IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

****

WRIT PETITION Nos.2, 3 & 5 OF 2021

Between:

WRIT PETITION No.2 OF 2021

Bharathi Cement Corporation Pvt. Ltd.,

Nallalingayapalli, Kamalapuram Mandal,

Kadapa District – 516 289, A.P. --- Petitioner.

And

The Additional Commissioner of Central Tax,

Office of the Commissioner of Central Tax,

Guntur Central GST Audit Commissionerate,

9/86-A, Amaravati Nagar,

West Church Compound,

Tirupati – 517 502 and three (3)

others. --- Respondents.

DATE OF COMMON ORDER PRONOUNCED : 16.08.2021

SUBMITTED FOR APPROVAL :

HON'BLE SRI JUSTICE JOYMALYA BAGCHI

AND

HON'BLE SRI JUSTICE K.SURESH REDDY

1. Whether Reporters of Local Newspapers

may be allowed to see the common order? Yes/No

2. Whether the copy of order may be

marked to Law Reporters/Journals? Yes/No

3. Whether Their Lordships wish to

see the fair copy of the order? Yes/No

________________________

JOYMALYA BAGCHI, J

________________________

K.SURESH REDDY, J

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

2

* HON'BLE SRI JUSTICE JOYMALYA BAGCHI

AND

* HON'BLE SRI JUSTICE K.SURESH REDDY

+ WRIT PETITION Nos.2, 3 & 5 OF 2021

% 16.08.2021

# Between:

WRIT PETITION No.2 OF 2021

Bharathi Cement Corporation Pvt. Ltd.,

Nallalingayapalli, Kamalapuram Mandal,

Kadapa District – 516 289, A.P. --- Petitioner.

And

The Additional Commissioner of Central Tax,

Office of the Commissioner of Central Tax,

Guntur Central GST Audit Commissionerate,

9/86-A, Amaravati Nagar,

West Church Compound,

Tirupati – 517 502 and three (3) others. --- Respondents.

! Counsel for the Petitioner : Sri Raghava Ramabhadran

^ Counsel for Respondents : Sri Suresh Kumar Routhu

< Gist:

> Head Note:

? Cases referred:

This Court made the following:

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

3

HON'BLE SRI JUSTICE JOYMALYA BAGCHI

AND

HON'BLE SRI JUSTICE K.SURESH REDDY

WRIT PETITION Nos.2, 3 & 5 OF 2021

(Taken up through video conferencing)

COMMON ORDER : (Per Hon'ble Sri Justice Joymalya Bagchi)

1. All these Writ Petitions are heard analogously and are

disposed of by way of this common order.

2. Factual matrix giving rise to the proceedings are as follows:

Petitioner is in the business of manufacturing ‘cement and

clinker’ falling under Chapter 25 of the Central Excise Tariff Act,

1985 (hereinafter referred to as ‘the existing law’). During the period

from 2014 to June, 2017, the petitioner made sales to customers on

‘for destination basis’ from its factory and depots. Petitioner availed

credit on the services of GTA and C&F Agents used for outward

transportation of goods from factory to customers’ premises for the

said period, as follows:

Cenvat credit availed (including cesses)

Period

Month of

Availment Factory to

Customer’s

place

Depot/Consignment

Agent Premises to

Customer’s place

C&F

Agency

services

August 14 to

April 15

May 2017

8,88,25,992

3,15,78,763

1,36,38,620

November 15

to June 17

Nov 16 to

June 17

3,41,05,942

53,07,576

-

12,29,31,934 3,68,86,339 1,36,38,620

TOTAL 17,34,56,893/-

3. Respondent - Commissioner of Central Tax : GST

Commissionerate, Tirupati, issued a show-cause notice, dated

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

4

04.06.2019, proposing recovery of irregularly availed Cenvat Credit

of Service Tax of Rs.17,34,56,893/- along with interest and penalty

on the ground that petitioner is not entitled to avail Cenvat credit of

service tax paid on GTA and C&F Agency Services for outward

transportation of goods. The Goods and Services Tax Act, 2017

(hereinafter referred to as ‘the GST Act’) was introduced with effect

from 01.07.2017. In order to resolve and settle pending cases under

various laws including Central Excise Act, which were subsumed in

the GST regime, the Government floated ‘Sabka Vishwas (Legacy

Dispute Resolution) Scheme, 2019 (hereinafter referred to as ‘the

Scheme’) under Chapter-V of the Finance Act, 2019 (for short, ‘the

Finance Act’). On 21

st

August, 2019, vide Notification No.05/2019

Central Excise-NT, the SVLDRS Rules were notified and the

scheme became operational from 1

st

September, 2019 to 31

st

December, 2019.

4. Section 122 of the Scheme enumerated the enactments to

which the said Scheme would apply, which, inter alia, included the

Central Excise Act, 1944 and the Rules framed thereunder. The

Scheme was made applicable with regard to ‘tax dues’ under the

aforesaid enactments as per Section 123 of the Finance Act.

Relevant portion of the said provision, for our purpose, is set out

herein below:

“123. For the purposes of the Scheme, “tax dues” means –

……………..

(b) where a show cause notice under any of the indirect tax

enactment has been received by the declarant on or before the

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

5

30

th

day of June, 2019, then, the amount of duty stated to be

payable by the declarant in the said notice:

Provided that if the said notice has been issued to the

declarant and other persons making them jointly and severally

liable for an amount, then, the amount indicated in the said notice

as jointly and severally payable shall be taken to be the amount of

duty payable by the declarant;”

5. Exceptions to such eligibility were engrafted in Section 125 of

the Finance Act. As the petitioner has been issued show-cause

notice, dated 04.06.2019, proposing to recover irregularly availed

Cenvat credit of Rs.17,34,56,893/-, as aforesaid, and did not fall

within the exceptions provided under Section 125 thereof, he was

eligible to avail the said Scheme and, in fact, did so by making a

declaration in electronic form (SVLDRS-1) under Section 125 of the

Finance Act. Pursuant to such declaration, the 1

st

respondent -

Designated Committee upon verification issued a statement in

electronic form being SVLDRS-3 indicating the amount payable by

the declarant i.e., Rs.8,67,28,446.50 after availing relief under the

Scheme. Petitioner duly paid the said amount within the period

stipulated under Sub-section (5) of Section 127 of the Finance Act

i.e., within 30 days. However, instead of issuing a discharge

certificate within 30 days of the payment, as per Sub-section (8) of

Section 127, it is contended that the respondent – Commissioner of

Central Tax GST Commissionerate, Tirupati, has issued the

impugned letter, dated 24.11.2020, refusing to issue a discharge

certificate on the ground that the petitioner has illegally sought

transitional credit of the disputed Cenvat credit under the GST Act.

As a consequence, the petitioner in Writ Petition No.5 of 2021

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

6

challenged the impugned letter, dated 24.11.2020, and prayed for a

direction upon the respondents to issue discharge certificate in form

SVLDRS-4 in terms of Section 127(8) of the Finance Act. In the

meantime, the respondent - Principal Commissioner of Central Tax

GST Commissionerate, Tirupati, proceeded with adjudication of the

show-cause notice, dated 04.06.2019, with regard to the irregularly

availed Cenvat credit of service tax paid on GTA and C&F Agencies

which was the subject matter of declaration in SVLDRS, as

aforesaid, and passed the order-in-original, dated 12.10.2020, which

came to be challenged in Writ Petition No.3 of 2021. Respondent –

Additional Commissioner (Audit), Visakhapatnam, also issued a

show-cause notice, dated 10.11.2020, with regard to irregular

availment of transition credit of Rs.17,46,55,825/- under Section 140

of the Central Goods and Services Tax Act, 2017 including the

irregularly availed Cenvat credit of Rs.17,34,56,893/- for availing

GTA and C&F Agency services i.e., the subject matter of the

declaration under the SVLDRS Scheme, which has been challenged

in Writ Petition No.2 of 2021.

6. Mr.Raghava Ramabhadran, learned counsel appearing for the

petitioner, submits that the Scheme had been introduced under

Chapter-V of the Finance Act of 2019 in order to put a hiatus to all

pending disputes relating to tax dues under the laws including

Central Excise Tax, which were subsumed into the GST Act, upon

its introduction on 1

st

July, 2017. Show-cause notice, dated

04.06.2019, issued upon his client for allegedly availing irregular

Cenvat credit to the tune of Rs.17,34,56,893/- fell under the category

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

7

of ‘tax dues’ under the Scheme. Accordingly, petitioner was advised

to make a declaration under Section 126(1) of the Finance Act.

Pursuant to such declaration, the tax relief claimed was accepted

and statement in electronic form SVLDRS-3 was issued by the 1

st

respondent – Designated Committee on 26.02.2020. Petitioner duly

paid the said amount as per Sub-section (5) of Section 127 of the

Finance Act. Under such circumstances, it was incumbent on the

part of the 1

st

respondent – Designated Committee to issue a

discharge certificate within 30 days of payment. Instead of doing so,

impugned letter, dated 24.11.2020, refusing to issue the discharge

certificate was issued. The respondents proceeded with the

adjudication under the Central Excise Act and the order-in-original,

dated 12.10.2020, came to be passed. He submitted that once the

declaration was accepted under the Scheme and the amount was

paid as per SVLDRS-3 statement, there was no scope on the part of

the 1

st

respondent – Designated Committee to refuse issuance of

discharge certificate and proceed with the adjudication under the

Central Excise Act, 1944. He further submitted that the Cenvat credit

available to his client as on 30.06.2017 after payment of the amount

under Sub-section (5) of Section 127 was validly transited under

Section 140 of the GST Act and therefore the impugned show-cause

notice issued under Section 140 of the said Act so far as it relates to

the aforesaid transited amount is liable to be quashed.

7. Mr.Suresh Kumar Routhu, learned Senior Standing Counsel

for Customs, submits that the petitioner has blown hot and cold at

the same time. He availed the Scheme and made a declaration

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

8

under Section 125 of the Finance Act with regard to the ‘tax dues’

and also paid the estimated amount after availing relief under the

Scheme. Having done so, the petitioner was ineligible to seek

transitional credit on the irregular Cenvat credit under Section 140 of

the GST Act.

8. Chapter-V of the Finance Act of 2019 provided a scheme for

settlement of disputes under various laws including the Central

Excise Act and the Rules framed thereunder, which were subsumed

under the GST Act. The purpose of framing the Scheme was to

settle all outstanding disputes and avoid complications of carrying

over the disputes into the GST regime. A person who had ‘tax dues’

as defined under Section 123 of the Finance Act was entitled to

make a declaration in electronic form under Section 125 stating the

amount payable by him after availing relief under the Scheme. In the

present case, a show-cause notice had been issued upon the

petitioner for availing of irregular Cenvat credit on GTA and C&F

Agency services to the tune of Rs.17,34,56,893/- for the period of

April, 2014 to June, 2017, which fell within the ambit of ‘tax dues’ as

aforesaid and the petitioner availed of the scheme by making a

declaration under Section 125 of the Finance Act proposing to pay

an amount to the tune of Rs.8,67,28,446.50 after availing relief as

per the Scheme. The said proposal appears to have been verified

and accepted by issuance of a statement in electronic form namely

SVLDRS-3 by the 1

st

respondent – Designated Committee and the

estimated amount was also paid by the petitioner within the

stipulated time. Sub-section (8) of Section 127 of the Finance Act

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

9

mandates the 1

st

respondent – Designated Committee to issue a

discharge certificate in electronic form within 30 days of payment of

the said amount. Instead of issuing the discharge certificate, the

respondents proceeded with adjudication of the aforesaid show-

cause notice under the Central Excise Act and passed the impugned

order-in-original, dated 12.10.2020, and also issued a letter, dated

24.11.2020, refusing to issue the discharge certificate on the

premise he has illegally claimed transitional credit on the irregular

Cenvat credit under the GST Act. Another show-cause notice, dated

10.11.2020, was issued upon the petitioner under the provisions of

the GST Act for illegally availing transitional credit for

Rs.17,46,55,825/-, which included the aforesaid sum of

Rs.17,34,56,893/- which was the subject matter of the declaration

under the Scheme.

9. A conjoined reading of the provisions of the aforesaid Scheme

would show that in the event a declaration is made with regard to

‘tax dues’ under the Scheme by a person eligible under Section 125

of the Finance Act and the same is accepted by the 1

st

respondent –

Designated Committee upon issuance of statement in form

SVLDRS-3 indicating the amount payable after relief and such

amount is paid within the stipulated time, it is incumbent upon the 1

st

respondent – Designated Committee to issue a discharge certificate

under Sub-section (8) of Section 127 of the Finance Act. As per

Section 129 of the Finance Act, the discharge certificate gives

immunity to the declarant on the following issues:

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

10

(I) Any further duty, interest or penalty in respect of the

subject matter and the period for which the declaration

is made;

(II) Any prosecution in respect of the aforesaid subject

matter; and

(III) No reopening of any other proceeding under the

Indirect tax enactment for the self same subject matter

and period.

10. Sub-section (2) of Section 129 inter alia provides that the

discharge certificate shall be presumed to be void if the same was

procured on the basis of any material particular furnished by the

declarant which is subsequently found to be false. Immunity

available to the declarant under the Scheme is therefore restricted to

any future demand of tax, penalty, or interest or prosecution on the

subject matter to which the declaration relates to or reopening of

other proceedings under the Indirect tax enactment with regard to

self same subject matter. Availing the Scheme, however, does not

entitle the declarant to a stamp of legitimacy vis-à-vis the tax dues

i.e., irregular availing of Cenvat credit under the Central Excise Act

as in the present cases. Thus, we are of the view once the declarant

has paid the estimated amount as per the statement under the form

of SVLDRS-3 within the stipulated time, he has the immunity from

any further claim of tax, interest or penalty on the self same subject

matter i.e., availing irregular Cenvat credit which is the substratum of

the show-cause notice issued under the Central Excise Act.

However, it is debatable whether availing the Scheme renders the

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

11

claim of Cenvat credit on GTA and C&F Agency services under the

Central Excise Act as eligible transitional credit under Section 140 of

the GST Act.

11. In the light of the aforesaid discussion, we are of the view that

once the declarant had made payment of the estimated amount as

per the statement in the form of SVLDRS-3 within the stipulated

time, it was beyond the jurisdiction of the respondents to proceed

with adjudication of the show-cause notice issued under the Central

Excise Act with regard to the self same subject matter and pass

impugned order-in-original, dated 12.10.2020. However, it is the

matter of adjudication whether availing of Scheme would attach

legitimacy to the Cenvat credit on GTA and C&F Agency services to

the tune of Rs.17,34,56,893/- and the same would be eligible for the

purpose of transition under Section 140 of the GST Act. Thus,

impugned show-cause notice, dated 10.11.2020, issued upon the

petitioner with regard to availing of transitional credit under Section

140 of the GST Act in respect of the aforesaid Cenvat credit cannot

be said to be without jurisdiction. Thus, we do not wish to interfere

with the said show-cause notice and leave it open to the adjudicating

authority to take appropriate decision thereon. With regard to the

issue of the 1

st

respondent – Designated Committee refusing to

issue discharge certificate under Sub-section (8) of Section 127 of

the Finance Act, we opine that there is nothing in the Scheme which

empowers the said respondent to refuse issuance of the discharge

certificate on the basis of any subsequent event apart from the fact

of discovery of false statement relating to any material particular in

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

12

the declaration. Availing of transitional credit by the petitioner under

the GST Act on the Cenvat credit for GTA and C&F Agency services

under the Central Excise Act is a subsequent and separate

transaction from the declaration made by him under the Scheme and

the adjudication of such claim cannot be said to be barred in law or

without jurisdiction. Hence, we set-aside the letter, dated

24.11.2020, and remand the matter to the 1

st

respondent –

Designated Committee to consider the issuance of discharge

certificate without prejudice to the adjudication under the aforesaid

show-cause notice, dated 10.11.2020, issued under the GST Act.

12. In view of the aforesaid facts, we dispose of these Writ

Petitions directing as follows:

(i) The impugned order-in-original, dated 12.10.2020,

passed by the Respondent-Principal Commissioner of

Central Tax GST Commissionerate, Tirupati, is set-

aside;

(ii) Letter, dated 24.11.2020, issued by the Respondent-

Commissioner of Central Tax GST Commissionerate,

Tirupati, is also set-aside and the matter is remanded to

the 1

st

respondent – Designated Committee to consider

the issuance of a discharge certificate under Sub-

section (8) of Section 127 of the Finance Act without

prejudice to the adjudication in the show-cause notice,

dated 10.11.2020, issued under the GST Act; and

JB, J & KSR, J

W.P.Nos.2, 3 & 5 of 2021

13

(iii) The respondents shall proceed with the adjudication

of show-cause notice, dated 10.11.2020, after giving an

opportunity to the petitioner to respond thereto and the

same shall be disposed of as expeditiously as possible

and in accordance with law.

13. As a sequel, miscellaneous applications pending in these Writ

Petitions, if any, shall stand closed.

________________________

JOYMALYA BAGCHI, J

________________________

K.SURESH REDDY, J

Date: 16-08-2021

Dsh