# M/s Unitech Machines Limited & Anr v. Union of India & Ors

- **Citation:** (2021) 10 ILRA 772
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-06-30
- **Case number:** Writ Tax No. 443 of 2020
- **Bench:** Naheed Ara Moonis, Saumitra Dayal Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-unitech-machines-limited-anr-v-union-of-india-ors-46414
- **Pages:** 10

## Headnote

A. Tax Law - Central Excise Rules, 2002 -
Rule 8(3A), 8(4) - Sabka Vishwas (Legacy
Dispute
Resolution)
Scheme,
2019
-
Sections
121(c),
123(e),
124(1)(c),
124(2), 128 & 133 - Sabka Vishwas
(Legacy
Dispute
Resolution)
Scheme
Rules, 2019: Rule 3, 6(6); Central Excise
Act, 1944 - Section 11 - Customs Act, 1962
-Section 142(1)(d).
10 All. M/s Unitech Machines Limited & Anr. Vs. Union of India & Ors.
773
Once a valid settlement is reached, then,
by way of a consequence provided, u/s
129(1)(a) of the Scheme no interest or
penalty liability may exist. If no amount of
the Central Excise duty or Service Tax was
due on the date of filing the declaration on
SVLDRS-1, the fact that interest or penalty
alone may have been claimed on that
date, may not give rise to an eligibility
under the Scheme. Here, admittedly, the
entire Central Excise duty demand stood
satisfied on 11.9.2018 and the entire Service
Tax demand stood satisfied on 13.6.2019. (Para
21)

No show-cause notice came to be issued to
petitioners before the cut-off date 30.06.2019 to
confirm, either any amount of interest or
penalty. Those amounts were otherwise never
quantified in writing either by any statutory
authority or the petitioners. (Para 22)

Therefore, neither declaration filed by petitioner
No. 1, on Form SVLDRS-1 was maintainable as
those were filed only w.r.t. unknown and
indeterminate interest and penalty liabilities.
That hypothetical liability could not be
described either as "tax dues" or "amount
of duty" or "amount in arrears", under the
Scheme. (Para 23)

B.
The
Circulars
are
not
pieces
of
legislation but only binding directions
issued to executive authorities, by virtue
of Section 133 of the Scheme. Their
applicability would stay confined within
the legislative limits set by the Scheme
and, their own language. Thus, de hors the
above referred Circulars, if a declarant had no
"tax dues" outstanding and there was no
amount of interest or penalty demanded from
him, on the date of filing the declaration, on
Form SVLDRS-1, neither it could be effectively
processed nor any relief granted thereon, by
virtue of the language of the provisions. (Para
27)

Administrative Circulars cannot overreach
or circumvent the statute or defeat the
plain letter of law. In the present case, the
Circulars clearly do not convey such intent of
the CBIC. The Circular dated 25.9.2019 would
remain confined (in applicability) only to cases
where an adjudication order may have been
passed, and to no other case. (Para 28)

In the present case, though the petitioner No. 1
had
deposited
the
entire
duty
demand,
however, on its own showing, there did not
exist any adjudication order with respect to the
same, let alone any demand of interest and/or
penalty. (Para 29)

The procedure i.e. manner of filling up the
statutory
Form
SVLDRS-1
or
the
explanations furnished cannot create any
right to the relief claimed that otherwise
does not exist under the

## Text

772 INDIAN LAW REPORTS ALLAHABAD SERIES
recourse to a general entry rather, the issue
involved in that case was - if, while
enacting a law to tax income (referable to
Entry 82, List I), the Parliament could enact
a law to tax that transaction by treating it as
an income. Here, the issue to be examined
is - if in the absence of a taxing entry, a
taxation law may be enacted. Plainly, that
ratio is inapplicable to the facts of this case.

72. Before parting, the State has
already charged 9 percent GST on the sale
of ENA with effect from 01.07.2017. Thus,
if it were to enforce the impugned
Notification dated 17.12.2019, with effect
from 09.12.2019, it necessarily would lead
to an admission of collection (without
authority of law) - of GST on ENA, by 4 to
13 percent. We do not see, what useful
purpose the impugned Notification would
serve if the argument of the learned AAG
were to be accepted.

73. Consequently, all the writ
petitions deserve to be allowed. It is
declared, the State lost its legislative
competence to enact laws, to impose tax on
sales of ENA, upon the enactment of the
101st
Constitution
Amendment.
Consequently,
and
upon
considering
Section 174(1)(i) of UPGST Act, 2017, the
impugned Notification dated 17.12.2019,
insofar as it seeks to impose UPVAT on
ENA, Rectified Spirit and SDS, is ultra
vires, both on account of lack of (i)
legislative competence and (ii) valid
delegation.
It
is
therefore
quashed.
Consequentially,
all
assessment
Orders/Notices
dated
30.06.2021,
21.06.2021,
08.06.2021,
15.06.2021,
11.06.2021,
07.07.2021,
the
(administrative)
Circulars/letters
dated
10.06.2021 and 11.06.2021, impugned in
these writ petitions, holding otherwise are
also quashed.

74. It is further directed, subject to
applicability of the rule against unjust
enrichment, any amount that may have
been deposited by the petitioners (except
petitioners claiming under this order, in
Writ Tax 355 of 2020), by way of UPVAT
on ENA on or after 01.07.2017, may be
refunded to them, within a period of one
month from today.

75. All writ petitions are allowed, as
above. No order as to costs.
----------

(2021)10ILR A772
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 22.09.2021

BEFORE

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

Writ Tax No. 443 of 2020

M/s Unitech Machines Limited & Anr.
 ...Petitioners
Versus
Union of India & Ors. ...Respondents

Counsel for the Petitioners:
Sri Tanmay Sadh, Sri Nishant Mishra, Sri
Dharnendra
Kumar
Rana,
Sri
Ayush
Agarwal

Counsel for the Respondents:
A.S.G.I., Sri Ashok Singh, Sri Devendra
Gupta

A. Tax Law - Central Excise Rules, 2002 -
Rule 8(3A), 8(4) - Sabka Vishwas (Legacy
Dispute
Resolution)
Scheme,
2019
-
Sections
121(c),
123(e),
124(1)(c),
124(2), 128 & 133 - Sabka Vishwas
(Legacy
Dispute
Resolution)
Scheme
Rules, 2019: Rule 3, 6(6); Central Excise
Act, 1944 - Section 11 - Customs Act, 1962
-Section 142(1)(d).
10 All. M/s Unitech Machines Limited & Anr. Vs. Union of India & Ors.
773
Once a valid settlement is reached, then,
by way of a consequence provided, u/s
129(1)(a) of the Scheme no interest or
penalty liability may exist. If no amount of
the Central Excise duty or Service Tax was
due on the date of filing the declaration on
SVLDRS-1, the fact that interest or penalty
alone may have been claimed on that
date, may not give rise to an eligibility
under the Scheme. Here, admittedly, the
entire Central Excise duty demand stood
satisfied on 11.9.2018 and the entire Service
Tax demand stood satisfied on 13.6.2019. (Para
21)

No show-cause notice came to be issued to
petitioners before the cut-off date 30.06.2019 to
confirm, either any amount of interest or
penalty. Those amounts were otherwise never
quantified in writing either by any statutory
authority or the petitioners. (Para 22)

Therefore, neither declaration filed by petitioner
No. 1, on Form SVLDRS-1 was maintainable as
those were filed only w.r.t. unknown and
indeterminate interest and penalty liabilities.
That hypothetical liability could not be
described either as "tax dues" or "amount
of duty" or "amount in arrears", under the
Scheme. (Para 23)

B.
The
Circulars
are
not
pieces
of
legislation but only binding directions
issued to executive authorities, by virtue
of Section 133 of the Scheme. Their
applicability would stay confined within
the legislative limits set by the Scheme
and, their own language. Thus, de hors the
above referred Circulars, if a declarant had no
"tax dues" outstanding and there was no
amount of interest or penalty demanded from
him, on the date of filing the declaration, on
Form SVLDRS-1, neither it could be effectively
processed nor any relief granted thereon, by
virtue of the language of the provisions. (Para
27)

Administrative Circulars cannot overreach
or circumvent the statute or defeat the
plain letter of law. In the present case, the
Circulars clearly do not convey such intent of
the CBIC. The Circular dated 25.9.2019 would
remain confined (in applicability) only to cases
where an adjudication order may have been
passed, and to no other case. (Para 28)

In the present case, though the petitioner No. 1
had
deposited
the
entire
duty
demand,
however, on its own showing, there did not
exist any adjudication order with respect to the
same, let alone any demand of interest and/or
penalty. (Para 29)

The procedure i.e. manner of filling up the
statutory
Form
SVLDRS-1
or
the
explanations furnished cannot create any
right to the relief claimed that otherwise
does not exist under the Scheme. This is
also not a case u/s 123(c) of the Scheme,
inasmuch as, the petitioner No. 1 does not
contend that the amount of penalty and interest
had ever been quantified in writing, by any
means. (Para 30)

C. Central Excise Rules, 2002 - Rule 8(4) -
Before any recovery of interest or penalty may
be enforced against the petitioners it would
have to be first adjudicated. Consequently, the
communications dated 17.3.2020 and 7.4.2020
issued by respondent No. 6 are found to be
wanting in jurisdiction and wholly pre-mature.
(Para 32)

D.
Notification
No.
68/63-CE
dated
04.05.1963 - Clause 1 - The provision of
Section 142(1)(d) of the Customs Act, 1962 had
not been borrowed either by reference or by
incorporation or otherwise made applicable to
the provisions of Central Excise Act, 1944. Thus,
the garnishee proceeding instituted against the
petitioners w.r.t. duty liability under the Central
Excise Act is wholly without jurisdiction. For the
above reasons, the communications dated
17.3.2020 and 7.4.2020 issued by respondent
No. 6 are set aside. (Para 34)

E. No provision of the Scheme indicates
that an amount of duty would include
interest or penalty in the definition of the
words "amount in arrears". (Para 20)

Words and Phrases - "amount in arrears"
- For the computation of relief u/s 124(c) of the
Scheme, the phrase "amount in arrears" means
the amount of Central Excise or Service Tax or
Cess dues recoverable as arrears of duty under
774 INDIAN LAW REPORTS ALLAHABAD SERIES
any indirect tax enactment (specified u/s 122 of
the Scheme) that may be admittedly payable
but may not have been paid upto that date.
(Para 18)

"Amount of duty" - The phrase "amount of
duty" conveys a singular meaning under the
Scheme. It is the amount of Central Excise duty
or an amount of Service Tax or a Cess payable
under any of the specified
indirect tax
enactments. No other amount whether by way
of interest or penalty can ever be categorized as
an amount of duty, especially as the entire
scheme conveys that singular meaning. (Para
19)

Writ petition partly allowed. (E-4)

Present
petition
challenges
the
computation/made on Form SVLDRS-3
dated 06.12.2019, issued for the periods
Sept. 2016 to Feb. 2017 and, April 2017 to
June 2017, by the Designated Committee
under SVLDRS 2019 and rejection of
SVLDRS-1 dated 27.12.2019 both, for the
periods Sept. 2016 to Feb. 2017 and, April
2017 to June 2017. Also, challenge has
been raised to the communications dated
17.3.2020 and 7.4.2020 issued by the
Assistant
Commissioner,
Central
GST
Division.

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

1. Heard Sri Dharmendra Kumar
Rana alongwith Sri Tanmay Sadh, learned
counsel for the petitioners; Sri Ashok Singh
and B.K.S. Raghuvanshi, learned counsel
for the revenue.

2. Present writ petition has been filed to
challenge the computation/made on Form
SVLDRS-3 dated 06.12.2019, issued for the
periods September 2016 to February 2017
and, April 2017 to June 2017, by the
Designated Committee under the Sabka
Vishwas
(Legacy
Dispute
Resolution)
Scheme, 2019 (hereinafter referred to as the
'Scheme') and rejection of SVLDRS-1 dated
27.12.2019 both, for the periods September
2016 to February 2017 and, April 2017 to
June 2017. Also, challenge has been raised to
the communications dated 17.03.2020 and
07.04.2020
issued
by
the
Assistant
Commissioner,
Central
GST
Division/respondent no.6, seeking recovery
of interest and penalty Rs. 74,36,934/-.

3. Further, mandamus has been sought
to re-compute the amount payable under the
Scheme as also for refund claimed. Insofar as
challenge to the validity of Rule 8(3A) of the
Central Excise Rules, 2002 is concerned, the
same has not been pressed.

4. Present writ petition has been filed by
M/s Unitech Machines Ltd.-petitioner no.1
and M/s UM Autocomp Pvt. Ltd.-petitioner
no.2. It has been submitted, earlier, M/s
United Machines Ltd. had two manufacturing
divisions, namely an auto division and an
engineering
division.
It
had
incurred
liabilities both under the Central Excise Act,
1944 and also towards Service Tax, under the
Finance Act, 1994.

5. According to the petitioners,
petitioner no.1 filed its return under the
Central Excise Act on Form ER-1 on time,
for the period September 2016 to February
2017 and also for the period April 2017 to
June 2017. Thus, total excise duty liability
was admitted at Rs. 26,62,16,761/-. Of that, it
discharged Central Excise duty liability to the
extent of Rs. 16,68,84,918/-, by the due date.
The balance Central Excise duty was
discharged belatedly, during the period
23.11.2016 to 11.09.2018.

6. Similarly, petitioner no.1 filed its
return under the Finance Act, 1994 with
10 All. M/s Unitech Machines Limited & Anr. Vs. Union of India & Ors.
775
respect to its Service Tax liability, for the
period April 2016 to June 2017, on or
before the due date. It admitted Service Tax
liability, Rs. 1,98,34,281/-. That petitioner
did not discharge any part of that liability
within the due date and it discharged that
liability after the due date, between the
period 21.09.2018 to 13.06.2019.

7. The reason for the delayed payment
is stated to be financial distress suffered by
petitioner no.1. It is also on record that the
auto division of petitioner no.1 came to be
transferred by way of slump sale, in favour
of the petitioner no.2, under the Business
Transfer Agreement dated 14.03.2017.
Thus, all assets and liability of the auto
division are stated to have been transferred
by petitioner no.1, to petitioner no.2.

8. It is a fact that no interest or penalty
came to be adjudicated before introduction of
the Scheme. Infact, no adjudication notice
was issued in that regard. Upon issuance of
the disputed SVLDRS-3 on 06.12.2019 and
on rejection of the (second) SVLDRS-1 dated
27.12.2019, the present (two) petitions have
been filed. Insofar as the Writ Petition No.
443 of 2020 is concerned, the same arises
from Central Excise duty for the periods
September 2016 to February 2017 and, April
2017 to June 2017, both for auto division and
engineering divisions of petitioner no.1.
Similarly, Writ Petition No. 444 of 2020
pertains to Service Tax liability for the tax
period April 2016 to June 2017.

9. First, learned counsel for the
petitioners
submits,
the
Designated
Committee has completely erred in
making
the
computation
on
Form
SVLDRS-3,
by
its
order
dated
06.12.2019. Here, reliance has been
placed on the provisions of Section
121(c), 123(e), 124(1)(c) read with
Section 124(2), Section 128 and Section
133 of the Scheme. Reliance has also
been placed on the Explanation (b)
appended to Rule 3 read with Rule 6(6)
of the Sabka Vishwas (Legacy Dispute
Resolution)
Scheme
Rules,
2019
(hereinafter referred to as the 'Rules').
Reliance has also been placed on Column
9.2 of the Form SVLDRS-1 (Part B) as
also Columns 10, 11 and 12 thereof.
Again, reference has been made on
Column G of the Form SVLDRS-2 and
the Columns 1, 2 and 3 of the Form
SVLDRS-2A read with Column G of the
Form SVLDRS-3. Heavy reliance has
been
placed
on
Circular
No.
1073/06/2019.CX
dated
29.10.2019
issued by the CBIC Clause 2(iii) read
with Circular No. 1072/05/2019.CX dated
25.09.2019 Clause 2(iv)(b). Thus, it has
been submitted, though the petitioner
no.1 had paid the amount of Central
Excise duty and Service Tax yet, owing
to delayed payments of that duty and tax,
the petitioner no.1 was eligible to make
an application on Form SVLDRS-1 as it
is not a person ineligible for making such
application under any of the Clauses (a to
h) of Section 125(1) of the Scheme. The
Estimated Amount Payable should have
been computed as 'zero'. In any case, the
second
declaration
filed
on
Form
SVLDRS-1,
should
have
been
entertained.

10. Second, it has been submitted, no
demand of interest or penalty could be
pressed against the petitioners without
being
preceeded
by
any
order
of
adjudication passed under Section 11 of the
Central Excise Act, 1944. By means of
paragraph no.54 of the writ petition, it has
been specifically stated that no such
adjudication
had
taken
place.
That
averment has not been denied by means of
776 INDIAN LAW REPORTS ALLAHABAD SERIES
paragraph no.32 of the counter affidavit
filed by the respondent.

11. Third, it has been submitted, in
any case, the provisions of Section
142(1)(d) of the Customs Act, 1962 are not
applicable with respect to any demand
under the Central Excise Act, 1944.

12. Last, it has been submitted, in any
case, in view of the Business Transfer
Agreement dated 14.03.2017 entered into
between the parties, interest or penalty
liabilities, if any, would have to be split up
between two petitioners with respect to the
auto division and the engineering division.
That exercise could only be done by
carrying out proper adjudication. Insofar as
that adjudication has not been done till
date, the recovery of interest and penalty is
wholly without jurisdiction or authority of
law.

13. Responding to the above, learned
counsel for the revenue has placed heavy
reliance on the provisions of Section 121(c)
read with Section 121(d) read with Section
123(e) read with Section 124(1)(c) and
Section 125(1)(f) of the Scheme to submit -
according to the own showing of the
petitioners, no amount of Central Excise
duty or Service Tax was due from
petitioner no.1, on the date of filing of
either of the two declarations on Form
SVLDRS-1. Therefore, the petitioners were
neither eligible to make an application
seeking settlement nor that application was
otherwise maintainable for the purposes of
computation of Estimated Amount Payable
(EAP).

14. As to the other submissions
advanced by learned counsel for the
petitioners,
learned counsel for the
revenue has placed reliance on Rule
8(3A) of the Central Excise Rules, 2002
and Notification No. 68/63-CE dated
04.05.1963 to submit, no adjudication
was required to be made as the default is
admitted to the petitioners and the
provisions of Section 142(1)(d) of the
Customs
Act,
1962,
apply
to
the
provisions of Central Excise Act. As to
the Business Transfer Agreement, it has
been submitted, the same may give rise to
inter
se
dispute
between
the
two
petitioners with which the respondent
authorities have no lis as the duty liability
and, therefore, the interest and penalty
liabilities arose only against petitioner
no.1, from whom recoveries are being
sought.

15. Having heard learned counsel
for the parties and having perused the
record, Section 124 of the Scheme reads
as under:

"124.
(1)
Subject
to
the
conditions specified in sub-section (2),
the relief available to a declarant under
this Scheme shall be calculated as
follows:--

(a) where the tax dues are
relatable to a show cause notice or one or
more appeals arising out of such notice
which is pending as on the 30th day of
June, 2019, and if the amount of duty is,--

(i) rupees fifty lakhs or less,
then, seventy per cent, of the tax dues;

(ii) more than rupees fifty lakhs,
then, fifty per cent, of the tax dues;

(b) where the tax dues are
relatable to a show cause notice for late
fee or penalty only, and the amount of
duty in the said notice has been paid or is
nil, then, the entire amount of late fee or
penalty;

(c) where the tax dues are
relatable to an amount in arrears and,--
10 All. M/s Unitech Machines Limited & Anr. Vs. Union of India & Ors.
777

(i) the amount of duty is, rupees
fifty lakhs or less, then, sixty per cent, of
the tax dues;

(ii) the amount of duty is more
than rupees fifty lakhs, then, forty per cent
of the tax dues;

(iii) in a return under the
indirect tax enactment, wherein the
declarant has indicated an amount of duty
as payable but not paid it and the duty
amount indicated is,--

(A) rupees fifty lakhs or less,
then, sixty per cent, of the tax dues;

(B) amount indicated is more
than rupees fifty lakhs, then, forty per
cent, of the tax dues;

(d) where the tax dues are linked
to an enquiry, investigation or audit against
the declarant and the amount quantified on
or before the 30th day of June, 2019 is--

(i) rupees fifty lakhs or less, then,
seventy per cent, of the tax dues;

(ii) more than rupees fifty lakhs,
then, fifty per cent, of the tax dues;

(e) where the tax dues are payable
on account of a voluntary disclosure by the
declarant, then, no relief shall be available
with respect to tax dues.

(2) The relief calculated under
sub-section (1) shall be subject to the
condition
that
any
amount
paid
as
predeposit at any stage of appellate
proceedings
under
the
indirect
tax
enactment or as deposit during enquiry,
investigation or audit, shall be deducted
when issuing the statement indicating the
amount payable by the declarant:

Provided that if the amount of
predeposit or deposit already paid by the
declarant exceeds the amount payable by
the declarant, as indicated in the statement
issued by the Designated Committee, the
declarant shall not be entitled to any
refund."

Relief may be available, under
Section 124(1)(c), to a declarant with
reference to and against whom "tax dues"
are relatable to an "amount in arrears", at
prescribed rates.

16. Then Section 123(e) of the
Scheme reads:

"123. For the purposes of the
Scheme, "tax dues" means -

(a) .....

(b) .....

(c) .....

(d) .....

(e) Where an amount in arrears
relating to the declarant is due, the amount
in arrears."

Thus, the words "tax dues" mean
"amount in arrears" that may be due.

17. The legislative intent becomes
further clear from Sections 121(c) and
121(d) of the Scheme. They read as under:

"121. In this Scheme, unless the
context otherwise requires, -

(a) .....

(b) .....

(c) "amount in arrears" means
the amount of 'duty' which is recoverable
as arrears of duty under the indirect tax
enactment, on account of -

(i) no appeal having been filed by
the declarant against an order or an order
in appeal before expiry of the period of
time for filing appeal; or

(ii) an order in appeal relating to
the declarant attaining finality; or

(iii) the declarant having filed a
return under the indirect tax enactment on
or before the 30th day of June, 2019,
wherein he has admitted tax liability but
not paid it;
778 INDIAN LAW REPORTS ALLAHABAD SERIES

(d) "amount of duty" means the
amount of central excise duty, the service
tax and the cess payable under the indirect
tax enactment;"

18. Thus, for the computation of relief
under Section 124(c) of the Scheme, the
phrase "amount in arrears" means the
amount of Central Excise or Service Tax or
Cess dues recoverable as arrears of duty
under any indirect tax enactment (specified
under Section 122 of the Scheme) that may
be admittedly payable but may not have
been paid upto that date.

19. The phrase "amount of duty"
conveys a singular meaning under the
Scheme. It is the amount of Central Excise
duty or an amount of Service Tax or a Cess
payable under any of the specified indirect
tax enactments. No other amount whether
by way of interest or penalty can ever be
categorized
as
an
amount
of
duty,
especially as the entire scheme conveys
that singular meaning.

20. No provision of the Scheme
indicates - an amount of duty would
include interest or penalty in the definition
of the words "amount in arrears".

21. Once a valid settlement is reached,
then, by way of a consequence provided
under Section 129(1)(a) of the Scheme no
interest or penalty liability may exist.
Consequently, for the purposes of Sections
121(1)(c), 123(e), 124(1)(c) and 125(1)(f)
also, the "amount in arrears" would be
referable only to duty liability outstanding
and not to interest or penalty liability, where
only that liability may exist. If no amount of
the Central Excise duty or Service Tax was
due on the date of filing the declaration on
SVLDRS-1, the fact that interest or penalty
alone may have been claimed on that date,
may not give rise to an eligibility under the
Scheme. Here, admittedly, the entire Central
Excise duty demand stood satisfied on
11.09.2018 and the entire Service Tax
demand stood satisfied on 13.06.2019.

22. Even if there were any doubt in that
regard,
undisputedly
according
to
the
petitioners themselves, no show cause notice
came to be issued to them before the cut off
date 30 June 2019 to confirm, either any
amount of interest or penalty. Those amounts
were otherwise never quantified in writing
either by any statutory authority or the
petitioners.

23. In view of the above, neither
declaration filed by petitioner no.1, on Form
SVLDRS-1 was maintainable as those were
filed only with respect to unknown and
indeterminate interest and penalty liabilities.
That hypothetical liability could not be
described either as "tax dues" or "amount of
duty" or "amount in arrears", under the
Scheme.

24. Though the petitioners admit that
the entire duty demand of Central Excise duty
and Service Tax liability stood discharged
before filing of the declaration of SVLDRS-1
and before the Scheme being enforced, yet,
the petitioner no. 1 was not ineligible to make
an application under Section 125(1)(f)(ii) of
the Scheme. Still, no relief may be granted
thereon as there were no "tax dues" relatable
to an "amount of arrears" due against
petitioner no.1 on the date of filing the
declaration. The definition of the phrase
"amount of duty" under Section 121(d)
clearly prohibits any other construction to be
made in favour of the petitioners.

25. In face of such statutory intent,
the Circulars referred to by learned counsel
for the petitioners are also of no avail,
10 All. M/s Unitech Machines Limited & Anr. Vs. Union of India & Ors.
779
inasmuch as paragraph no. 2(iii) of the
Circular dated 29 October, 2019 reads as
below:-

"2(iii) A doubt has also been
expressed whether a party who has filed an
ST-3 return and has also paid the dues in
FULL before filing the application but still
wants to avail the benefits of the scheme for
interest on the late paid dues is eligible. In
this
regard,
attention
is
invited
to
illustrations (a) and (b) under Para 2(iv) of
Circular
No.
1072/05/2019-CX
dated
25.09.2019, given in the context of arrears
of confirmed demand. It is clarified that
these also cover the cases of arrears of tax
liability admitted under returns filed on or
before 30.06.2019."

26. Further paragraph no. 2(iv) of the
Circular dated 25.09.2019 reads as below:-

"2(iv) Section 121(c) defines an
amount in arrears as the amount of duty
which is recoverable as arrears of duty.
Further, Section 123 defines 'tax dues' in
respect of arrears as the amount which is
due in arrears. In other words, tax dues is
the amount of duty which is outstanding
against the declarant. This is the net
amount after deducting the dues that he has
already paid. Such payment may be in the
form of pre-deposits appropriated or paid
subsequently by the tax payer voluntarily
against the outstanding amount. It is
clarified that the relief available under
Section 124(1)(c) will be applied to the net
outstanding amount so arrived at. It may be
noted that in respect of all other categories,
any money paid before its appropriation is
in the nature of a deposit only. Hence, in
respect of declarations made under these
other categories, the relief will be applied
to the outstanding amount and, only
thereafter
the
pre-deposits/deposits
[Section 124(2)] shall be adjusted. The
same is illustrated as follows:

(a) Tax paper has outstanding
arrears of confirmed duty demand of Rs.1
crore and he has already paid Rs.60 lakhs.
So, the amount of tax dues is Rs. 40 lakhs.
After applying applicable relief @ 60%, the
amount payable under the Scheme is Rs 16
lakhs.

(b) Taxpayer has outstanding
arrears of confirmed duty demand of Rs.1
crore apart from Rs 20 lakh penalty and
interest as applicable. He has already paid
Rs 1 cr towards duty. So, the amount of tax
dues is zero, and the amount payable under
the Scheme is zero."

27. The Circulars are not pieces of
legislation but only binding directions
issued to executive authorities, by virtue of
Section
133
of
the
Scheme.
Their
applicability would stay confined within
the legislative limits set by the Scheme and,
their own language. Thus, de hors the
above referred Circulars, if a declarant had
no "tax dues" outstanding and there was no
amount of interest or penalty demanded
from him, on the date of filing the
declaration, on Form SVLDRS-1, neither it
could be effectively processed nor any
relief granted thereon, by virtue of the
language of the provisions noted above.

28. Administrative Circulars cannot
overreach or circumvent the statute or
defeat the plain letter of law. In the present
case, the Circulars clearly do not convey
such intent of the CBIC. "Tax dues"
relatable to "amount in arrears" may arise
under Section 124(1)(c) both, in view of an
adjudication or other order passed that may
not have been satisfied on the date of filing
of the declaration and also, by way of
admitted liability under a return filed or
other admission made by a declarant.
780 INDIAN LAW REPORTS ALLAHABAD SERIES
Clause 2(iv)(b) of the Circular dated 25
September, 2019 alludes to the first type of
case noted above only i.e. where there may
be outstanding arrears of 'confirmed duty'
demand as also 'penalty and interest
demands' on the date of the declaration
being filed. Therefore, the Circular dated
25.09.2019 would remain confined (in
applicability) only to cases where an
adjudication order may have been passed,
and to no other case.

29. In the present case, though the
petitioner no.1 had deposited the entire duty
demand, however, on its own showing, there
did not exist any adjudication order with
respect to the same, let alone any demand of
interest and/or penalty.

30. This is also not a case under Section
123(c) of the Scheme, inasmuch as, the
petitioner no.1 does not contend that the
amount of penalty and interest had ever been
quantified in writing, by any means. The
procedure i.e. manner of filling up the
statutory
Form
SVLDRS-1
or
the
explanations furnished cannot create any
right to the relief claimed that otherwise does
not exist under the Scheme.

31. In view of the above reasons, the
first submission advanced by learned counsel
for the petitioners cannot be accepted. For the
same reasons, no recoveries are possible to be
made pursuant to any determination made
under the Scheme.

32. Insofar as the other contention has
been raised, the same appears to be wholly
well founded, inasmuch as Rule 8(4) of the
Central Excise Rules, 2002 reads as under:-

"8(4). The provisions of section
11 of the Act shall be applicable for
recovery of the duty as assessed under rule
6 and the penalty under sub-rule 3(A) in
the same manner as they are applicable for
recovery of any duty or other sums payable
to the Central Government."

Therefore, before any recovery of
interest or penalty may be enforced against
the petitioners it would have to be first
adjudicated.
Consequently,
the
communications dated 17.03.2020 and
07.04.2020 issued by respondent no.6 are
found to be wanting in jurisdiction and
wholly pre-mature.

33. Also, Clause 1 of the Notification
No. 68/63-CE dated 04.05.1963, reads as
under:-

"(1) In supersession of the
notification of the Government of India in
the Ministry of Finance (Department of
Revenue) Central Excise No. 69/59 (G.S.R.
No. 822 of 1959), dated the 18th July,
1959, the Central Government hereby
declares that the provisions of sub-section
(1) of Section 105, Section 110, Section 115
[excluding clauses (a) and (e) of subsection (1)] clause (a) of Section 118,
Sections 119, 120, 121 and 124, clause (b)
and sub-clause (ii) of clause (c) of subsection (1) of Section 142 and 150 of the
Customs Act, 1962, (52 of 1962), relating
to matters specified therein, shall be
applicable in regard to like matters in
respect of the duties imposed by Section 3
of the first mentioned Act, subject to the
following modifications and alterations
which the Central Government considers
necessary and desirable to adapt those
provisions to the circumstances, namely:-"

34. Thus, the provision of Section
142(1)(d) of the Customs Act, 1962 had not
been borrowed either by reference or by
incorporation or otherwise made applicable
to the provisions of Central Excise Act,
10 All. M/s Ratek Pheon Friction Technologies Pvt. Ltd., Noida, Gautam Budh Nagar Vs.
 Principal Commissioner, Central G.S.T. Noida & Ors.
781
1944. Thus, the garnishee proceeding
instituted against the petitioners with
respect to duty liability under the Central
Excise Act is wholly without jurisdiction.
For the above reasons, the communications
dated 17.03.2020 and 07.04.2020 issued by
respondent no.6 are set aside. Any amount
that may have been recovered pursuant to
those communications may be refunded
within a period of one month from today.

35. As to the submission of learned
counsel for the petitioners based on the
Business
Transfer
Agreement
dated
14.03.2017, we do not record any
conclusion in that regard and that issue
may
remain
to
be
examined
in
appropriate
proceedings,
at
the
appropriate stage. We further leave it
open to the revenue authorities to initiate
a valid adjudication proceeding with
respect to penalty and interest, if the
limitation to institute such proceeding
otherwise survives today. We make clear,
we have not granted any extension of
limitation
that
may
have
otherwise
expired.

36. Thus, the writ petition stands
partly allowed. No order as to costs.
----------

(2021)10ILR A781
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 15.09.2021

BEFORE

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

Writ Tax No. 477 of 2021
and
Writ Tax No. 225 of 2021
and
Writ Tax No. 872 of 2018
M/s Ratek Pheon Friction Technologies
Pvt. Ltd., Noida, Gautam Budh Nagar
 ...Petitioner
Versus
Principal Commissioner, Central G.S.T.
Noida & Ors. ...Respondents

Counsel for the Petitioner:
Sri Shubham Agarwal, Sri Suyansh Agarwal

Counsel for the Respondents:
C.S.C., Sri Krishna Agarawal, Sri Sudarshan
Singh, Sri R.C. Shukla, Sri Gaurav Mahajan,
Sri Anant Kumar Tiwari

A. Tax Law - CGST Act,2017 & U.P. GST
Act,2017 - Sections 140 & 174(2)(c) -
Central Goods and Services Tax Act, 2017
- Sections 168 & 168A - Uttar Pradesh
Goods and Services Tax Act, 2017 -
Central Excise Act, 1944 - The Uttar
Pradesh Value Added Tax Act, 2008 - U.P.
Goods and Services Tax Rules, 2017 - Rule
117 & 117 (1)(a) - Indian Income Tax Act,
1922 & Section 24(1) & CGST Rules and
UPGST Rules: Rule 121 -

The first issue for consideration is whether
the ITC is a vested right under the GST
regime. This issue arises in the context of
transition provisions enacted under the CGST
Act read with the CGST Rules. (Para 22)

The legislature did not intend to nullify those
credits earned under the pre-existing laws,
rather, it intended to transition those credits to
the GST regime. That appears to be the plain
object and intent, of section 140 of the CGST &
UPGST Acts. It has also allowed ITC to
unregistered dealers under the preexisting laws,
on tax paid inputs, stocks etc., on the strength
of Tax Invoices. (Para 23, 48)

Thus, u/s 140(1) of the Act, a "registered
person", other than one opting to pay tax by
way of composition levy (u/s 10 of the CGST
Act) has been made entitled to take benefit of
any CENVAT credit of eligible duties that may
have been carried forward on 30 June 2017.
However, by virtue of the plain language of
Section 140 of the Act, that right is subject
(mainly) to fulfilment of two conditions, namely,