there is a suspicion that the
transactions were sham. (Para 30, 57)