# M/s Magma Industries Ltd., Muzaffarnagar v. Designated Committee, Office of Commissioner C.G.S.T., Commissionerate, Meerut & Ors

- **Citation:** (2021) 10 ILRA 735
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-09-07
- **Case number:** Writ Tax No. 110 of 2021
- **Bench:** Naheed Ara Moonis, Saumitra Dayal Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-magma-industries-ltd-muzaffarnagar-v-designated-committee-office-of-46409
- **Pages:** 9

## Headnote

A. Tax Law - Sabka Vishwas (Legacy
Dispute
Resolution)
Scheme,
2019
-
Sections
125,
125(1)(e),
123(c),
124(1)(d), 121(r), 121(m) & 133 - Central
Excise Act, 1944 - Income Tax Act, 1961 -
Section 119(1) - A person against whom
an enquiry, investigation or audit may be
pending and whose 'tax dues' may not
have been 'quantified', would remain
ineligible to make a declaration on form
SVLDRS-1. (Para 10)

There is no doubt that the 'Panchnama'
document dated 10.02.2016 prepared by the
Central Excise authorities, in writing, clearly
mentioned the amount Rs. 2,18,516/- as the
amount of duty short paid by the petitioner.
Again, there can be no doubt that a director of
the petitioner-company Dinesh Garg, in his
statement recorded, in writing, on 13.05.2016
further
admitted
duty
avoidance
by
the
petitioner, to the tune of Rs. 45,38,231/-. The
total of these two admissions is Rs. 47,56,751/-.
Section 121(r) does not, in any manner
suggest or seek to limit the meaning of
the phrase 'written communication' to be
one written and issued by any Central
Excise authority. Plainly, it refers to an
amount of duty under any indirect tax
736 INDIAN LAW REPORTS ALLAHABAD SERIES
enactment, reduced to writing. Once the
amount of Rs. 45,38,231/- was thus reduced to
writing before the Central Excise authority in an
"enquiry or investigation" as defined under
Section 121(m) of the Scheme and the
petitioner did not dispute the same, the
requirement of Section 121(r) read with Section
125(1)(e) read with 123(c) stood fulfilled. (Para
11)

The CBIC has only clarified the meaning to
be given to the word 'quantified' used
under the Scheme - to include thereunder
any duty liability admitted (in writing) by
a
person
(during
an
enquiry
or
investigation)
-
as
a
'written
communication' spoken of u/s 121(r) of
the Scheme. Also, Rs. 45,38,231/- is the exact
amount 'quantified' while issuing the subsequent
show-cause-notice dated 06.09.2019. While that
notice may never be read as evidence of the
'quantification' made earlier since that showcause-notice was issued after the cut-off date
30.06.2019, at the same time, the said
document does indicate - other than the
aforesaid 'Panchnama' and admission made by
the petitioner there was no other material with
the revenue authorities to create any other or
further demand. (Para 20)

B. Circular No. 1071/4/2019-CX.8, dated
27.08.2019, issued by CBIC - The Circular
would bind the revenue authorities ranked
lower to the CBIC, in so far as it is
beneficial to the petitioner. Those revenue
authorities, subordinate to the CBIC,
cannot resist or protest or deviate from
the interpretation of the Scheme made by
the CBIC. To allow them to do so would be
to render the mandate of Section 133 of
the Scheme, redundant. (Para 16)

Once the CBIC clarified and thus enlarged the
meaning of the word 'quantified' to give effect to
the purpose of Section 123(c) read with Section
125(1)(e) and Sect

## Text

10 All. M/s Magma Industries Ltd., Muzaffarnagar Vs. Designated Committee, Office of
 Commissioner C.G.S.T., Commissionerate, Meerut & Ors.
735

19. I n the case of Paras Nath (supra),
it has been held by this Court that against
an interlocutory order no revision is
maintainable. Interlocutory order is an
order, which does not touch the merit of the
case and which does not prejudice any
party, while arguing the case on merits. It
was found, therein, that by condonation of
delay the merits of the case had not been
touched
by
the
Settlement
Officer
Consolidation. From reading of Paras Nath
(supra) it is evident that the interlocutory
order is such order by which the delay is
condoned but without touching the merits
of the case. In the present case, as
mentioned above, the Settlement Officer of
Consolidation while condoning the delay
has touched the merits of the case, and,
therefore,
the
order
passed
by
the
Settlement Officer of Consolidation is not
be an interlocutory order.

20. For the aforesaid reasons, I do not
find any illegality in the order of the
Deputy Director of Consolidation. The
order passed by the Settlement Officer of
Consolidation was not sustainable and
therefore this Court is not inclined to
interfere in the matter. However, the Court
finds that the courts below ought not to
have made any observation on the merit of
the case. Therefore, it is observed that any
observation made by the Deputy Director
of Consolidation or the Settlement Officer
of Consolidation in their respective orders
on the merits of the claim of the parties
shall not be taken into consideration by any
authority.

21. The writ petition is dismissed
with the aforesaid observation.
----------
(2021)10ILR A735
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 07.09.2021

BEFORE

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

Writ Tax No. 110 of 2021

M/s
Magma
Industries
Ltd.,
Muzaffarnagar ...Petitioner
Versus
Designated
Committee,
Office
of
Commissioner C.G.S.T., Commissionerate,
Meerut & Ors. ...Respondents

Counsel for the Petitioner:
Sri Suyash Agarwal

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

A. Tax Law - Sabka Vishwas (Legacy
Dispute
Resolution)
Scheme,
2019
-
Sections
125,
125(1)(e),
123(c),
124(1)(d), 121(r), 121(m) & 133 - Central
Excise Act, 1944 - Income Tax Act, 1961 -
Section 119(1) - A person against whom
an enquiry, investigation or audit may be
pending and whose 'tax dues' may not
have been 'quantified', would remain
ineligible to make a declaration on form
SVLDRS-1. (Para 10)

There is no doubt that the 'Panchnama'
document dated 10.02.2016 prepared by the
Central Excise authorities, in writing, clearly
mentioned the amount Rs. 2,18,516/- as the
amount of duty short paid by the petitioner.
Again, there can be no doubt that a director of
the petitioner-company Dinesh Garg, in his
statement recorded, in writing, on 13.05.2016
further
admitted
duty
avoidance
by
the
petitioner, to the tune of Rs. 45,38,231/-. The
total of these two admissions is Rs. 47,56,751/-.
Section 121(r) does not, in any manner
suggest or seek to limit the meaning of
the phrase 'written communication' to be
one written and issued by any Central
Excise authority. Plainly, it refers to an
amount of duty under any indirect tax
736 INDIAN LAW REPORTS ALLAHABAD SERIES
enactment, reduced to writing. Once the
amount of Rs. 45,38,231/- was thus reduced to
writing before the Central Excise authority in an
"enquiry or investigation" as defined under
Section 121(m) of the Scheme and the
petitioner did not dispute the same, the
requirement of Section 121(r) read with Section
125(1)(e) read with 123(c) stood fulfilled. (Para
11)

The CBIC has only clarified the meaning to
be given to the word 'quantified' used
under the Scheme - to include thereunder
any duty liability admitted (in writing) by
a
person
(during
an
enquiry
or
investigation)
-
as
a
'written
communication' spoken of u/s 121(r) of
the Scheme. Also, Rs. 45,38,231/- is the exact
amount 'quantified' while issuing the subsequent
show-cause-notice dated 06.09.2019. While that
notice may never be read as evidence of the
'quantification' made earlier since that showcause-notice was issued after the cut-off date
30.06.2019, at the same time, the said
document does indicate - other than the
aforesaid 'Panchnama' and admission made by
the petitioner there was no other material with
the revenue authorities to create any other or
further demand. (Para 20)

B. Circular No. 1071/4/2019-CX.8, dated
27.08.2019, issued by CBIC - The Circular
would bind the revenue authorities ranked
lower to the CBIC, in so far as it is
beneficial to the petitioner. Those revenue
authorities, subordinate to the CBIC,
cannot resist or protest or deviate from
the interpretation of the Scheme made by
the CBIC. To allow them to do so would be
to render the mandate of Section 133 of
the Scheme, redundant. (Para 16)

Once the CBIC clarified and thus enlarged the
meaning of the word 'quantified' to give effect to
the purpose of Section 123(c) read with Section
125(1)(e) and Section 121(1)(r) of the Scheme -
clearly to extend the benefit of the Scheme to
more persons, there is neither any wisdom nor
legal basis to curtail the same, contrary to the
express intent of the CBIC. (Para 17)

Therefore, (i) the 'tax dues' of the petitioner
stood 'quantified' for the purpose of Section
121(r), 123(c), 124(1)(d) and 125(1)(d) before
the cut-off date 30.06.2019 at Rs. 45,38,231
and (ii) even if it may have been otherwise
permissible to interpret those provisions in a
manner that in the case of a pending enquiry,
investigation or audit, no declaration may be
filed unless the revenue authority had first
communicated in writing the 'quantified' amount
of 'tax dues'/duty demand proposed under the
Act, yet, that interpretation would stand
blocked, at the instance of the revenue
authorities,
by
virtue
of
the
binding
interpretation of the law offered by the CBIC,
u/s 133 of the Scheme. (Para 21)

The
Scheme
is
a
piece
of
reform
legislation. It commends a purposive
construction. The object of the Scheme is only
to resolve all legacy disputes and focus all
energies of the revenue authorities as also of
the
assessees
at
the
(then)
imminent
enforcement of the new G.S.T regime. (Para 22)

Writ petition allowed. (E-4)

Precedent followed:

1.
CCE,
Vadodara
Vs
Dhiren
Chemical
Industries, (2002) 2 SCC 127 (Para 14)

2. Commissioner of Customs, Calcutta & ors. Vs
Indian Oil Corporation Ltd. & anr., (2004) 3 SCC
488 (Para 15)

3. UCO Bank, Calcutta Vs Commissioner of
Income Tax, W.B., (1999) 4 SCC 599 (Para 18)

4. M/s Fashion Dezire and another Vs U.O.I.
Through Principal Secretary, Ministry of Finance,
Department of Revenue & 3 ors., 2021 (8) ADJ
133; (2021) ILR 9 All 1359 (Para 22)

Present petition challenges order dated
05.05.2020,
passed
by
Designated
Committee,
Office
of
Commissioner
Central
Goods
and
Service
Tax,
Commissionerate, Meerut.

(Delivered by Hon'ble Naheed Ara
Moonis, J.
&
Hon'ble Saumitra Dayal Singh, J.)
10 All. M/s Magma Industries Ltd., Muzaffarnagar Vs. Designated Committee, Office of
 Commissioner C.G.S.T., Commissionerate, Meerut & Ors.
737

1. Heard Sri Suyash Agarwal, learned
counsel for the petitioner and Sri R.C.
Shukla, learned counsel for the revenue.

2. Present writ petition raises
challenge to the order dated 05.05.2020
passed by respondent no.1-Designated
Committee rejecting the declaration filed
by the petitioner on SVLDRS-1, seeking
settlement of its dispute, under the
provisions of the Sabka Vishwas (Legacy
Dispute Resolution) Scheme, 2019 (in short
the 'Scheme').

3. Undisputed facts of the case are, a
search was conducted in the case of the
petitioner under the provisions of the
Central Excise Act, 1944, (hereinafter
referred to as the Act) on 10.02.2016 at the
business and other premises of the
petitioner and its directors etc. In the
''Panchnama' drawn on 10.02.2016 itself,
an allegation of short payment of Central
Excise duty (against shortage of stock) Rs.
2,18,516/- was made. A copy of the same is
annexed as Annexure No. 1 to the writ
petition. Pursuant to the search, an
investigation (under the Act), became
pending against the petitioner and its
directors. During that investigation, on
13.05.2016, the statement of Dinesh Garg,
a director of the petitioner-company came
to be recorded. As per Annexure-A to that
statement duty payment Rs. 45,38,231/-
was avoided upon clandestine removal of
excisable goods. Its copy is annexed as
Annexure No. 3 to the writ petition.
Relevant to our discussion, the contents of
question nos. 3 and 7 together with the
answers furnished by the said Dinesh Garg,
in that statement, read as under:

"Q-3. On the basis of print outs of
sales register taken from the laptop and
sales register submitted by your accountant
Shri Gaurav Tyagi on 10.02.2016 in reply
of Question No.4 of his statement, a detail
have been prepared containing date wise
entries of sales made to different buyers
during the period 01.04.2015 to 09.02.2016
in Annexure-A. Please see the said
Annexure-A and explain about the entries?

Ans: I have seen the Annexure-A
and put my dated signatures on it. I have
also perused the sales detail given in our
sales register provided by Shri Gaurav
Tyagi on 10.02.2016. The said Annexure-A
contains the sales details made to different
parties by our manufacturing unit M/s
Magma Industries Ltd., during the period
01.04.2015 to 09.02.2016. In some case
where Bill issued has been shown, we have
issued proper bills and account for the said
sale in our ledgers. Against sales in few
cases bills for lesser amount have been
issued due to adjustment of commission to
commission agent and rate differences.
Against rest entries we have neither issued
any Sale Bill nor account for the said sales
in our ledgers for payment of central excise
duty. I also want to state that the name of
G.S. Pharma has wrongly mentioned by
our Accountant in the said sales register
and party ledger, whereas the actual sale
was made to M/s Trends Remedies Pvt.
Ltd., Roorkee on the sale bills. These facts
may also be checked.

Q-7. What do you want to state
about the central excise duty liability on the
sales done by your company without
issuing bills and without payment of duty?

Ans: I admit that sales of finished
goods shown against other entries except
the sales made to M/s S.S. Enterprises,
Gulzar (Kabadi) have been done by our
unit to different parties without payment of
Central Excise duty and without entry in
the statutory records. We have sold empty
old and used drums, in which we purchased
raw material to M/s S.S. Enterprises,
738 INDIAN LAW REPORTS ALLAHABAD SERIES
Gulzar (Kabadi) and Israr (Kabadi) and
we have neither issued any bill nor paid
any central excise duty since these are not
our manufactured goods. I admit the duty
liability in respect of other clearances
shown in the said Annexure-A, Which have
been done without issuing sales bills and
without payment duty."

4. The amount of excise duty as per
Annexure-A to that statement is Rs.
45,38,231/-.
Yet,
that
investigation
remained pending. Before a show-causenotice could be issued, the Scheme was
introduced by Finance Act No. 2 of 2019.
Much later, after the Scheme came into
force a show-cause-notice was issued to the
petitioner, on 06.09.2019.

5. In the aforesaid fact background,
the petitioner filed its declaration on
SVLDRS-1,
under
the
Scheme
on
13.01.2020. It disclosed the amount of
disputed duty payable under the Act at Rs.
47,56,751/- and the Estimate Amount
Payable (EAP in short) Rs. 14,27,025.30/-.
The disputed duty payable/'tax dues'
disclosed was the sum of the alleged shortpaid duty - as per the ''Panchnama'
document dated 10.02.2016 and, the
evaded duty - as per the statement of
Dinesh
Garg
dated
13.05.2016.
The
Designated Committee did not dispute the
computation of disputed duty payable and
EAP disclosed by the petitioner yet, on
31.01.2020, instead of issuing a demand on
SVLDRS-3
it
issued
a
demand
on
SVLDRS-2, to the petitioner. It also
computed the EAP at Rs. 14,27,025.30. It
included the amount of Rs. 2,18,516/-
already paid by the petitioner, during the
investigation.

6. Thereafter, though no hearing took
place, the Designated Committee rejected
the petitioner's declaration by the impugned
order dated 05.05.2020. While rejecting the
petitioner's
declaration,
it
has
been
observed as under:

"I find that in the instant case, the
officers of Anti-evasion, Central Excise
Commissionerate, Meerut has initiated an
enquiry against the party, wherein a search
was conducted on 10.02.2016. During the
visit a shortage in stock of finished goods
valued at Rs. 17,48,129/- involving Central
Excise duty of Rs. 2,18,516/- was found,
which was debited by the party through
CENVAT on the same day. Further, during
statement
dated
13.05.2016
tendered
before the Superintendent (Anti-evasion),
Central Excise, Meerut, Shri Dinesh Garg,
Director admitted/accepted the liability of
Central Excise duty of Rs. 45,38,231/-
involved on the sales done without issuing
bills and without payment of duty. This
acceptance of taxability remains tentative
as further investigation was still going on.
It is only after conclusion of investigation,
final Tax liability was to be computed and
communication to the party. We find that
no such communication of final Tax
liability was made by the department in the
instant case on or before 30.06.2019. From
the records, it is evident that they have not
got
anything
in
writing
from
the
department about final tax liability so far.
In this case, Tax liability was finally
quantified in Show Cause Notice dated
06.09.2019
issued
vide
C.No.IVCE(9)CP/M/08/2016/1289-1305
dated
06.09.2019 for demand of Central Excise
duty
amounting
to
Rs.
47,56,751/-
(including Rs. 2,18,516/- + Rs. 45,38,235/-)
and to appropriate an amount of Rs.
2,18,516/- already deposited by the party"

7. Having heard learned counsel for
the parties, we find, under Section 125 of
10 All. M/s Magma Industries Ltd., Muzaffarnagar Vs. Designated Committee, Office of
 Commissioner C.G.S.T., Commissionerate, Meerut & Ors.
739
the Scheme all persons, except those
specified under sub-clause 1(a) to (h) of
that Section were eligible to make a
declaration. Under Section 125(1)(e) of the
Scheme in the case of a person who may
have been subjected to an enquiry or
investigation, if the amount of duty
involved in that investigation had not been
'quantified' on or before 30.06.2019, would
be ineligible to make a declaration. If that
amount stood 'quantified', such person
would be eligible and the liability of that
declarant, would be 30% to 50% of the 'tax
dues', thus 'quantified'. That is the effect of
Section 123(c) read with Section 124(1)(d)
of the Scheme.

8. Under Section 124(1)(d) of the
Scheme in cases where enquiry, investigation
or audit may have been pending on
30.06.2019 the ''tax dues' may be calculated
as a percentage of amount ''quantified'. The
word 'quantified' has been defined under
Section 121(r) of the Scheme as below:

"121(r).
''quantified",
with
its
cognate
expression,
means
a
written
communication of the amount of duty payable
under the indirect tax enactment;"

9. Also, the phrase "enquiry or
investigation" has been defined under Section
121(m) of the Scheme. It reads:

"121(m).
"enquiry
or
investigation", under any of the indirect tax
enactment, shall include the following
actions, namely:-

(i) search of premises;

(ii) issuance of summons;

(iv) recording of statements;"

10. Clearly, a person against whom an
enquiry, investigation or audit may be
pending and whose ''tax dues' may not have
been 'quantified', would remain ineligible
to make a declaration on form SVLDRS-1.
According to the revenue, for the purposes
of Clause 123(c) of the Scheme, on
30.06.2019, the ''tax dues' against the
petitioner
were
not
''quantified'.
Admittedly,
prior
to
that
date
no
communication whatsoever was issued by
any Central Excise authority to the
petitioner to communicate the 'quantified'
amount of 'tax dues'/duty amount payable.

11. However, there is no doubt that
the
''Panchnama'
document
dated
10.02.2016 prepared by the Central Excise
authorities, in writing, clearly mentioned
the amount Rs. 2,18,516/- as the amount of
duty short paid by the petitioner. Again,
there can be no doubt that a director of the
petitioner-company Dinesh Garg, in his
statement
recorded,
in
writing,
on
13.05.2016 further admitted duty avoidance
by the petitioner, to the tune of Rs.
45,38,231/-. The total of these two
admissions is Rs. 47,56,751/-. Section
121(r) does not, in any manner suggest and
it therefore does not seek to limit the
meaning
of
the
phrase
'written
communication' to be one written and
issued by any Central Excise authority.
Plainly, it refers to an amount of duty under
any indirect tax enactment, reduced to
writing.
Once
the
amount
of
Rs.
45,38,231/- was thus reduced to writing
before the Central Excise authority in an
"enquiry or investigation" as defined under
Section 121(m) of the Scheme and the
petitioner did not dispute the same, the
requirement of Section 121(r) read with
Section 125(1)(e) read with 123(c) stood
fulfilled.

12. While that is the interpretation
that commends to us, the discussion cannot
740 INDIAN LAW REPORTS ALLAHABAD SERIES
rest here. Section 133 of the Scheme, reads
as below:

"133(1) The Central Board of
Indirect Taxes and Customs may, from time
to time, issue such orders, instructions and
directions to the authorities, as it may deem
fit, for the proper administration of this
Scheme, and such authorities, and all other
persons employed in the execution of this
Scheme shall observe and follow such
orders, instructions and directions:

Provided that no such orders,
instructions or directions shall be issued so
as to require any designated authority to
dispose of a particular case in a particular
manner.

(2) Without prejudice to the
generality of the foregoing power, the
Central Board of Indirect Taxes and
Customs may, if it considers necessary or
expedient so to do, for the purpose of
proper and efficient administration of the
Scheme and collection of revenue, issue,
from time to time, general or special orders
in respect of any class of cases, setting
forth directions or instructions as to the
guidelines, principles or procedures to be
followed by the authorities in the work
relating to administration of the Scheme
and collection of revenue and any such
order may, if the said Board is of opinion
that it is necessary in the public interest so
to do, be published in the prescribed
manner."

13. The Central Board of Indirect
Taxes and Customs (hereinafter referred to
as the CBIC), is the highest administrative
authority under the Act. It was also given
the power to issue binding orders and
instructions
and
directions
to
other
authorities under the Scheme, for its proper
administration. In exercise of that power,
the
CBIC
issued
the
Circular
No.
1071/4/2019-CX.8,
dated
27.8.2019
(hereinafter referred to as the 'Circular').
Relevant to our discussion, the opening
Clauses and Clause 10(g) of that Circular
read as under:

" I am directed to state that the
Government has announced the Sabka
Vishwas
(Legacy
Dispute
Resolution)
Scheme, 2019 as a part of the recent Union
Budget. Further, in accordance with the
Finance (No.2) Act, 2019, the Central
Government
has
notified
the
Sabka
Vishwas
(Legacy
Dispute
Resolution)
Scheme Rules, 2019 as well as issued
Notification No. 04/2019 Central ExciseNT dated 21.08.2019 to operationalize this
Scheme from 01.09.2019 to 31.12.2019.

2. As may be appreciated, this
Scheme is a bold endeavor to unload the
baggage relating to the legacy taxes viz.
Central Excise and Service Tax that have
been subsumed under GST and allow
business to make a new beginning and
focus on GST. Therefore, it is incumbent
upon all officers and stall of CBIC to
partner with the trade and industry to make
this Scheme a grand success.

3.
Dispute
resolution
and
amnesty are the two components of this
Scheme. The dispute resolution component
is aimed at liquidating the legacy cases
locked up in litigation at various forums
whereas the amnesty component gives an
opportunity to those who have failed to
correctly discharge their tax liability to pay
the tax dues. As may be seen, this Scheme
offers substantial relief to the taxpayers
and others who may potentially avail it.
Moreover, the Scheme also focuses on the
small taxpayers as would be evident from
the fact that the extent of relief provided is
higher in respect of cases involving lesser
duty (smaller taxpayers can generally be
expected
to
face
disputes
involving
relatively lower duty amounts).
10 All. M/s Magma Industries Ltd., Muzaffarnagar Vs. Designated Committee, Office of
 Commissioner C.G.S.T., Commissionerate, Meerut & Ors.
741

4. .....

5. .....

6. .....

7. .....

8. .....

9. .....

10. Further, the following issues
are clarified in the context of the various
provisions of
 the Finance (No.2) Act, 2019 and Rules
made thereunder:

a. .....

b. .....

c. .....

d. .....

e. .....

f. .....

g. Cases under an enquiry,
investigation or audit where the duty
demand has been quantified on or before
the 30th day of June, 2019 are eligible
under the Scheme. Section 2(r) defines
"quantified" as a written communication of
the amount of duty payable under the
indirect tax enactment. It is clarified that
such written communication will include a
letter intimating duty demand; or duty
liability admitted by the person during
enquiry, investigation or audit; or audit
report etc."

14. In CCE, Vadodara Vs. Dhiren
Chemical Industries, (2002) 2 SCC 127,
a five-Judge Constitution Bench of the
Supreme Court had the occasion to
interpret the phrase "on which the
appropriate amount of duty of excise has
already been paid" appearing in an
exemption notification issued under the
Act. Giving a wider meaning to that
phrase, in view of the purpose of the
exemption notification, as to the Circular
issued by the CBEC, the Constitution
Bench of the Supreme Court held as
below:

"11. We need to make it clear
that, regardless of the interpretation that
we have placed on the said phrase, if there
are circulars which have been issued by the
Central Board of Excise and Customs
which place a different interpretation upon
the said phrase, that interpretation will be
binding upon the Revenue."

That principle has been consistently
applied by the Supreme Court. Also, our
Court has consistently followed the same.

15. In Commissioner of Customs,
Calcutta
&
Ors.
Vs.
Indian
Oil
Corporation Ltd. & Anr., (2004) 3 SCC
488, the above principle was reiterated and
reaffirmed. After discussing the entire
gamut of law on the subject, the Supreme
Court held as below:

"12. The principles laid down by
all these decisions are :

(1) Although a circular is not
binding on a Court or an assessee, It is not
open to the Revenue to raise the contention
that is contrary to a binding circular by the
Board. When a circular remains in
operation, the Revenue is bound by it and
cannot be allowed to plead that it is not
valid nor that it is contrary to the terms of
the statute.

(2) Despite the decision of this
Court, the Department cannot be permitted
to take a stand contrary to the instructions
issued by the Board.

(3) A show cause notice and
demand contrary to existing circulars of
the Board are ab initio bad.

(4) It is not open to the Revenue
to advance an argument or file an appeal
contrary to the circulars."

16. Thus, the Circular would bind the
revenue authorities ranked lower to the
CBIC, in so far as it is beneficial to the
742 INDIAN LAW REPORTS ALLAHABAD SERIES
petitioner.
Those
revenue
authorities,
subordinate to the CBIC, cannot resist or
protest or deviate from the interpretation of
the Scheme made by the CBIC. To allow
them to do so would be to render the
mandate of Section 133 of the Scheme,
redundant.

17. Once the CBIC clarified and thus
enlarged
the
meaning
of
the
word
''quantified' to give effect to the purpose of
Section 123(c) read with Section 125(1)(e)
and Section 121(1)(r) of the Scheme -
clearly to extend the benefit of the Scheme
to more persons, there is neither any
wisdom nor legal basis to curtail the same,
contrary to the express intent of the CBIC.
We have reached this conclusion applying
the first principle crystalised/summarised
by the Supreme Court in paragraph 12(1) in
Commissioner of Customs, Calcutta Vs.
IOCL (supra).

18. We are also unable to accept the
submission advanced by learned counsel
for the revenue, that the Circular is contrary
to the Scheme and therefore unenforceable.
A similar submission had been advanced
by the revenue in UCO Bank, Calcutta
Vs. Commissioner of Income Tax, W.B.,
(1999) 4 SCC 599. In that case, it had been
contended by the revenue, that a circular
issued by the CBDT under Section 119 of
the Income Tax Act, 1961 stood in conflict
with the method of computation of income
chargeable to tax (existing under the
Income Tax Act, 1961). Dealing with such
submission, it was held as below:

"Thus, the authority which wields
the power for its own advantage under the
Act is given the right to forego the
advantage when required to wield it in a
manner it considers just by relaxing the
rigour of the law or in other permissible
manners as laid down in Section 119. The
power is given for the purpose of just,
proper and efficient management of the
work of assessment and in public interest.
It is a beneficial power given to the Board
for proper administration of fiscal law so
that undue hardship may not be caused to
the assessee and the fiscal laws may be
correctly applied. Hard cases which can be
properly categorised as belonging to a
class, can thus be given the benefit of
relaxation of law by issuing circulars
binding on the taxing authorities."

19. In the present case, Section 133 of
the Scheme is pari materia (in material
parts) to Section 119(1) of the Income Tax
Act, 1961. Under clause 10(g) of Circular
issued by the CBIC under Section 133 of
the Scheme, the CBIC had forsaken the
power it wielded, to its own advantage,
under the Scheme. Thus, it waived that
advantage and relaxed the rigor of law - to
make the Scheme more purposeful and
successful
by
maximizing
amicable/consented resolution of legacy
disputes,
under
all
indirect
taxation
enactments, in the context of the imminent
enforcement of the G.S.T. Regime, at the
relevant time. That being the emphasis laid
by the CBIC, it clearly sought to maximize
the number and quantum of settlements
under the Scheme. That intent is selfapparent from a plain reading of paragraphs
2 and 3 of the Circular. It needs no
elaboration.

20. Thus, the CBIC has only clarified
the meaning to be given to the word
'quantified' used under the Scheme - to
include thereunder any duty liability
admitted (in writing) by a person (during an
enquiry or investigation) - as a 'written
communication' spoken of under Section
121(r) of the Scheme. Also, Rs. 45,38,231/-
10 All. M/s Jain Distillery Pvt. Ltd., Bijnor Vs. State of U.P. & Ors.
743
is the exact amount ''quantified' while
issuing the subsequent show-cause-notice
dated 06.09.2019. While that notice may
never
be
read
as
evidence
of
the
'quantification' made earlier since that
show-cause-notice was issued after the cutoff date 30.06.2019, at the same time, the
said document does indicate - other than
the aforesaid ''Panchnama' and admission
made by the petitioner there was no other
material with the revenue authorities to
create any other or further demand.

21. Therefore, we unhesitatingly
reach the conclusions - (i) the 'tax dues' of
the petitioner stood 'quantified' for the
purpose
of
Section
121(r),
123(c),
124(1)(d) and 125(1)(d) before the cut-off
date 30.06.2019 at Rs. 45,38,231 and (ii)
even if it may have been otherwise
permissible to interpret those provisions in
a manner that in the case of a pending
enquiry,
investigation
or
audit,
no
declaration may be filed unless the revenue
authority had first communicated in writing
the ''quantified' amount of ''tax dues'/duty
demand proposed under the Act, yet, that
interpretation would stand blocked, at the
instance of the revenue authorities, by
virtue of the binding interpretation of the
law offered by the CBIC, under section 133
of the Scheme.

22. We also note, the Scheme is a piece
of reform legislation. It commends a
purposive construction. That view we have
expressed in Writ Tax No. 220 of 2020 (M/s
Fashion Dezire And Another Vs. Union of
India Through Principal Secretary, Ministry
of Finance, Department of Revenue & 3
Ors.). We see no good ground to form any
different opinion in this regard as the object
of the Scheme is only to resolve all legacy
disputes and focus all energies of the revenue
authorities as also the assessees at the (then)
imminent enforcement of the new G.S.T
regime.

23. Thus, the reasoning given by the
Designated Committee in the impugned order
runs contrary to law. The Designated
Committee was obligated to deal with the
declaration filed by the petitioner, on merits.
No discretion was vested in the Designated
Committee to take a different view. Even
though the Circular has not been referred to
or dealt by the Designated Committee, by
virtue of the clear language of Section 133 of
the Scheme, it was further obligated to
necessarily act in accordance with that law.

24. Consequently, the impugned order
dated 05.05.2020 is set aside. In absence of
any other dispute or objection, the matter is
remitted to the Designated Committee to
issue the necessary SVLDRS-3 in line with
the observations made above, within a period
of thirty days from today. Petitioner shall
have thirty days therefrom to deposit that
amount and obtain a Discharge Certificate, in
accordance with law.

25. Accordingly, the present petition
is allowed. No orders as to costs.
----------
(2021)10ILR A743
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 28.09.2021

BEFORE

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

Writ Tax No. 378 of 2021
with other cases

M/s Jain Distillery Pvt. Ltd., Bijnor
 ...Petitioner
Versus
State of U.P. & Ors. ...Respondents