CESTAT’s Remand Order Not a Final Decision: Delhi HC Rules Taxpayer Eligible for SVLDRS Relief [Read Order]
The Delhi High Court held that a CESTAT remand is not a final decision, making the taxpayer eligible for relief under the SVLDRS scheme.
SVLDRS - relief - Taxscan
SVLDRS - relief - Taxscan
In a recent decision, the Delhi High Court held that an order of remand passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) does not amount to a final decision and the taxpayer remains eligible to avail benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS).
Lokesh Pathak, along with other petitioners, approached the Court seeking directions to the Designated Committee under SVLDRS to issue discharge certificates in respect of a show cause notice dated 28 April 2005.
The dispute originated from searches conducted by the Directorate General of Central Excise Intelligence in 2004, which led to seizure of goods and cash, and subsequent issuance of a show cause notice demanding central excise duty of Rs. 58,66,596 along with proposals for confiscation and penalties.
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The adjudicating authority confirmed duty, imposed penalties, ordered confiscation, and allowed redemption of seized goods on payment of redemption fines. The petitioners filed appeals before CESTAT, which, by its final order dated 9 November 2016, set aside the order and remanded the matter for fresh adjudication, without deciding the merits of the case.
The petitioners later filed declarations under the SVLDRS in December 2019. The Designated Committee treated them as ineligible, taking the view that cases involving seizure and redemption fine were outside the scope of the scheme, and that the CESTAT order constituted a final decision before 30 June 2019.
The petitioners’ counsel argued that the CESTAT had not rendered a final decision on merits and had only remanded the matter, so Section 125(1)(a) of the SVLDRS (which excludes cases finally heard before 30 June 2019) was not applicable. They further argued that redemption fine is in the nature of penalty and should be waived under the scheme.
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The Division Bench comprising Justice PrathibaM. Singh and Justice Shail Jain observed that the CESTAT order merely remanded the matter due to legal infirmities in the original adjudication and did not decide the appeals finally.
It explained that since the show cause notice remained pending for fresh adjudication, the petitioners were not barred from filing declarations under the SVLDRS. The court further observed that redemption fine arises as a consequence of non-payment of duty and is not an independent liability.
Referring to flyers and FAQs issued by the Central Board of Indirect Taxes and Customs (CBIC) which promise total waiver of interest, penalty, and fine, the Court pointed out that such interpretive materials must guide the application of the scheme.
It also relied on judgments of the Gujarat, Allahabad, Punjab & Haryana, and Bombay High Courts holding that redemption fine is covered under the SVLDRS waiver.
Holding that excluding redemption fine would defeat the object of the scheme, the court ruled that the petitioners are eligible for SVLDRS relief and directed the department to issue discharge certificates in respect of the show cause notice dated 28 April 2005 within two months. The writ petitions were allowed.
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