1. Heard Shri Vijay Kumar along with Shri Awadhesh Kumar Mishra, learned counsel for the petitioner and Shri Ramesh Chandra Shukla, learned counsel for the revenue.
2. Present petition has been filed to quash the order dated 17.11.2020 issued by the Designated Committee, SVLDR Scheme, 2019/Commissioner Central Tax, Central Goods & Services Commissionerate, Ghaziabad. By that order, the said authority has refused to issue the Discharge Certificate in electronic form, in terms of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinafter referred to as the 'Scheme') for reason of outstanding demand of Rs. 30 lakh against the petitioner, towards redemption fine, for the same transaction and tax period for which the Discharge Certificate has been sought, upon payment of fee computed in terms of section 124 of the Scheme.
3. Briefly, the petitioner is a partnership concern against which an Order-in Original No. 2/A/Ayukt/M-/97 dated 14.08.1997 had been passed creating duty demand of Rs. 1,05,99,382/- together with penalty Rs. 60 lac under the Central Excise Act, 1944. Also, by that order, redemption fine Rs. 30 lac had been determined against the petitioner, in lieu of confiscation of goods under that Act.
4. Upon introduction of the Scheme through the Finance (No.2) Act, 2019, the petitioner applied for issue of the Discharge Certificate under section 127 of the Scheme, with respect to the aforesaid Order-in-Original dated 14.08.1997. It was required to deposit Rs. 63,59,629.20. Undisputedly, the petitioner deposited that amount on 30.06.2020. It did not discharge the liability of redemption fine Rs. 30 lac imposed vide the aforesaid Order-in-Original dated 14.08.1997. The Designated Committee did not issue the Discharge Certificate in absence of deposit of redemption fine Rs. 30 lacs. At that stage, the petitioner filed Writ Tax No. 483 of 2020 wherein, vide order dated 21.10.2020, the petitioner was granted liberty to file a representation relying on the order dated 27.02.2020 passed by the Gujarat High Court in R/Special Civil Application No. 21744 of 2019. The petitioner made compliance of that order. Subsequently, that writ petition came to be dismissed vide order dated 19.11.2020, in view of the order dated 17.11.2020 passed by the Designated Authority. Hence, this writ petition.
5. Learned counsel for the petitioner has submitted: ''redemption fine' is a ''penalty' and, therefore, by virtue of the clear language of section 129 of the Scheme, no amount of ''redemption fine' may be demanded. The petitioner is eligible to the benefit of the Scheme and in view of the further fact that the petitioner has made the requisite deposit in terms of section 124 of the Scheme, it is entitled to its issue. In addition, he has placed heavy reliance on the final decision of the Gujarat High Court dated 27.02.2020 in R/Special Civil Application No. 21744 of 2019. He has further submitted that the Special Leave Petition filed against the aforesaid decision of the Gujarat High Court being Special Leave to Appeal (C) No. 449 of 2021 has been dismissed by the Supreme Court vide order dated 03.03.2021 on the following terms:
"1. We are not inclined to entertain the Special Leave Petition under Article 136 of the Constitution.
2. The Special Leave Petition is accordingly dismissed."
Relying on that order, it has been submitted, the decision of the Gujarat High Court has become binding on the revenue. Next, reliance has been placed on the communication dated 03.06.2013 issued by the Chairperson, Central Board of Excise and Customs (CBEC) to contend, ''redemption fine' is ''penalty'. Last, learned counsel for the petitioner has placed heavy reliance on the circulars and other communications issued by the departmental authorities (described as flyers and press notes in the decision of the Gujarat High Court), to submit that the departmental authorities have consistently read the provisions of the Scheme to include redemption fine as a penalty and therefore, the separate demand of ''redemption fine' does not survive upon payment of the entire amount computed under section 124 of the Scheme.
6. Opposing the writ petition, learned counsel for the revenue submits that the Scheme is part of a fiscal statute. He has therefore invoked the rule of strict interpretation and submitted, the Scheme does not, in any way, include ''redemption fine' within the ambit of consequences of the Discharge Certificate under section 129 of the Scheme. Therefore, unless the petitioner were to pay the entire amount of ''redemption fine' - Rs. 30 lacs, the Discharge Certificate cannot be issued. Referring to the communication dated 20.12.2019, he would submit that the position in this regard has been clarified by the Central Board of Indirect Taxes and Customs (CBIC in short), to exclude ''redemption fine' from ''penalty' and therefore, from the scope of the Scheme. He has further submitted that the petitioner had given an undertaking before the Designated Committee to pay the redemption fine once the Discharge Certificate is issued to it. Therefore, invoking estoppel against the petitioner, it has been submitted, the petitioner cannot go against its own undertaking and that the challenge now raised, is merely an afterthought.
7. Having heard learned counsel for the parties and having perused the record, first, we find that the object of the Scheme is only one, being to end legacy disputes. For that object and purpose, the "amount in arrears" has been defined under section 121 (c) of the Scheme. It includes duty amount that is recoverable as arrears under an indirect tax enactment, on account of - either no appeal having been filed or on account of an order in appeal having attained finality or on account of a declarant having filed his return under the indirect tax enactment on or before the cut-off date, 30.06.2019, wherein he may have admitted the duty liability but not discharged the same. The phrase 'amount of duty' has been defined under section 121 (d) of the Scheme to mean the amount of central excise duty, the service tax and the cess payable under the indirect tax enactment.
8. Section 121 (u) of the Scheme provides that words and expressions used in this Scheme, but not defined, would carry the same meaning as may be assigned to them in the indirect tax enactment. In case of conflict between two or more such meanings in any indirect tax enactment, the meaning that is more congruent with the provisions of the Scheme shall be adopted. For ready reference, the provision of section 121 (u) of the Scheme is quoted below:
"(u) all other words and expressions used in this Scheme, but not defined, shall have the same meaning as assigned to them in the indirect tax enactment and in case of any conflict between two or more such meanings in any indirect tax enactment, the meaning which is more congruent with the provisions of this Scheme shall be adopted".
The words ''penalty' and ''redemption fine' have not been defined, either under the Central Excise Act, 1944 or the Scheme or the Rules framed thereunder.
9. Computation of the relief granted under the Scheme is provided under section 124 of the Scheme. It reads as under:
"124. (1) Subject to the conditions specified in sub-section (2), the relief available to a declarant under this Scheme shall be calculated as follows:--
(a) where the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice which is pending as on the 30th day of June, 2019, and if the amount of duty is,--
(i) rupees fifty lakhs or less, then, seventy per cent, of the tax dues;
(ii) more than rupees fifty lakhs, then, fifty per cent, of the tax dues;
(b) where the tax dues are relatable to a show cause notice for late fee or penalty only, and the amount of duty in the said notice has been paid or is nil, then, the entire amount of late fee or penalty;
(c) where the tax dues are relatable to an amount in arrears and,--
(i) the amount of duty is, rupees fifty lakhs or less, then, sixty per cent, of the tax dues;
(ii) the amount of duty is more than rupees fifty lakhs, then, forty per cent of the tax dues;
(iii) in a return under the indirect tax enactment, wherein the declarant has indicated an amount of duty as payable but not paid it and the duty amount indicated is,--
(A) rupees fifty lakhs or less, then, sixty per cent, of the tax dues;
(B) amount indicated is more than rupees fifty lakhs, then, forty per cent, of the tax dues;
(d) where the tax dues are linked to an enquiry, investigation or audit against the declarant and the amount quantified on or before the 30th day of June, 2019 is--
(i) rupees fifty lakhs or less, then, seventy per cent, of the tax dues;
(ii) more than rupees fifty lakhs, then, fifty per cent, of the tax dues;
(e) where the tax dues are payable on account of a voluntary disclosure by the declarant, then, no relief shall be available with respect to tax dues.
(2) The relief calculated under sub-section (1) shall be subject to the condition that any amount paid as predeposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant:
Provided that if the amount of predeposit or deposit already paid by the declarant exceeds the amount payable by the declarant, as indicated in the statement issued by the Designated Committee, the declarant shall not be entitled to any refund."
Undisputedly, the entire amount determined in terms of section 124 of the Scheme, Rs. 63,59,629.20 has been paid by the petitioner, within time.
10. The petitioner's eligibility to apply under the Scheme as provided under section 125 of the Scheme is also undisputed by the revenue. That provision of law includes within the ambit of the Scheme, all persons, excluding those falling under clauses (a) to (h) of sub-section (1) of that section. Persons who have been held ineligible are, amongst others, those who may have been convicted of any offence punishable under any indirect tax enactment or; who may have been subjected to inquiry or investigation or audit though the amount of duty involved in such inquiry, investigation or audit may not have been quantified or; a person who may have made a voluntary disclosure or; a person who may have made a declaration under the Scheme with respect to excisable goods set forth in the Fourth Schedule of the Central Excise Act. Admittedly, the petitioner before us, is not such a person.
11. The consequences of the Discharge Certificate being issued are provided under section 129 of the Scheme. For ready reference, the provisions of section 129 are quoted herein below:
"129. (1) Every Discharge Certificate issued under section 126 with respect to the amount payable under this Scheme shall be conclusive as to the matter and time period stated therein, and--
(a) the declarant shall not be liable to pay any further duty, interest, or penalty with respect to the matter and time period covered in the declaration;
(b) the declarant shall not be liable to be prosecuted under the indirect tax enactment with respect to the matter and time period covered in the declaration;
(c) no matter and time period covered by such declaration shall be reopened in any other proceeding under the indirect tax enactment.
(2) Notwithstanding anything contained in sub-section (1),--
(a) no person being a party in appeal, application, revision or reference shall contend that the central excise officer has acquiesced in the decision on the disputed issue by issuing the Discharge Certificate under this scheme;
(b) the issue of the Discharge Certificate with respect to a matter for a time period shall not preclude the issue of a show cause notice,--
(i) for the same matter for a subsequent time period; or
(ii) for a different matter for the same time period;
(c) in a case of voluntary disclosure where any material particular furnished in the declaration is subsequently found to be false, within a period of one year of issue of the Discharge Certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted."
12. Thus, upon the Discharge Certificate being issued under section 129 of the Scheme, the same would be conclusive as to the matter (resolution of the dispute) and the time period stated in that Certificate. Further, by virtue of clauses (a) (b) and (c) of sub-section (1) of section 129 of the Scheme, such a declarant would not be liable to pay any further amount, either towards duty or interest or penalty with respect to the subject matter in question and the time period covered under the declaration. Second, such a person shall not be prosecuted under the indirect tax enactment with respect to the subject matter and the time period covered under his declaration made. Third, no proceeding would be reopened, and no other proceeding would be initiated against such a person for that subject matter and tax period. We are called upon to decide whether ''redemption fine' is covered under the word ''penalty; used in section 129 (1) (a) of the Act.
13. Sub-section (2) of section 129 provides exception to sub-section (1) of the Scheme. Thus, it has been provided: the person in whose favour a Discharge Certificate may have been issued, may not successfully contend that, by virtue of that certificate having been issued, the central excise authority had acquiesced (to the defence of the declarant). Thus, a Discharge Certificate cannot be read as evidence against the revenue in another proceeding. Second, the issue of Discharge Certificate may not prevent the authorities from issuing another notice on the same matter for another time period and it may also not prevent such authority from issuing a notice on another matter for the same time period. Further, by virtue of clause (c) of sub-section (2), it has been provided that the effect of a Discharge Certificate obtained on false declaration may stand wiped out if falsity in the declaration is discovered within a period of one year. Clearly, none of those statutory exclusions are attracted to the facts of the case and none has been pressed into service by the revenue.
14. Under section 133 of the Scheme, the Central Board of Indirect Taxes and Customs (CBIC) has been authorised to issue orders, instructions and directions to the other authorities, for the proper administration of the Scheme. The directions so issued have been made mandatory to be observed and followed by the authorities under the Scheme. For ready reference, the provisions of section 133 are quoted below:
"133. (1) The Central Board of Indirect Taxes and Customs may, from time to time, issue such orders, instructions and directions to the authorities, as it may deem fit, for the proper administration of this Scheme, and such authorities, and all other persons employed in the execution of this Scheme shall observe and follow such orders, instructions and directions:
Provided that no such orders, instructions or directions shall be issued so as to require any designated authority to dispose of a particular case in a particular manner.
(2) Without prejudice to the generality of the foregoing power, the Central Board of Indirect Taxes and Customs may, if it considers necessary or expedient so to do, for the purpose of proper and efficient administration of the Scheme and collection of revenue, issue, from time to time, general or special orders in respect of any class of cases, setting forth directions or instructions as to the guidelines, principles or procedures to be followed by the authorities in the work relating to administration of the Scheme and collection of revenue and any such order may, if the said Board is of opinion that it is necessary in the public interest so to do, be published in the prescribed manner."
Considering the submissions advanced by learned counsel for the petitioner, we have also to examine, whether the communications relied upon by him have binding force on the revenue authorities.
15. The Gujarat High Court, upon a detailed consideration of the Scheme, reached a conclusion that ''redemption fine' was included in the term ''penalty' appearing under section 129 (1) (a) of the Scheme. To reach that conclusion, that Court has looked at the intent and object of the Scheme and reasoned that a person against whom ''redemption fine' may have been imposed is not excluded from making a declaration under section 125(1) of the Scheme. Then, relying on the Frequently Asked Questions (FAQs), press notes and flyers issued for the smooth implementation of the Scheme, it has been further reasoned, for the purpose of section 129 of the Scheme, there is no other fine contemplated, other than the ''redemption fine'. Third, it has been reasoned that the Board's communication dated 20.12.2019 is contrary to the intent and object of the Scheme. Here, it may be relevant to quote the text of the communication dated 20.12.2019:
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
Dated, the 20th December, 2019
The Principal Commissioner,
CGST Ahmedabad (South) Commissionerate
Subject: SabkaVishwas (Legacy Dispute Resolution) Scheme, 2019-reg
I am directed to refer to your letter F.No.CGSt-Ahd(S)/ Legal/SCA-29/19-20 dated 19.12.2019 on the above mentioned subject.
2. The matter has been examined. 'Find' and 'Redemption Fine' denote different things. Section 9 of the Central Excise Act, 1944 provides for the offences and penalties under the Act. The penalties for the offences under the Act may extend to seven years of imprisonment and fine. Needless to say that once the person is granted immunity from prosecution, he also gets waiver from such 'fine'. However, redemption fine is levied in lieu of confiscation Section 34 of the Act, whereby the party can 'redeem' the confiscated goods. Under the scheme, no immunity (Section 129) or relief (Section 124) has been granted for redemption fine.
3. A 'case' under the scheme means 'a show cause notice, or one or more appeals arising out of such notice which is pending as on 30.06.2019' [explanation to rule 3, SVLDRS Rules, 2019]. In the instant case, the SCNs also involve imposition of redemption fine. There are two scenarios that can emerge:
(a) The SCN involving redemption fine has been adjudicated. In this case, redemption fine has been imposed and quantified.
(b) The SCN involving redemption fine is yet to be adjudicated. In other words, the redemption fine has not been imposed or quantified.
The Discharge Certificate [Section 129] which is issued at the end of the proceeding under the Scheme is a full and final closure of the matter and time period stated therein. Therefore, the Discharge Certificate in such cases can only be issued after settlement of redemption fine. In scenario (a) above, it would be mean payment of redemption fine. In scenario (b) above, it would mean adjudication of show cause notice for imposition of redemption fine and payment thereof.
4. The Hon'ble High Court may be apprised of the above position along with the relevant facts of the case.
(Navraj Goyal) OSD(CX)"
16. Then, it has been reasoned that the goods in question (in that case) being not available for confiscation, the ''redemption fine' imposed could only be a ''penalty'. Last, the rule of interpretation - contemporanea expositio was invoked to conclude that the revenue authorities themselves read section 129 of the Scheme to include ''redemption fine' within the ambit of ''penalty'.
17. While we are obliged to consider the persuasive value of the decision of the Gujarat High Court, we are equally dismissive of the further submission advanced by learned counsel for the petitioner that the same has become the law declared by the Supreme Court, by virtue of dismissal of Special Leave to Appeal filed against that decision of the Gujarat High Court. In Workmen of Cochin Port Trust v. Board of Trustees of the Cochin Port Trust & Anr., (1978) 3 SCC 119, in the context of an order dismissing a Special Leave Petition in limine, it was clearly explained:
"10. In the instant case the award of the Tribunal, no doubt, was challenged in the special leave petition filed in this Court, on almost all grounds which were in the subsequent writ proceeding agitated in the High Court. There is no question, therefore, of applying the principles of constructive res judicata in this case. What is, however, to be seen is whether from the order dismissing the special leave petition in limine it can be inferred that all the matters agitated in the said petition were either explicitly or implicitly decided against the respondent. Indisputably nothing was expressly decided. The effect of a non-speaking order of dismissal without anything more indicating the grounds or reasons of its dismissal must, by necessary implication, be taken to have decided that it was not a fit case where special leave should be granted. It may be due to several reasons. It may be one or more. It may also be that the merits of the award were taken into consideration and this Court felt that it did not require any interference. But since the order is not a speaking order, one finds it difficult to accept the argument put forward on behalf of the appellants that it must be deemed to have necessarily decided implicitly all the questions in relation to the merits of the award. A writ proceeding is a different proceeding..."
Again, in Kunhayammed & Ors. v. State of Kerala & Anr., (2000) 6 SCC 359, it was conclusively laid down by the Supreme Court:
"40. A petition seeking grant of special leave to appeal may be rejected for several reasons. For example, it may be rejected (i) as barred by time, or (ii) being a defective presentation, (iii) the petitioner having no locus standi to file the petition, (iv) the conduct of the petitioner disentitling him to any indulgence by the court, (iv) the question raised by the petitioner for consideration by this Court being not fit for consideration or deserving being dealt with by the Apex Court of the country and so on. The expression often employed by this Court while disposing of such petitions are -- "heard and dismissed", "dismissed", "dismissed as barred by time" and so on. May be that at the admission stage itself the opposite party appears on caveat or on notice and offers contest to the maintainability of the petition. The Court may apply its mind to the merit worthiness of the petitioner's prayer seeking leave to file an appeal and having formed an opinion may say "dismissed on merits". Such an order may be passed even ex parte, that is, in the absence of the opposite party. In any case, the dismissal would remain a dismissal by a non-speaking order where no reasons have been assigned and no law has been declared by the Supreme Court. The dismissal is not of the appeal but of the special leave petition. Even if the merits have been gone into, they are the merits of the special leave petition only. In our opinion neither doctrine of merger nor Article 141 of the Constitution is attracted to such an order. Grounds entitling exercise of review jurisdiction conferred by Order 47 Rule 1 CPC or any other statutory provision or allowing review of an order passed in exercise of writ or supervisory jurisdiction of the High Court (where also the principles underlying or emerging from Order 47 Rule 1 CPC act as guidelines) are not necessarily the same on which this Court exercises discretion to grant or not to grant special leave to appeal while disposing of a petition for the purpose. Mere rejection of a special leave petition does not take away the jurisdiction of the court, tribunal or forum whose order forms the subject-matter of petition for special leave to review its own order if grounds for exercise of review jurisdiction are shown to exist. Where the order rejecting an SLP is a speaking order, that is, where reasons have been assigned by this Court for rejecting the petition for special leave and are stated in the order still the order remains the one rejecting prayer for the grant of leave to appeal. The petitioner has been turned away at the threshold without having been allowed to enter in the appellate jurisdiction of this Court. Here also the doctrine of merger would not apply. But the law stated or declared by this Court in its order shall attract applicability of Article 141 of the Constitution. The reasons assigned by this Court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other court, tribunal or authority to express any opinion in conflict with or in departure from the view taken by this Court because permitting to do so would be subversive of judicial discipline and an affront to the order of this Court. However this would be so not by reference to the doctrine of merger".
18. Thus, the order dated 03.03.2021 dismissing the Special Leave to Appeal neither laid down the law of the land nor did the order of the Gujarat High Court merge in that order of the Supreme Court. Therefore, the Gujarat High Court decision has only persuasive value. That we are bound to consider.
19. With all respect, we face our own difficulty and reservations in accepting (in toto), the reasoning contained in the decision of the Gujarat High Court. Merely because the petitioner was eligible to apply for Discharge Certificate under the Scheme, it would not therefore make it entitled to issue of a Discharge Certificate. That eligibility arises under section 125 of the Scheme whereas the consequences of issue of the Discharge Certificate arise under section 129 of the Scheme. Therefore, a person who may be eligible and who may apply under and comply with the terms of the Scheme, may be issued the Discharge Certificate, yet, the benefit of the same may remain confined to the extent provided under section 129 of the Scheme only. In short, in our view, in scope and ambit sections 125 and 129 of the Scheme are different and largely independent of each other. Merely because the person may be entitled to apply for issue of a Discharge Certificate it would not determine the consequences of its issue. He may continue to remain liable to pay ''redemption fine' if that liability is not found to have been expressly dissolved under the Scheme.
20. Insofar as it has been reasoned by the Gujarat High Court that other than ''redemption fine', no other fine is contemplated, we would like to look at the controversy in a little different complexion-whether the ''redemption fine' would per se fall within the meaning of the word 'penalty' used in section 129 of the Scheme. The ambit of that question is limited to that extent as there is no dispute and, perhaps there can be no argument that ''redemption fine' is either a 'duty' or 'interest' (which are the other consequences contemplated under section 129 (1) of the Scheme). This aspect, we propose to examine a little later.
21. The reasoning of the Gujarat High Court that ''redemption fine' would remain a ''penalty' because the goods had already been disposed of (in that case), has not been pressed in the present case. Neither, the facts on that aspect are clear nor we are required to examine that matter in detail since we propose to examine the very nature of ''redemption fine'.
22. As to applicability of the rule of Contemporanea Expositio, again, with all respect, we find ourselves unable to persuade ourselves to the view taken by the Gujarat High Court. First, other than the communication dated 20.12.2019, none of the communications has been issued by the Central Board of Indirect Taxes and Customs, but by other/subordinate authorities. By virtue of section 133 of the Scheme (quoted above), the Central Board of Indirect Taxes alone is competent to issue mandatory orders, instructions, and directions to the authorities under the Scheme for the purpose of proper administration of its Scheme. Therefore, we are not inclined to look at the other communications (flyers and press notes) relied upon by learned counsel for the petitioner. Second, those communications do not contain expression of any opinion that ''redemption fine' is ''penalty' under section 129 (1) of the Scheme. Third, the communication dated 20.12.2019 clearly does not support the submission advanced by learned counsel for the petitioner. It speaks of ''redemption fine' being different from ''penalty'. Therefore, we are unable to accept the submission advanced by learned counsel for the petitioner on that count.
23. The rule of Contemporanea Expositio may apply only to cases where, in the first place, the revenue authorities have looked at the law in a particular way and that view taken in favour of the assessee has sustained over a period. Here, neither condition is satisfied. The view taken by the Central Board of Indirect Taxes and Customs is not in favour of the petitioner and, in any case, the Scheme is a recent enactment over which there is no consistent view taken by the departmental authorities.
24. Coming to the main issue, whether ''redemption fine' falls within the meaning of the word 'penalty' used in section 129 of the Scheme, we find neither word has been defined under the Scheme or the Rules framed thereunder or the principal Act, namely the Central Excise Act, 1944. Indisputably, the ''redemption fine' imposed on the petitioner was payable in lieu of ''confiscation'. As to ''confiscation', historically, under the Roman Law, it was an act or desire of taking into hands of the Emperor and, to transfer it to the imperial treasury, the goods or the commodity forfeited. That principle appears to be existing in favour of the State, under the Central Excise Act, 1944 read with the Customs Act, 1962. Here, it may be noted that the powers of ''confiscation', though existing under the Customs Act, 1962, have been made applicable to the Central Excise Act, 1944 by virtue of notifications issued under section 12 of the Central Excise Act. Section 9 of that Act provides for penalties punishable with imprisonment, for specified offences. Section 11 AC of that Act provides for monetary penalties for short levy or non-levy of Central Excise duty, in certain cases. Again, section 15 B of that Act provides for levy of monetary penalty for failure to furnish information on return (under section 15A). These penalties are imposable on the ''person' offending the law. On the other hand, by virtue of section 110 and other provisions of the Customs Act, 1962 read with notification no. 68/63 dated 04.05.1963 (as amended), goods found to have been cleared in contravention of the Central Excise Act, 1944 may be confiscated.
25. We find that a three-judge bench of the Supreme Court in Srish Chandra Sen & Ors. Vs. Commissioner of Income-tax, West Bengal, AIR 1961 SC 487, had the occasion to consider the meaning of the word 'redemption' in the context of the Income Tax Act, 1922. In that background, it was observed as under:
"18. We next consider the effect of redemption. Learned counsel for the appellant contends that redemption in this connection means that by a single payment, the liability for periodical payments is saved but the assessment on the land remains uncancelled. He has cited Wharton's Law Lexicon to show the meaning of the word "redemption", which is "commutation or the substitution of one lump payment for a succession of annual ones: e.g. See the Land Tax and the Title Redemption Acts and many other statutes". Redemption is the act of redeeming which in its ordinary meaning is equal to bringing off a charge or obligation by payment. To what extent this redemption freed the land or its holder from the obligation depends not so much upon what the obligation was before redemption as what remained of that obligation after it. Here, the payment itself was meant to be "an immediate payment of one sum equal in value to the revenue redeemed" (vide the Resolution of Government dated October 17, 1861). By the down payment, the entire land revenue to be recovered from that land was redeemed. The payment was equal to the capitalised value of the land revenue. When such a payment took place, it cannot be said that the assessment for land revenue remained. The land was freed from that assessment as completely as if there was no assessment. Thenceforward, the land would be classed as revenue-free, in fact and in law. In The Land-Law of Bengal (Tagore Law Lectures, 1895) p. 81 S.C. Mitra described these revenue-free lands as follows:
"There is another class of revenue-free lands which comes within these rules laid down in the Registration and Tenancy Acts, namely, lands of which Government has, in consideration of the payment of a capitalised sum, granted proprietary title free in perpetuity from any demand of land-revenue.""
26. Section 34 of the Central Excise Act, 1944 creates a fine in lieu of ''confiscation'. It reads:
"34. Option to pay fine in lieu of confiscation.-Wherever confiscation is adjudged under this Act or the rules made thereunder, the officer adjudging it shall give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks".
The above provision is similar in scope and ambit to section 125 of the Customs Act, 1962 which reads:
"125. Option to pay fine in lieu of confiscation.--(1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit:
(2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1) shall, in addition, be liable to any duty and charges payable in respect of such goods".
Plainly, same, or similar concept of ''confiscation' exists both under the Customs Act, 1962 and the Central Excise Act, 1944. It allows the revenue authorities to seize and confiscate any goods found offending those legislations. Under both enactments, such confiscation is in addition to the other penalties prescribed against the person offending the laws in the transaction that may give rise to an act of ''confiscation'. Again, under both legislations, there is a right given to the offender to reclaim the title in the confiscated goods, subject to payment of an amount in addition to the other penalties that may have been imposed. That amount is known as the ''redemption fine', under both laws.
27. Thus, upon ''confiscation', the title in the goods vests in the State. Yet, by virtue of section 34 of the Central Excise Act, 1944, an opportunity is given to the offender to reclaim that title in those goods through payment of ''redemption fine', in addition to all other dues of tax/duty, interests and liabilities of other penalties.
28. Considering the nature of ''confiscation' under the Foreign Exchange Act, a five judge Constitution Bench of the Supreme Court in Sewpujanrai Indrasanarai Ltd. v. Collector of Customs & Ors., AIR 1958 SC 845, at that early stage, had made a distinction between the penalty imposed on a citizen for violating the law and, a penalty imposed on the offending goods, both penalties arising from one transaction. The first was categorized as a penalty in personam, visiting the offender/person whereas confiscation was held to be a penalty in rem, visiting the goods. That penalty being imposed on the offending goods may be imposed even if the ownership in the goods remains undetermined or in doubt or in dispute and even if a penalty in personam may remain from being imposed. In paragraph 15 of that decision, it was held as below:
"(15) We do not so decide, but let us assume that the construction put forward on behalf of the appellant is the one that should be accepted in this case. The question then is-does S. 23 of the Foreign Exchange Act apply o the facts of this case and could the appellant Company be proceeded against under that section? A distinction must at once be drawn between an action in rem and a proceeding in personam. Section 23 of the Foreign Exchange Act is a proceeding against the offender, and is applicable to the person who contravenes any of the provisions of that Act, even though on a conviction for such contravention, the Court may, if it thinks fit and in addition to any sentence which it may impose for such contravention, direct that the goods in respect of which the contravention has taken place be confiscated. In substance it is a proceeding against a person for the purpose of penalising him for a contravention of the provisions of the Foreign Exchange Act, and such a proceeding is available when the offender is known. Take, however, a case where the offender (the smuggler, for example) is not known, but the goods in respect of which the contravention has taken place are known and have been seized. Section 167(8) of the Sea Customs Act contemplates a case of this nature, when it describes the offence in Col. 1 in the following words:
"If any goods, the importation or exportation of which is ........ prohibited or restricted be imported into or exported from India contrary to such prohibition or restriction."
The penalty provided is that the goods shall be liable to confiscation. There is a further provision in the penalty column that any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods etc. The point to note is that so far as the confiscation of the goods is concerned, it is a proceeding in rem and the penalty is enforced against the goods whether the offender is known or not known; the order of confiscation under section 182 Sea Customs Act, operates directly upon the status of the property, and under S. 184 transfers an absolute title to Government. Therefore, in a case where the Customs authorities can proceed only against the goods, there can be no question of applying S. 23 of the Foreign Exchange Act and even on the construction put forward on behalf of the appellant Company as respects S. 8(3), the remedy under the Sea Customs Act against the smuggled goods cannot be barred; when on the facts of the case S. 23 can have no application, no question of prejudicing its provisions by the adoption of the procedure under the Sea Customs Act can at all arise."
29. The question again arose in another case before the Supreme Court in Collector of Customs, Madras & Ors. v. D. Bhoormall, (1974) 2 SCC 544, in the context of the Customs Act, 1878. The same principle was followed and applied. The imposition of penalty on the offender was treated to be a penalty in personam whereas the penalty of confiscation of the goods was treated to be penalty in rem. Relevant to our discussion in paragraphs 22 and 23 of the aforesaid decision, it was held:
"22. A reading of Section 167(8) and the related provisions indicates that proceedings for confiscation of contraband goods are proceedings in rem and the penalty of confiscation under the first part of the entry in column (3) of clause (8) of the Schedule, is enforced against the goods irrespective of whether the offender is known unknown. But, imposition of the other kind of penalty, under the second part of the entry in column (3), is one in personam ; such a penalty can be levied only on the "person concerned" in any offence described in column (I) of the clause.
23. Goods found to be smuggled can, therefore, be confiscated without proceeding against any person and without ascertaining who is their real owner or who was actually concerned in their illicit import."
30. Last, in Union of India & Anr. Vs. Mustafa & Najibai Trading Co. & Ors., (1998) 6 SCC 79, the above noted principle of law was again reiterated in the context of the Customs Act, 1962. It was thus held as below:
"33. Similarly, in the case of D. Bhoormall, (1974) 2 SCC 544, this Court, while considering the provisions of Section 167(8) of the Sea Customs Act, 1878, has pointed out that proceedings for confiscation of contraband goods are proceedings in rem and the penalty of confiscation is enforced against the goods irrespective of whether offender is known or unknown and it is not necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation and it is enough if the department furnishes prima facie proof of the goods being smuggled stocks. It was observed that the second kind of penalty which is enforced against the person concerned in the smuggling of the goods is one in personam and in the case of the said penalty the Department have to prove further that the person proceeded against was concerned in the smuggling. It was held that "goods found to be smuggled can, therefore, be confiscated without proceeding against any person and without ascertaining who is their real owner or who was actually concerned in their illicit import." [pp. 550, 551 and 554]
34. This distinction between the nature of the two penalties , viz., penalty in rem and penalty in personam, has been maintained in the Act. The provision regarding confiscation of goods contained in Sections 111 and 113 of the Act is a penalty in rem which is enforced against the goods, while the personal penalties imposed under Section 112 and other provisions of the Act are in the nature of penalty in personam which are enforced against the person concerned."
31. In view of that law laid down by the Supreme Court, ''confiscation' is nothing but a penalty in rem. Redemption fine, by virtue of Section 34 of the Central Excise Act, is only a payment made in lieu of this penalty. Upon any ''confiscation' made under the Act, the option to pay an equivalent fine is required to be provided. It is not possible to say that the nature of ''confiscation' under the Act and a fine in lieu thereof is somehow different. ''Redemption fine' must necessarily also be considered a 'penalty' against the offending goods. Further, in absence of any contrary statutory definition of the word 'penalty' or other specific exclusion of 'redemption fine' from the consequences of issuance of a Discharge Certificate (under section 129 of the Scheme), undoubtedly, the word 'penalty' appearing in section 129 of the Scheme includes, within its plain ambit, both, a penalty in personam and a penalty in rem. Here, both, personal penalty and the penalty in rem arose from a single transaction. Clearly, both penalties are part of the same dispute, for a common period. It is so because even according to the revenue both those penalties were imposed vide the Order-in-Original 2/A/Ayukt/M/97 dated 14.08.1997. Though that order has not been shown to us, yet it is not the case of the revenue that the ''redemption fine' in question was imposed on the petitioner, independent of that order. The revenue only contends that by its very nature, ''redemption fine' is not a ''penalty' at all. That submission is contrary to the law laid down by the Supreme Court. We have no hesitation to hold, ''redemption fine' is a kind or type of ''penalty' under the Central Excise Act, 1944.
32. Now, we choose to consider the intent and object of the Scheme. Though incorporated with reference to a fiscal statute, it does not create a charge or levy of tax. Rather, it represents and implements the Union Government's policy to reduce legacy litigation involving disputed levies of indirect taxes under twenty-eight (28) specified indirect tax enactments under section 122 (a) and (b) of the Scheme and, any other enactment that may have been notified for that purpose. To end such legacy litigation, the Scheme first lays down strict eligibility, under section 125 of the Scheme. Undisputedly, the present petitioner is eligible to apply for issue of the Discharge Certificate. The Scheme provides for (legacy dispute) resolution upon payment of thirty to sixty percent of the disputed demand of tax dues. By virtue of section 123 of the Scheme, ''tax dues' are the total disputed amount of duty only.
33. Thus, the legislation seeks to reduce indirect tax legacy litigation, against positive payment of a part (according to the predetermined rates) of the disputed dues of tax. Remarkably, the Scheme requires the applicant/assessee to pay part of the disputed dues of tax even to obtain closure to any appeal filed by the revenue. Also, the legislation is not an amnesty scheme - to encourage voluntary disclosures of hitherto undisclosed, evaded taxes. Rather, by virtue of section 124 (1) (e) of the Scheme, it purposely denies any relief to persons who may have made a voluntary disclosure. Clearly, the Scheme is a reform legislation. It seeks to end old or pending indirect tax disputes, against payment of a substantial part of the disputed tax amount.
34. While interpreting another reformatory legislation involving land laws, in R.E.M.S. Abdul Hameed v. Govindaraju & Ors., (1999) 4 SCC 663, the Supreme Court considered whether a minor inam came within the purview of the Tamil Nadu Minor Inams (Abolition and Conversion into Ryotwari) Act, 1963 or it would fall under the Madras Inam Estates (Abolition and Conversion into Ryotwari) Act, 1963, (hereinafter referred to "Act 26 of 1963"), in the reformatory nature of the Act, the Supreme Court relied on the intention of the legislature to include all inams. It further opined that any exclusion claimed must arise on "unimpeachable evidence" and not ipse dixit. It was thus held:
"12. Returning to the presen
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t case, to be out of Act 26, the area of grant to the appellants should not constitute to be a "part-village estate" and for this the appellants have to prove that its grant was expressed "only in terms of acreage or cawnies etc.". Unless this is shown exclusion from the Act cannot be gained. Looking back to the history of legislation of inam estates, the intention of the legislature was to encompass all inam estates within its fold and if small exclusion is made, the exclusion has to be read keeping with the intention of legislation. The exclusion cannot be read by ipse dixit but only through clear and unimpeachable evidence. The legislature further makes it clear through sub-section (9) of Section 2 of Act 30 of 1963 that it is only such area of grant which is not included within the purview of Act 26 of 1963 as will constitute to be "minor inam" under Act 30 of 1963". 35. As noted above, the Scheme being a piece of reformative legislation, ''redemption fine' that is a penalty in rem must clearly be shown to have been excluded from the meaning of the word ''penalty' used in section 129 of the Scheme, before it may be inferred that a Discharge Certificate may be issued only upon payment of the ''redemption fine'/penalty in rem. In absence of any provision to exclude ''redemption fine'/ penalty in rem from the benefits of the Discharge Certificate contained in section 129 of the Scheme, no such inference may be drawn, against the plain language and intent of the Scheme. In absence of any express exclusion created by the Scheme, ''redemption fine' would always remain a ''penalty' covered under the meaning of that word used in section 129 (1) (a) read with section 121 (u) of the Scheme. Thus, we have reached the same conclusion on the point as the Gujarat High Court, but for reasons of our own. 36. That being the law, the further objection of the revenue based on the rule of estoppel is devoid of any merit. In Commissioner of Income Tax (Central) v. B.N. Bhattacharjee & Anr., (1979) 4 SCC 121, it was clearly opined that estoppel does not operate against a statute. The Supreme Court had laid down: "58. The soul of estoppel is equity, not facility for inequity. Nor is estoppel against statute permissible because public policy animating a statutory provision may then become the casualty. Halsbury has noted this sensible nicety: "Where a statute, enacted for the benefit of a section of the public, imposes a duty of a positive kind, the person charged with the performance of the duty cannot by estoppel be prevented from exercising his statutory powers. [Maritime Electric Co. Ltd. v. General Diaries Ltd., 1937 AC 610 and HALSBURY'S LAWS OF ENGLAND, para 1515] A petitioner in a divorce suit cannot obtain relief simply because the respondent is estopped from denying the charges, as the court has a statutory duty to inquire into the truth of a petition. [Hudson v. Hudson, 1948 P. 292 and HALSBURY'S LAWS OF ENGLAND, para 1515] " The luminous footnote cites rulings and states that: "This rule probably also applies where the statute bestows a discretion rather than imposing a duty. [ HALSBURY'S LAWS OF ENGLAND, 4th Edn., p. 1019]" To sum up, where public duties cast by statute are involved, private parties cannot prevent performance by invoking estoppel. We do not discuss further since the facts here exclude estoppel". We have no reason to apply a different yardstick to allow the respondent authorities to overlook the clear and binding statutory provision, in favour of the concession claimed to have been made by the petitioner. The concession, if any, made by the petitioner in the Discharge Certificate proceedings - to deposit the ''redemption fine', would remain contrary to the express provision of law and therefore unenforceable and of no consequence. 37. In the result, upon the petitioner being eligible under section 125 of the Scheme and upon payment of the entire amount due under section 124 of the Scheme and, in absence of any other objection being raised by the revenue, clearly, the petitioner is entitled to issue of the Discharge Certificate. 38. Accordingly, the present petition is allowed. The communication dated 20.12.2019 issued by the CBIC providing for payment of ''redemption fine' in addition to the settlement amount paid under section 124 of the Scheme and further providing that the Discharge Certificate under the Scheme may not be issued unless that fine has been paid, is clearly contrary to the Scheme. To that extent it is unenforceable against the petitioner. The order dated 17.11.2020 issued by the Designated Committee, SVLDR Scheme, 2019/Commissioner Central Tax, Central Goods & Services Commissionerate, Ghaziabad, requiring the petitioner to deposit the 'redemption fine' as a pre-condition to issue the Discharge Certificate is found to be wholly contrary to law for the same reason. The said order is accordingly set-aside, and a Mandamus is issued to the said respondent to issue the Discharge Certificate to the petitioner within a period of two weeks from the date of service of a copy of this order. 39. No order as to costs.