REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.8957 OF 2022

M/s. Shekhar Resorts Limited

(Unit Hotel Orient Taj) …Appellant

Versus

Union of India & Ors. …Respondents

J U D G M E N T

M.R. SHAH, J.

1.Feeling aggrieved and dissatisfied with the impugned

judgment and order dated 24.06.2021 passed by the High

Court of Judicature at Allahabad in Writ Tax No.328 of 2021

by which the High Court has dismissed the said writ petition

preferred by the appellant herein seeking direction to the

respondents for consideration of the case of the petitioner

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under the scheme “Sabka Vishwas (Legacy Dispute Resolution)

Scheme, 2019” (hereinafter referred to as the “Scheme of

2019”), the original writ petitioner has preferred the present

appeal.

2.The facts leading to the present appeal in nutshell are as

under:

That the appellant – company registered with the Service

Tax Department was a company engaged in providing

hospitality services. The Service Tax Department conducted

investigations as to the evasion of service tax by the appellant

and issued show cause notices demanding payment of service

tax under various categories such as Accommodation in

Hotels, Inn, Guest House, Restaurant Services, Mandap

Keeper services etc.

2.1Proceedings under the Insolvency and Bankruptcy Code,

2016 (hereinafter referred to as “IBC”) were initiated against

the appellant – Company. The NCLT, Delhi vide order dated

2

11.09.2018 admitted the application filed by the Financial

Creditors of the appellant under Section 7 of the IBC. Thus,

on and from 11.09.2018 the corporate insolvency resolution

process against the appellant commenced and the appellant

was subjected to moratorium under Section 14 of the IBC on

and from 11.09.2018. The Committee of Creditors constituted

as per the provisions of the IBC, in its 15

th

meeting,

unanimously approved the resolution plan submitted by NCJ

Infrastructure Private Limited on 04.06.2019. That thereafter

the Scheme of 2019 came to be introduced on 01.09.2019

under Section 125 of the Finance Act, 2019 for availing the

benefit of “Sabka Vishwas (Legacy Dispute Resolution)

Scheme, 2019”. The appellant acting through its Resolution

professional submitted an application within the period

prescribed under the Scheme 2019. The applicant – company

was issued Form No.1 on 27.12.2019. At this stage, it is

required to be noted that the last date for making the

application under the Scheme 2019 was 31.12.2019. Thus,

Form No.1 was issued within the prescribed time limit and the

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tax dues were computed by the appellant as per the Scheme,

2019. That thereafter Form No.3 was issued by the

Designated Committee on 25.02.2020 determining the amount

due and payable under the Scheme by the appellant. It

appears that as per the said statement for payment of tax

dues, the appellant was required to pay Rs.1,24,28,500/-.

Under the Scheme the appellant/assessee was required to

make the payment as per Form No. 3 within a time period of

30 days. However, in view of the COVID-19 Pandemic, the

time to make the payment was extended by the Government

upto 30.06.2020.

2.2That the NCLT approved the Resolution Plan of the

successful Resolution applicant - NCJ Infrastructure Private

Limited vide order dated 24.07.2020. Thus, on approval of the

Resolution Plan by the NCLT the moratorium period came to

an end, with the closure of the insolvency proceedings on

24.07.2020. Subsequent to the acceptance of the Resolution

Plan by the NCLT, the appellant wrote to the successful

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resolution applicant and the Commissioner, CGST and Central

Excise, Agra intimating them that the resolution process

under the IBC had come to an end and that the appellant is

ready and willing to make full amount of Rs.1,24,28,500/- as

ascertained by the Designated Committee in Form No.3. Vide

communication dated 09.10.2020 to the Assistant

Commissioner, the appellant explained that the settlement

amount under the Scheme, 2019 could not be paid by the

appellant before 30.06.2020 due to the legal moratorium

imposed upon the company and sought permission to pay the

due amount. The Joint Commissioner, Agra vide letter dated

19.10.2020 intimated the appellant that the last date for

payment under the Scheme was 30.06.2020, which could not

be extended. Consequently, the request of the appellant was

rejected. Since the appellant could not obtain permission for

payment of the dues post the lifting of the moratorium, the

appellant approached the High Court by way of Writ Tax

No.328 of 2021. By the impugned judgment and order the

High Court has dismissed the said writ petition on the

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grounds that (i) the High Court shall not issue a direction

contrary to the Scheme; (ii) the relief sought cannot be granted

as the Designated Committee under the Scheme is not

existing.

2.3Feeling aggrieved and dissatisfied with the impugned

judgment and order passed by the High Court, the original

writ petitioner – appellant has preferred the present appeal.

3. Ms. Charanya Lakshmikumaran, learned counsel

appearing on behalf of the appellant has vehemently

submitted that in the facts and circumstances of the case the

Hon’ble High Court has seriously erred in dismissing the writ

petition and not directing the authority to accept the amount

due and payable under the Scheme, 2019.

3.1It is submitted that the Hon’ble High Court has erred in

holding that the Designated Committee does not exist. It is

submitted that the Designated Committee under the Scheme

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was formed as per Rule 5 of the Scheme, 2019. The

Designated Committee consists of either the Principal

Commissioners, Commissioners, Additional Commissioners,

Joint Commissioners or Deputy Commissioners of the Central

Excise and Service Tax depending on the tax amount involved

in the matter. It is submitted that in the present case, the

Designated Committee comprised of the Joint Commissioner

and the Commissioner who are officers associated with the

offices of Respondent nos.3 and 4. That the Designated

Officers continue to act as the Designated Committee under

the Scheme till the completion of the proceedings under the

Scheme.

3.2It is submitted that the Designated Committee under the

Scheme is being constituted on a need basis to comply with

the orders of the courts across the country. That in many

cases the Designated Committee rejected the applications

under the Scheme, 2019 erroneously and the different courts

set aside the decisions of the Designated Committee after

7

30.06.2020 and directed the Designated Committee to

consider the case of the respective applicants under the

Scheme, 2019. It is submitted that to reconsider the cases

pursuant to the orders passed by the courts/High Courts, the

CBEC issued the instructions dated 17.03.2021 allowing for

manual processing of declarations under the Scheme by the

respective Designated Committees. It is submitted that

therefore even after 30.06.2020 the respective Designated

Committees carried out their functions under the Scheme,

however by manual processing. It is submitted that therefore

the reasoning given by the Hon’ble High Court that the

Designated Committees are not in existence after 30.06.2020

and therefore the appellant is not entitled to any relief, may

not be accepted, as even after 30.06.2020 and even as per the

instructions issued by the CBEC, the respective Designated

Committees continued to function and process the

declarations manually.

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3.3It is further submitted by learned counsel appearing on

behalf of the appellant that in the instant case the Hon’ble

High Court has not properly appreciated the cause for which

the appellant could not deposit the amount under the Scheme

2019 on or before 30.06.2020. It is submitted that at the

relevant time and more particularly at the time when the Form

No.3 was issued and even during the period under the Scheme

2019, the appellant was subjected to the rigor of the

provisions of the IBC by virtue of the moratorium period which

ended on 24.07.2020 when the NCLT approved the Resolution

Plan. It is submitted that in the instant case, the appellant

bonafidely could not deposit the settlement due, on or before

30.06.2020 on account of operation of law. It is next

submitted that during the moratorium period, no payment

could have been made as per the provisions of the IBC. It is

contended that if any payment would have been made during

the mortarium period the same would have been in breach of

the provisions of the IBC. It is submitted that as per the

Resolution Plan accepted during the insolvency proceedings,

9

the Resolution Applicant was required to deposit all statutory

dues (including service tax dues) within 6 months from the

effective date into an escrow account. That as per the

Resolution Plan, payment to escrow account shall be treated

as effective payment to the relevant Operational Creditors. It

is further contended that in this case, effective date is

24.07.2020, the date on which the Resolution Plan was

approved by the NCLT. So, Service Tax dues along with other

statutory dues were deposited in an escrow account on

08.01.2021 before the expiry of the period of six months. It is

accrued that this Hon’ble Court in the case of Principal

Commissioner of Income Tax vs. Monnet Ispat & Energy

Ltd., (2018) 18 SCC 786 has held that once a moratorium

has been enforced, any existing proceeding against the debtor

shall stand prohibited. In this regard, it is submitted that the

IBC shall have precedence over any inconsistent statutes.

3.4It is vehemently submitted that in any case, no person

can be left remediless due to operation of law. That in the

10

present case, the moratorium period under the IBC was

extended from 11.09.2018 to 24.07.2020 due to the COVID-19

pandemic and non-functioning of the NCLT. It is contended

that even otherwise, the appellant could not have made any

payment during the mortarium period by operation of law and

inability to make the payment was owning to the moratorium

imposed under the provisions of the IBC. It is urged that

therefore, the appellant may not be left remediless when the

application under the Scheme 2019 was submitted and

processed within time. In support of her above submissions

and the relief prayed, learned counsel appearing on behalf of

the appellant has heavily relied upon the decisions of this

Court in the case of Sunil Vasudeva vs. Sundar Gupta,

(2019) 17 SCC 385 (para 31), United Air Travel Services vs.

Union of India, (2018) 8 SCC 141 (para 13) and Union of

India vs. Asish Agarwak, (2022) SCC Online SC 543 (para

23).

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3.5It is reiterated submitted that the appellant could not

make the payment due to legal disability and no one can be

expected to do the impossible. Reliance is placed on the

decisions of this Court in the case of Gyanichand vs. State of

Andhra Pradesh, (2016) 15 SCC 164 (para 11) and Calcutta

Iron Merchants Association vs. Commissioner of

Commercial Taxes, (1997) 8 SCC 42 (para 5).

3.6It is submitted that the appellant cannot be prejudiced

and/or made to suffer for no fault of the appellant. Reliance is

placed on the decision of this Court in Anmol Kumar Tiwari

& Ors. vs. State of Jharkhand reported in (2021) 5 SCC

424.

Making the above submissions it is prayed to allow the

present appeal and direct the respondents to appropriate the

payment of Rs.1,24,28,500/- towards settlement dues under

the Scheme 2019 and that discharge certificate be issued to

the appellant accordingly.

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4.While opposing the present appeal, Shri Vikramjit

Banerji, learned ASG appearing on behalf of the Union of India

has vehemently submitted that in the facts and circumstances

of the case no error has been committed by the Hon’ble High

Court in dismissing the writ petition and refusing to direct the

respondents to accept the payment towards the settlement

dues under the Scheme, 2019.

4.1It is submitted that admittedly the Scheme was valid

upto 30.06.2020 and the last date for payment of settlement

amount under the Scheme, 2019 was 30.06.2020. That

thereafter the Scheme was closed and even the Designated

Committees were also dissolved and therefore as rightly

observed by the Hon’ble High Court, the Hon’ble High Court

has no jurisdiction to extend the Scheme. It is submitted that

if the Scheme is extended it would create many complications.

4.2It is further submitted that in the present case,

admittedly, no payment was made of settlement amount under

13

the Scheme prior to 30.06.2020 and therefore, the prayer of

the original petitioner to extend the time limit to make the

payment of settlement amount under the Scheme, 2019 was

rightly rejected by the Commissioner and the same has rightly

not been interfered with by the Hon’ble High Court.

Making above submissions it is prayed to dismiss the

present appeal.

5.We have heard the learned counsel appearing for the

respective parties at length.

6.At the outset, it is required to be noted and it is not in

dispute that the appellant is entitled to the benefit of the

settlement under the Scheme, 2019. The Scheme, 2019 came

to be introduced on 01.09.2019 and the last date for making

the application under the Scheme was 30.12.2019 and in fact,

the appellant submitted the application in Form No.1 on

27.12.2019 i.e. before the last date specified for making an

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application. Under the Scheme, after the Form No.1 is

processed the Designated Committee was to scrutinize the

same and issue the Final Form No.3 determining the

settlement amount which the applicant was required to

deposit within a period of one month from the date of receipt

of the final determination – Form No.3. That the appellant

was issued the Form No.3 on 25.02.2020 and was required to

pay the settlement dues on or before 25.03.2020. However, in

view of the COVID-19 Pandemic the Government extended the

time upto 30.06.2020. Therefore, the appellant was required

to deposit the settlement dues on or before 30.06.2020.

However, even before the Scheme, 2019 came to be

introduced, the appellant was subjected to proceedings under

the IBC which commenced on 11.09.2018 when the NCLT

admitted the application under Section 7 of the IBC. Thus,

the moratorium under the IBC commenced on 11.09.2018.

The CoC approved the Resolution Plan on 04.06.2019, and the

same came to be approved by the NCLT by Order dated

24.07.2020. Therefore, the moratorium under the IBC

15

continued upto 24.07.2020. Under the provisions of the IBC

no payment could have been made during the period of

moratorium. Therefore, the appellant was statutorily

restrained/debarred from making any payment. There was

statutory disability on the part of the appellant in making the

payment during the moratorium. If the appellant had made

any payment during the period of moratorium, the appellant

would have committed breach of the provisions of the IBC.

Therefore, it was impossible for the appellant to make any

payment during the period of moratorium. Immediately on the

moratorium coming to an end, the appellant – Resolution

Professional / the successful Resolution applicant approached

the authority requesting them to accept the settlement amount

under the Scheme, 2019 as per the Form No.3. Such request

has been rejected by the Commissioner on the rejection has

been confirmed by the High Court.

7.Therefore, the short question which is posed for

consideration before this Court is, whether, when it was

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impossible for the appellant to deposit the settlement amount

in view of the bar and/or the restrictions under the IBC, the

appellant can be punished for no fault of the appellant? In a

given case can the appellant be made to suffer for no fault of

its own, and be rendered remediless and denied the

benefit/relief though it was impossible for the appellant to

carry out certain acts, namely to deposit the settlement

amount during the moratorium.

7.1As per the settled position of law, no party shall be left

remediless and whatever the grievance the parties had raised

before the court of law, has to be examined on its own merits

[Sunil Vasudeva (supra) (para 31)].

7.2As observed and held by this Court in the case of

Calcutta Iron Merchants’ Association (supra), no law would

compel a person to do the impossible. [Calcutta Iron

Merchants’ Association (supra) (para 5)]

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7.3In the case of Gyanichand (supra) it was observed by

this Court that it would not be fair on the part of the Court to

give a direction to do something which is impossible and if a

person has been directed to do something which is impossible,

and if he fails to do so, he cannot be held guilty.

8.Applying the law laid down by this Court in the aforesaid

decisions to the facts of the case on hand, the appellant

cannot be punished for not doing something which was

impossible for it to do. There was a legal impediment in the

way of the appellant to make any payment during the

moratorium. Even if the appellant wanted to deposit

settlement amount within the stipulated period, it could not

do so in view of the bar under the IBC as, during the

moratorium, no payment could have been made. In that view

of the matter, the appellant cannot be rendered remediless

and should not be made to suffer due to a legal impediment

which was the reason for it and/or not doing the act within

the prescribed time.

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8.1Now so far as the observations made by the High Court to

the effect that the High Court cannot, in exercise of powers

under Article 226 of the Constitution of India extend the

period under the Scheme, 2019, to some extent the High Court

is right. The High Court while exercising the powers under

Article 226 of the Constitution of India cannot extend the

Scheme. However, in the present case it is not a case of

extension of the Scheme by the High Court; It is a case of

taking remedial measures. It is not a case where the appellant

did not make any application within the stipulated time under

the Scheme. This is not a case where the Form No.3

determining the settlement amount was not issued during the

validity of the Scheme. It is not a case where the appellant

deliberately did not deposit the settlement amount and/or

there was any negligence on the part of the appellant in not

depositing the settlement amount within the stipulated time.

As observed hereinabove it is a case where the appellant was

unable to make the payment due to the legal impediment and

the bar to make the payment during the period of moratorium

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in view of the provisions of the IBC. In a given case it may

happen that a person who has applied under the Scheme and

who was supposed to make payment on or before 30.06.2020,

became seriously ill on 29.06.2020 and there was nobody to

look after his affairs and therefore he could not deposit the

amount; such inability was beyond his control and thereafter,

immediately on getting out of sickness he tried to deposit the

amount and/or approached the Court - can the Court close its

eyes and say that though there may be valid reasons and/or

causes for that person’s inability to make the payment, still no

relief can be granted to him? There may be extra ordinary

cases which are required to be considered on facts of each

case. The Courts are meant to do justice and cannot compel a

person to do something which was impossible for him to do.

8.2Now so far as the other ground given by the High Court,

that the Designated Committees are not in existence, is

concerned, it is required to be noted that the CBCE has issued

a circular that in a case where the High Court/courts have

20

passed an order setting aside the rejection of the claim under

the Scheme after 30.06.2020, the applications can be

processed manually. In many cases the High Courts have

remanded the matter to the Designated Committees which

consist of the officers of the Department and the applications

thereafter are processed manually.

9.In view of the above, and under the circumstances and

for the reasons stated above, as the appellant was not in a

position to deposit the settlement amount at the relevant time,

more particularly on or before 30.06.2020 due to legal

impediment and the bar to make the payment of settlement

amount in view of the mortarium under the IBC, and as it is

found that the appellant was otherwise entitled to the benefit

under the Scheme as the Form No.1 submitted by the

appellant has been accepted, the Form No.3 determining the

settlement amount has been issued, the High Court has erred

in refusing to grant any relief to the appellant as prayed.

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10.In view of the above and for the reasons stated above, the

present appeal is allowed. The impugned judgment and order

passed by the High Court is hereby quashed and set aside. It

is directed that the payment of Rs.1,24,28,500/- already

deposited by the appellant be appropriated towards settlement

dues under “Sabka Vishwas (Legacy Dispute Resolution)

Scheme, 2019” and the appellant be issued discharge

certificate. Present appeal is allowed accordingly.

However, in the facts and circumstances of the case there

shall be no order as to costs.

…………………………..J.

(M. R. SHAH)

.………………………...J.

(B.V. NAGARATHNA)

NEW DELHI;

JANUARY 5, 2023

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