STAR PISTONS PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners have challenged the order dated 16.1.1999 at Annexure-C to the petition of the respondent No.2 rejecting the declaration in Form-18 dated 20.11.1998 filed by the petitioners under the Kar Vivad Samadhan Scheme, 1998 on the ground that there was no dispute in the case pending and no appeal was filed by the petitioners against the final order of the CEGAT.

(2.) According to the petitioners, it satisfied all the conditions of getting the benefit under the said Scheme contained in Chapter IV of the Finance (No.2) Act, 1998.

(3.) The learned counsel appearing for the petitioners argued that the order of rejection of the declaration made by the petitioners under the Scheme was based on the ground that the classification dispute stood finally decided by the CEGAT and therefore there was no dispute pending in the case. It was argued that the two show cause notices were still pending and the matter was to be adjudicated upon as per the provisions of Section 11-A of the said Act even after the decision of the CEGAT and therefore it could not be said that no dispute was pending. Even after the dispute regarding classification was decided by the Tribunal, the matter regarding determination of the amount would still be pending in view of the show cause notices not having been proceeded with further. The learned counsel further argued that under the provisions of Section 87 (m) of the Finance (No.2) Act, 1998, the expression "tax arrear", in relation to indirect tax enactment, means not only the amount of duties etc. determined as due or payable as on 31st March, 1998 and remaining unpaid on the date of declaration, but also the amount of duties etc. which constituted the subject-matter of a demand notice or a show cause notice issued on or before 31st March, 1998 and remaining unpaid on the date of the declaration. It was argued that, in view of this specific inclusion of the amount of duties covered by a demand notice or a show cause notice issued prior to 31st March, 1998 which were not paid on the date of declaration within the meaning of the expression "tax arrear", it was clear that in all cases where show cause notices were pending, even if no adjudication was made, the benefit of the Scheme was available in respect of the tax arrear. The learned counsel argued that the provisions of Section 95 (ii) (c) of the said Act did not come in way of the petitioners because show cause notices were already issued and were pending for determination by the concerned authority under Section 11-A of the said Act. He contended that Sub-clause (c) of Clause (ii) of Section 95 of the said Act, which provided that the provisions of the Scheme shall not apply in a case where no appeal, reference or writ was pending, was attracted only to cases where the amount of duty was determined while Sub-clause (b) of Clause (ii) of Section 95, which provided that the Scheme will not apply in cases where show cause notice or a notice of demand under any indirect tax enactment has not been issued, would be applicable to cases where there was no determination of the amount of duties. He submitted that it should be inferred from the wordings of Sub-Clause (b) of Clause (ii) of Section 95 that in all cases where show cause notices were issued, the Scheme applied without anything more. He submitted that this construction was warranted by the very definition of the expression "tax arrear" in Clause (m) (ii) of Section 87 of the said Act. It was then argued that the Department had itself construed the provisions so as to treat the cases where show cause notices were pending as eligible for the benefits under the Scheme. A reference was made to the Board's letter dated 3.8.1998, more particularly to its paragraph 4 which discusses the salient features of the Scheme, in support of this contention. Attention was drawn to paragraph 4.1 of that letter in which it was stated: "The dispute and the case may be still at the stage of show cause notice or demand notice when party comes forward and makes a declaration for claiming the benefit of the Scheme, or the duties, fine, penalties or interest after the issue of show cause/demand notice may have been determined, but the assessee is disputing the same in appellate forums/courts etc. and the amounts due have not been paid up." The learned counsel referred to paragraph 4.2 of that letter in which it was stated: "In either of the two aforesaid category of cases, to be covered by the Scheme, the original show cause/ demand notice involved in the case should have been issued on or before 31.3.1998; whether or not by that date the duties due and payable have been determined or not and any fine/penalty imposed by the adjudicating authority". In the same letter in paragraph 4.3 it was stated that, it is pertinent to note that when a party comes forward for taking the benefits of the Samadhan Scheme and makes suitable declaration as provided thereunder, there must be a dispute pending between the party and the Department [ Section 95 (ii) (c) of the Finance Act ]. In other words, if in any case where there is no show cause notice pending nor the party is in dispute at the appellate/ revision stage nor is there any admitted petition in the court of law where party is contesting the stand of the Department, but certain arrears of revenue due in the case, are pending payment, the benefits of the Scheme will not be available in such a case. The learned counsel then referred to the Trade Notice dated 2.11.1998 which was based on this letter. At serial No.5 of the Table of the clarification, as against the query, "Can the KVS Scheme be availed of in a case where a show cause notice/demand notice has been issued prior to 31.3.1998 and adjudication is pending on the date of making a declaration?", the clarification issued was: "Yes, the scheme can be availed of in such cases", and for the same query in respect of the adjudication made after 1.3.1998, the clarification was: "Only, where party is in dispute i.e. it has filed an appeal against the order and the appeal is admitted and pending on the date of declaration, the benefit under the Scheme can be claimed". The learned counsel finally referred to the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998 which has been issued under Section 97 (1) of the said Act by the Central Government and stated on the basis of Clause 2 of the Order that, in all cases where a show cause notice was issued and was pending adjudication on the date of declaration, the benefit of the Scheme could be availed of.