2023:BHC-AS:28274-DB

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO. 1210 OF 2022

P. N. Gadgil & Sons Ltd. ….Petitioner

Versus
The Union of India and Ors. ….Respondents

Mr. Bharat Raichandani a/w Mr. Prathamesh Gargate i/by UBR Legal
Advocates for the Petitioner.
Mr. Vijay H. Kantharia i/by Mr. Dhananjay Deshmukh for the Respondents.

CORAM : G. S. KULKARNI,
JITENDRA JAIN, J.J.

DATE : 13th SEPTEMBER, 2023.

JUDGMENT (Per Jitendra Jain, J.):

1. Rule. Rule made returnable forthwith. Respondents waives

service. By consent of the parties heard finally.

2. By this petition under Article 226 of the Constitution of India,

the Petitioner has sought for the following substantive reliefs:

“(a) that this Hon’ble Court be pleased to issue a Writ of Certiorari or a

writ in the nature of Certiorari or any other writ, order or direction under
Article 226 of the Constitution of India calling for the records pertaining to
the Petitioner’s case and after going into the validity and legality of the
provisions set aside and quash SVLDRS FORM 1 rejection (Exhibit “A”).

(d) that this Hon’ble Court be pleased to issue a writ of mandamus or any
other appropriate writ, order or direction ordering and directing the
Respondent to accept the application (FORM SVLDRS 1) filed by the
petitioner and issue discharge certificate (FORM SVLDRS 4) to the
petitioner because, the petitioner is eligible for the relief / benefit available
under SVS, 2019 and has rightly opted for it and willing to pay the
designated / specified amount required to be paid;
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(e) without prejudice to the above, this Hon’ble Court be pleased to issue
a writ of mandamus or any other appropriate writ, order or direction
ordering and directing the Respondent to adhere to the provisions of SVS,
2019 and afford an opportunity to the petitioner to put forth their
case/submissions and thereafter, pass a reasoned order;”

Narrative of Events :

3. The Petitioner is engaged in the business of manufacture and

sale of gold/silver articles and jewellery. The Petitioner is registered with

the Central Excise Department and the goods of the Petitioner are

classified under heading 7113 of the Central Excise Tariff Act, 1985.

4. On 10th July, 2018, Respondent No.4 intimated the Petitioner

about internal audit being taken up of the account/records of the

Petitioner for the period of April 2013 to June 2017. The said intimation

further requested the Petitioner to furnish various documents referred to

therein.

5. On 27th May, 2019, the Petitioner replied to the above letter of

Respondent No.4 giving reference of above intimation and submitted

details of excise duty paid for the period March 2016 to June 2017 and

details of exempt turnover of ‘Vedhani’ goods for the said period. The said

letter reads as thus :-

“This is with reference to our telephonic discussion as regard to information

required for the audit proceedings vide letter F.No.III/10-119/Circle-IV/
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Grp-17/Intimation/2018-19.
We would like to submit the following information for your reference and
kind perusal:
1. Details of Excise Duty paid for the period from March 2016 to June
2017 (Annexure No.1)
2. Details of Exempt Turnover for the period from March 2016 to June
2017 (Annexure No.2)
Thanking you,”

Verbatim Extract of the photo copy of the Annexure to letter dated 27th May 2019
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6. On 24th October, 2019, the Additional Commissioner of CGST

Audit Pune-II issued a pre-consultation notice to the Petitioner. In the said

notice it was recorded that there is a disagreement between the Petitioner

and Respondents on non-payment of excise duty on ‘Vedhani’ article of

jewellery. The said notice was made returnable on 7 th November, 2019.

The said letter also refers to letter of the Respondents dated 3 rd October,

2019 wherein it is recorded that the Petitioner was informed about the

observation made by the audit team with respect to payment of tax/duty

along with interest and penalty.

7. On 14th January, 2020, Respondent No.4 issued a show cause

notice-cum-demand notice intending to levy duty on the value of

“Vedhani” sold by the Petitioner. In the said show cause notice, the

Petitioner was put to notice as to why excise duty of Rs. 1,94,22,809/- (1%

of turnover) on sale of “Vedhani rings” for the period of March, 2016 to

June, 2017 should not be demanded and recovered along with interest

and penalty.

8. On the very same day that is 14 th January, 2020, the Petitioner

replied to the aforesaid show cause notice wherein the Petitioner

submitted that since “Vedhani” is not an article of jewellery, excise duty is

not leviable on the same. Further, it was submitted that the conversion of
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raw gold into Vedhani does not change the basic nature of product and it

still continue to be bullion only and as the process does not amount to

manufacture there cannot be any levy of excise duty. Having said so, the

Petitioner stated that to buy peace and minimize litigation, the Petitioner

would accept liability of excise duty of Rs.1.94 crore as per the show cause

notice and further stated that they wish to avail the benefit of Sabka

Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinafter referred

as ‘SVLDR Scheme’) to close the matter.

9. On 15th January, 2020, the Petitioner made an application under

SVLDR Scheme in Form SVLDRS-1. In the said application, the basic excise

duty was mentioned as Rs.1,94,22,809/- and it was stated that the said

quantification is as per communication dated 27 th May, 2019.

10. On 15th January, 2020, the Respondents rejected the application

made by the Petitioner in Form SVLDRS-1 on the ground that the

Petitioner is ineligible since the “amount of duty was not quantified on/or

before 30th June, 2019”.It is on this backdrop that the present petition is

filed challenging the rejection dated 15th January, 2020.

11. Heard learned counsel for the Petitioner and learned counsel for

the Respondents and with their assistance have perused the documents

annexed to the petition and also the reply affidavit of the Respondents
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dated 12th August, 2021 and rejoinder dated 7 th April, 2022 of the

Petitioner to the said reply.

12. Submissions of the Petitioner : The Petitioner relying upon

Section 127(3) and (4) of SVLDR Scheme, 2019 contended that the

Respondents ought to have given an opportunity of hearing before

rejecting the application/declaration made by the Petitioner. Secondly, the

Petitioner contended that there was a quantification of the duty by them

vide letter dated 27th May, 2019 and therefore, the ground of rejection

mentioned by the Respondents that duty was not quantified on/or before

30th June, 2019 is not correct. The Petitioner further contended that

looking at the objective of the SVLDR Scheme, same should be construed

liberally so as to enable the Petitioner to avail the benefit of the scheme.

The Petitioner, therefore, contended that the petition be allowed in terms

of prayers made in the petition.

13. Submissions of the Respondents : The Respondents submitted

that the provisions of Section 127(3) and (4) of SVLDR Scheme granting

opportunity of hearing is not applicable to the facts of the present

Petitioner, since the Petitioner was non-eligible at the threshold itself. The

Respondents further submitted that there was no quantification of duty

on/or before 30th June, 2019 and therefore it was rightly found that the
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Petitioner is not eligible to avail the benefit of SVLDR Scheme. The

Respondents further contended that the letter of the Petitioner dated 27 th

May, 2019 does not quantify the demand but only seeks to furnish the

details of turnover called for during the course of the audit. The

Respondents therefore contended that the petition be dismissed.

Analysis and Conclusion :

14. Issue: The moot point which arises for our consideration is

whether the Petitioner is eligible to avail the benefit of SVLDR Scheme,

2019 on the ground whether there was a quantification of the demand

on/or before 30th June, 2019, being the cut-off date specified in the SVLDR

Scheme.

15. Before we address the issue which is posed for our consideration

it would be apt to reproduce certain provisions of the SVLDR Scheme,

2019 introduced by the Finance Act, 2019.

Section 121

Definitions :

(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 on 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
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enactment on or before the 30th day of June, 2019, wherein he has admitted
a tax liability but not paid it;

(g) “audit” means any scrutiny, verification and checks carried out
under the indirect tax enactment, other than an enquiry or investigation,
and will commence when a written intimation from the central excise officer
regarding conducting of audit is received;

(r) “quantified”, with its cognate expression, means a written

communication of the amount of duty payable under the indirect tax
enactment.

Section 123 For the purposes of the scheme, “tax dues” means-
(a) where …….
(b) where a show cause notice under any of the indirect tax
enactment has been received by the declarant on or before the 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;
(c) Where an enquiry or investigation or audit is pending against the
declarant, the amount of duty payable under any of the indirect tax
enactment which has been quantified on or before the 30 th day of June,
2019;
(d) where the amount has been voluntarily disclosed by the declarant,
then, the total amount of duty stated in the declaration.
(e) where an amount in arrears relating to the declarant is due, the
amount in arrears.

Section 125 Declaration under Scheme :

(1) All persons shall be eligible to make a declaration under this
Scheme except the following, namely:-
(a) who have filed an appeal before the appellate forum and such
appeal has been heard finally on or before the 30th day of June, 2019;
(b) who have been convicted for any offence punishable under any
provision of the indirect tax enactment for the matter for which he intends
to file a declaration;
(c) who have been issued a show cause notice, under indirect tax
enactment and the final hearing has taken place on or before the 30 th day of
June, 2019;
(d) who have been issued a show cause notice under indirect tax for
an erroneous refund or refund;
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(e) who have been subjected to an enquiry or investigation or audit

and the amount of duty involved in the said enquiry or investigation or audit
has not been quantified on or before the 30th day of June, 2019;
(f) a person making a voluntary disclosure,
(i) after being subject to any enquiry or investigation or audit; or
(ii) having filed a return under the indirect tax enactment, wherein
he has indicated an amount of duty as payable, but has not paid it;
(g) who have filed an application in the Settlement Commission for
settlement of a case;
(h) persons seeking to make declarations with respect to excisable
goods set forth in the Fourth Schedule to the Central Excise Act, 1944.
(2) A declaration under sub-section (1) shall be made in such
electronic from as may be prescribed.

Section 127 Issue of statement by designated committee :

(1) Where the amount estimated to be payable by the declarant, as

estimated by the designated committee, equals the amount declared by the
declarant, then, the designated committee shall issue in electronic form, a
statement, indicating the amount payable by the declarant, within a period
of sixty days from the date of receipt of the said declaration.
(2) Where the amount estimated to be payable by the declarant, as
estimated by the designated committee, exceeds the amount declared by the
declarant, then, the designated committee shall issue in electronic form, an
estimate of the amount payable by the declarant within thirty days of the
date of receipt of the declaration.
(3) After the issue of the estimate under sub-section (2), the
designated committee shall give an opportunity of being heard to the
declarant, if he so desires, before issuing the statement indicating the
amount payable by the declarant:
Provided that on sufficient cause being shown by the declarant, only
one adjournment may be granted by the designated committee.
(4) After hearing the declarant, a statement in electronic form
indicating the amount payable by the declarant, shall be issued within a
period of sixty days from the date of receipt of the declaration.
(5)……
(6)……
(7)……
(8)…… .

16. Section 125 of the SVLDR Scheme provides for eligibility of

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persons who can avail benefit of the scheme by making a declaration.

However, clauses (a) to (h) of Section 125(1) provide for exceptions as to

who cannot avail the benefit of the scheme. In the case of the Petitioner

the relevant clauses applicable for our consideration would be clauses (c),

(e) and (f). If the Petitioner falls under any one of these clauses, then

such person is not eligible to make a declaration and avail the benefit of

the scheme.

17. Clause (c) of Section 125(1) of SVLDR Scheme disqualifies a

person who has been issued a show cause notice under indirect tax

enactment and the final hearing has taken place on/or before 30 th June,

2019. In the case of the Petitioner, this clause would not be applicable

because the show cause notice is dated 14th January, 2020 .

18. Clause (e) of Section 125(1) of the SVLDR Scheme provides for

disqualification of a person who has been subjected to an enquiry or

investigation or audit and the amount of duty involved in the said enquiry

or investigation or audit has been quantified on/or before 30 th June, 2019.

In the present case, the Petitioner was subjected to audit vide letter dated

10th July, 2018 issued by Respondent No.4. However, the amount of duty

involved in the said audit was not quantified on/or before 30 th June, 2019.

The reliance placed by the Petitioner on letter dated 27 th May, 2019 to

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contend that there has been a quantification of duty is incorrect. The letter

of 27th May, 2019 by the Petitioner only records furnishing of information

required for the purposes of the audit. In the annexure to the said letter,

the Petitioner has bifurcated its goods between “Bullion-others” which

according to the Petitioner are goods on which excise duty is leviable and

“Bullion-Vedhani” being turnover of goods which is exempt. The letter

dated 27th May, 2019 and the annexure thereto only provides turnover of

dutiable goods and exempt goods. There is no quantification of duty by

the Petitioner in the letter dated 27th May, 2019. This is fortified by a

letter dated 24th October, 2019 addressed by the Additional Commissioner

to the Petitioner wherein there is further reference to letter dated 3 rd

October, 2019 and it is stated that the Petitioner has not agreed to the

payment of tax/duty along with interest and penalty. These two letters of

3rd October, 2019 and 24th October, 2019 are addressed much after the cut-

off date of 30th June, 2019. The quantification of duty happened only on

the issuance of the show cause notice dated 14 th January, 2020 which also

falls after the cut-off date of 30 th June, 2019. The Petitioner in its reply

dated 14th January, 2020 after contending how there is no liability to the

show cause notice has admitted the excise duty liability of Rs.1.94 crore as

per the show cause notice and this is evident from the letter dated 14 th

January, 2020, extract of which is reproduced reads as under :

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“Without accepting that “Vedhani” can be treated as jewellery, we being tax

compliant assessee would prefer to minimize litigation and to buy the peace,
we wish to file an application with Sabka Vishwas (Legacy Dispute
Resolution) Scheme, 2019 (SVLDR Scheme) to close the matter. For the said
purpose we accept the liability of Excise Duty of Rs.1.94 Crs as per the
above referred show cause notice. We waive our right to be heard in person
for the above matter and we request you good-self to kindly adjudicate the
matter at the earliest.”

19. The Petitioner was thus disqualified as per clause (e) of Section

125(1) of SVLDR Scheme to make a declaration since in the Petitioner’s

case there has not been a quantification before the cut-off date. Section

121(r) defines “quantified” to mean a written communication of the

amount of duty payable under the indirect tax enactment. In the instant

case, the letter of the Petitioner dated 27 th May, 2019 cannot be read to

mean a communication of the amount of duty payable since there is no

such statement in the said letter or its annexure. On the contrary the

communication of the amount of duty payable is for the first time in the

show cause notice dated 14th January, 2020 and therefore even on this

account the submission of the Petitioner that there is a quantification vide

letter dated 27th May, 2019 is to be rejected.

20. The phrase ‘quantification’ has been the subject matter of

interpretation before various courts.. In Karan Singh V/s. The Designated

Committee Sabka Vishwas (Legacy Dispute Resolution) Scheme 1 , the

Delhi High Court observed that the phrase “quantification” can only mean

1 2019 SCC Online DEL 12396

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to be a duty liability which has been determined by the department. The

Court observed that in terms of Section 121(r) of the Finance Act, 2019

the word “quantified” means a written communication of the amount of

duty payable under indirect tax enactment and that a unilateral

quantification by the Petitioner does not render an assessee eligible to

avail the benefit of the scheme since it was the prerogative of the

department to quantify the amount and not the assessee.

21. In this connection it is also important to note the decision of the

Madras High Court in the case of Vitthalrao Jayaprakash V/s. The

Designated Committee Sabka Vishwas (Legacy Dispute Resolution)

Scheme (Writ Appeal No. 2450 of 2021) who in para 12 in the context of

“quantification” observed as under :

“Thus it is evident that for availing the benefit of the scheme, one of the
conditions precedent is that the tax liability of the tax payer ought to have
been quantified. Even though the Appellant had submitted a letter dated
13th June, 2019 much before the date of closure of the scheme, the fact
remains that is tax liability has not been quantified and therefore, he cannot
avail the benefit of the scheme. In fact the letter dated 13 th June, 2019 has
been given by the Appellant for the purpose of quantification of service tax
liability in the on-going investigation pending against him, which itself is a
disqualification for the Appellant to avail the benefit of scheme. The
Appellant, in the letter dated 13th June, 2019 did not claim the benefits of
the scheme but only requested the Respondents to quantify the tax liability
payable by him……...

13. Thus, the letter dated 13.06.2019 would clearly indicate that the
appellant furnished certain documents only for quantification of the service
tax liability and there is no whisper that he intended to avail the benefits of
the scheme. Secondly, the letter also indicates that as on 13.06.2019, the
service tax liability of the appellant has not been quantified, which is one of
the pre-conditions to avail the benefits of the scheme. Therefore, the
rejection of the application of the appellant by the first respondent herein is
proper.”
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22. It is also important to note in the facts of the present case, the FAQs

issued by the Respondents and the relevant question reads thus:

“Q3. If an enquiry or investigation or audit has started but the

tax dues have not been quantified whether the person is eligible
to opt for the Scheme ?

Ans. No. If audit, enquiry or investigation has started, and the

amount of duty/duty payable has not been quantified or before
30th June, 2019, the person shall not be eligible to opt for the
Scheme under the enquiry or investigation or audit category.
‘Quantified’ means a written communication of the amount of
duty payable under the indirect tax enactment [Section 121(g)].
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. [Para 10(g)
of Circular No 1071/4/2019-CX dated 27th August, 2019]”

23. The common thread passing through clauses (a) to (h) of the

exception to section 125(1) is that there has to be a quantification for

being eligible to avail the benefit of the SVLDR Scheme and in the absence

of “quantification” a person fails the eligibility test.

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24. Therefore, looked at from any angle the Petitioner is not eligible

to make a declaration as per the exceptions carved out by Section 125(1)

of the SVLDR Scheme.

25. The second contention of the Petitioner is that they were not

heard before rejection of the application is on the basis of Section 127(3)

and (4) of the SVLDR Scheme. The provisions of sub-section (3) and (4)

would be applicable only if a person is found to be eligible to make a

declaration under Section 125(1), the correctness of which is verified by

the designated committee and same is found to be eligible under Section

125. It is only when a person is found to be eligible and there is a

difference between the estimated amount payable by the declarant and

that estimated by the committee that the provisions of sub-section (3) and

(4) of Section 127 of the SVLDR Scheme become applicable. In the present

case, as observed by us above, the Petitioner at the threshold itself is not

eligible for availing the benefit of the scheme and therefore reliance

placed on Section 127 (3) and (4) to assail the rejection on the ground of

no hearing being given is misconceived.

26. In any view, as per the admission made by the Petitioner in letter

dated 14th January, 2020 wherein the Petitioner admitted the liability of
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excise duty of Rs.1.94 crore as per the quantification made and reflected

in the show cause notice dated 14 th January, 2020, itself was sufficient that

the Petitioner was not qualified from being eligible for the benefit of the

scheme. Therefore, no purpose would have been served by giving any

opportunity of hearing nor does the scheme provide for any hearing under

Section 125 of the SVLDR Scheme. The letter dated 27 th May, 2019 on

which the case of the Petitioner is based also does not specify any

quantification of duty and same is apparent on the face of the said letter.

Therefore, the plea of the Petitioner on the ground of hearing not been

given would not take the case of the Petitioner any further .

27. We may now deal with the decision of the Bombay High Court in

the case of Thought Blurb V/s. Union of India2 on the issue of opportunity

of being heard. In the said case inspite of there being quantification of

demand, the declaration under SVLDR Scheme was rejected without

giving an opportunity of hearing. It was on these facts that the High Court

observed that summary rejection of an application without affording any

opportunity of hearing would be in violation of the principles of natural

justice. The facts of the Petitioner before us are different. There is no

quantification at all before the cut-off date and therefore even if an

opportunity of hearing was given to the Petitioner, it would not have made

2 (2021) 125 taxmann.com 316

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any difference as to the eligibility under the SVLDR Scheme. The Petitioner

even before us has not been able to satisfy on this issue and therefore the

prayer made now to remand the matter back on the principles of natural

justice would not serve any purpose moreso because now the scheme has

come to an end. It is settled position that a decision has to be read in the

context of facts of that case and one cannot read the same dehors the

facts. Therefore, for more than one reason the decision in the case of

Thought Blurb (supra) is not applicable.

28. The second decision which requires consideration is the decision

of the co-ordinate bench of this court in the case of Rakesh Industrial

Stitching V/s. Union of India3. In this case the remark for rejection of

SVLDRS declaration stated “investigation already initiated by department”

and it was on the basis of this remark following the decision of Thought

Blurb (supra) that the matter was remanded back. In the present

Petitioner’s case the remark sates “The amount of duty was not quantified

on or before 30th June, 2019” and it was specifically stated that ground of

rejection is “ineligibility”. It is on these facts that the decision in the case of

Rakesh Industrial Stitching (supra) is distinguishable.

29. The Petitioner has relied upon the decision of this Court in the
3 Writ Petition No.2835 of 2022
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case of Saksham Facility Services Pvt. Ltd. V/s. Union of India and Others 4

in support of its contention. We have perused the said decision relied upon

by the Petitioner and same is distinguishable inasmuch as in the case of

Saksham Facility Services Pvt. Ltd. (supra), there was a quantification of

the service tax liability prior to the cut-off date of 30 th June, 2019 which is

evident from paragraphs 5, 6 and 23 of the said decision. In the case of the

Petitioner, as observed by us above, there is no quantification of duty prior

to the cut-off date and therefore this decision does not assist the case of

the Petitioner.

30. SVLDR Scheme is a scheme aimed at liquidating legacy cases

locked up in litigation at various forums. However, it does mean that the

scheme should be interpreted in a way to make a disqualified person

qualified to avail the benefits of the scheme, though such a scheme is in

public interest inasmuch as the government can collect taxes immediately,

pendency in courts gets reduced and the assessee gets relieved from

uncertainty, penalties, etc. The entry into the scheme is to be interpreted

strictly without doing any violence to the scheme. Any other interpretation

in the garb of beneficial legislation would amount to giving the benefit of

the scheme to those who are expressly not qualified.

4 2020-TIOL-2108-HC-MUM-ST
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31. In view of above discussion, the petition is dismissed with no

order as to cost. Rule accordingly stands discharged.

[JITENDRA JAIN, J.] [G. S. KULKARNI, J.]

Signed by: Smita Gonsalves

Designation: PS To Honourable Judge
Date: 27/09/2023 10:46:42