2019-TIOL-508-SC-MISC

UP Trade Tax Act - Question involved is about the power of the State to rescind the notification providing for rebate in respect of tax payable under the Uttar Pradesh Trade Tax Act, 1948 and thus withdrawing the facility even in respect of industrial units, which had commenced production and had complied with the conditions for grant of such rebate in terms of Notification dated 27th February, 1998 - in exercise of power under Section 5 of the 1948 Act, appropriate issued notification dated 18th June, 1997, to declare the goods having fly ash contents of 10% or more by weight to be notified goods for the purpose of Section 5, and to grant a rebate of 25% in respect of the goods having fly ash contents between 10 to 30% by weight and a rebate of 50% in respect of the goods having fly ash contents exceeding 30% by weight on the tax levied under the Act in the districts notified thereunder - In due course, the feedback received by the Government was that neither any new industrial unit was established within the State nor the consumption of the fly ash had increased by the existing units - Resultantly, there was no extra disposal/consumption of fly ash which was being produced by the thermal power stations situated within the State of Uttar Pradesh - In other words, the avowed objective for issuing the notification to extend rebate did not fructify, therefore, appropriate authority issued fresh notification dated 27th February, 1998 to rescind the earlier notification and instead to grant a rebate of 25% in respect of the goods having fly ash contents between 10% to 30% by weight and a rebate of 50% in respect of the goods having fly ash contents exceeding 30% by weight on the tax levied under the Act in the districts mentioned thereunder, subject to certain conditions - This notification, however, was assailed in two writ petitions filed before the High Court of Judicature at Allahabad on the ground that the conditions specified in the notification resulted in causing discriminatory treatment to the producers and suppliers of the said product imported from neighbouring States as opposed to the goods manufactured and produced in the State of Uttar Pradesh - Court [ 2013-TIOL-55-SC-MISC ] held that rebate of tax granted by the State Government only to the cement manufacturing units using fly ash as raw material in the units established in the districts of the State of Uttar Pradesh, is violative of the provisions contained in Articles 301 and 304(a) of the Constitution of India; that notification, therefore, would also apply to the cement manufacturing units of the neighbouring States who were using fly ash as raw material - After the decision of the High Court dated 29th January, 2004, the appropriate authority was advised to rescind the Notification dated 27th February, 1998 - appropriate authority of the State eventually took decision on the said proposal, as a result of which a notification dated 14th October, 2004 came to be issued rescinding the earlier notification dated 27th February, 1998 - This notification is the subject matter of challenge in the present proceedings - respondents filed separate writ petitions before the High Court asserting that the State could not have resiled from the promise or representation it had made in terms of notification dated 27th February, 1998, and the impugned notification dated 14th October, 2004, therefore, suffered from the vice of being violative of promissory estoppel - thrust of the challenge was that the decision to rescind the notification dated 27th February, 1998 was to discontinue the rebate to industry that would be set up on and from 14th October, 2004 and to other industrial units in the neighbouring States on account of the decision of the High Court and which is impermissible in law - High Court vide impugned judgment, in the first place held that the State had given assurance about the rebate on the specified goods produced in the designated areas within the State on complying with other conditions specified in notification dated 27th February, 1998; that the State Government in the Indian context and the Indian jurisprudence was amenable to the doctrine of promissory estoppel like any other private party or individual - On that finding, the High Court concluded that the notification issued on 14th October, 2004 cannot stand the test of judicial scrutiny qua the claim of the industrial units which were already established within the designated area in the State and had commenced commercial production of the stated goods before 14th October, 2004 - It also rejected the stand taken by the State Government that it was justified in doing so because of supervening public interest and resultantly allowed the writ petitions preferred by the respondents herein - State of Uttar Pradesh has assailed the decision of the High Court.

Held: It is well established that the Court would not act on mere ipse dixit of the Government and must insist on a highly rigorous standard of proof in discharge of its burden by the Government - On a bare reading of section 5 of the the Uttar Pradesh Trade Tax Act, 1948, it is evident that there is no express authority given to the Executive to issue notification for “withdrawing or rescinding the rebate facility” from a date prior to the date of notification - Section 5(2) merely constricts that power only for “allowing” rebate with effect from a date prior to the date of notification - That does not include, by necessary implication or otherwise, power to “withdraw” or “rescind” the rebate from a date prior to the date of the notification - There is no express or tacit intent manifested from this notification, so as to construe it as bestowing power to withdraw the rebate facility with effect from a date prior to the date of notification as such - On this finding, nothing more is required to be said as the concomitant of this finding would necessarily be that all the industrial units set up after 27th February, 1998 and before 14th October, 2004 which had commenced commercial production, must continue to qualify for rebate for specified term mentioned in notification dated 27th February, 1998, subject to fulfilling all other conditions specified therein - The dominant intent behind notification dated 27th February, 1998 was to invite the investors to set up industrial unit in the designated areas within the State of Uttar Pradesh which were known to be underdeveloped or backward areas and more importantly to address the environmental issue because of the fly ash generated by the thermal power stations situated in Uttar Pradesh and incidentally to generate job opportunities and employment to the locals - It is one thing to argue that because of the interpretation given to the notification dated 27th February, 1998 by the High Court and affirmed by this Court, the industrial units situated in the neighbouring States may not be able to fulfill the underlying intent behind the notification dated 27th February, 1998 in its letter and spirit - That is not the plea of the State - Furthermore, it is undeniable that the thermal power stations in the State of Uttar Pradesh are still operational and are generating fly ash in the same manner and quantity as was happening in February, 1998, if not more - It is also indisputable that the industrial units set up in furtherance of the promise or representation made in the notification dated 27th February, 1998 which had commenced commercial production in respect of specified goods before 14th October, 2004, would continue to achieve the same objective as is specified in the notification dated 27th February, 1998 - In that, the concerned manufacturing units continue to manufacture specified goods by using fly ash purchased or produced from the thermal power stations situated within the State - As long as that activity is continued until the term specified under the notification dated 27th February, 1998, namely ten years from the date of commencement of commercial production, there is no tangible reason nor it is open to contend that the dominant purpose underlying notification dated 27th February, 1998 had ceased to exist or had become irrelevant in any manner, much less there are supervening circumstances qua such units which are so overwhelming that it would be inequitable for the State Government to be bound by the promise given in notification dated 27th February, 1998 - Indubitably, an enforceable right had accrued to and crystalised in favour of such industrial units which could not be truncated or snapped unless the dominant purpose for which the notification dated 27th February, 1998 came to be issued had ceased to exist, namely generation of fly ash by the thermal power stations situated within the State and consumption of that fly ash by the industrial units established within the designated areas of the State as per the specified quantity to become entitled for rebate for the duration mentioned therein - it must necessarily follow that the impugned notification dated 14th October, 2004 can have no application to the settled enforceable right accrued to industrial units who fulfill all other conditions specified in the notification dated 27th February, 1998, having commenced commercial production of the specified goods before 14th October, 2004 - In other words, Bench rejects the stand of the State Government about the supervening public interest qua the respondents herein and similarly placed persons - The notification dated 14th October, 2004 cannot be construed as having retrospective or retroactive effect to whittle down the accrued rights in favour of such industrial units - appeals, therefore, fail: Supreme Court [para 24, 25, 27, 29, 30, 31, 36]

- Appeals dismissed : SUPREME COURT OF INDIA

2019-TIOL-2665-HC-PATNA-VAT

ACC Ltd Vs State of Bihar

Whether any duty liability can be said to arise in a particular period if excess duty paid in an earlier period is adjusted against the tax payable in the current period - NO: HC

- Assessee's writ petition allowed : PATNA HIGH COURT

2019-TIOL-2658-HC-MAD-VAT

Wabco India Ltd Vs Assistant Commissioner (ST)

Whether assessment order and accompanying penalty merit being quashed where issue of sales against Form C is settled against assessee merely because proof of acknowledgment for filing original C-Forms is not submitted, despite AO's acknowledgement that duplicate C-Form had been filed - YES: HC

-Assessee's writ petition partly allowed : MADRAS HIGH COURT

2019-TIOL-456-AAR-GST

Parexel International Clinical Research Pvt Ltd

GST - Question whether the services provided by the applicant to the foreign client amounts to export of service cannot be answered by the Authority as s.97 of the CGST Act, 2017 does not empower the authority to give a ruling on the 'place of supply of goods or services' - insofar as 'pass through expenses' are concerned, applicant acts as a 'pure agent' in receiving amounts from foreign clients and passing it on to the local research institutions: AAR

- Application disposed of  :AUTHORITY ON ADVANCE RULINGS

2019-TIOL-455-AAR-GST

Hewlett Packard Enterprise India Pvt Ltd

GST - Activity of setting up of data centre facilities would qualify as ‘Works Contract' as per s.2(119) of the CGST Act - Rate of tax is GST @9% as per Entry no. 3(ii) of 11/2017-CTR: AAR

- Application disposed of  :AUTHORITY ON ADVANCE RULINGS

2019-TIOL-2664-HC-AHM-GST

Paresh Nathalal Chauhan Vs State of Gujarat

GST - The respondent has tendered a report of inquiry made by Chief Commissioner of State Tax - Upon perusal of report, it emerges that it is no better than the earlier report dated 20.10.2019 submitted by Assistant Commissioner of State Tax, and does not meet with the directions issued by this court in letter and spirit - It appears that the Chief Commissioner of G.S.T. has taken a very lenient view in the matter and instead of examining the action of the concerned officers in the context of the relevant provisions of Goods & Services Tax Act, has tried to justify the action of the concerned officers, which is required to be deprecated in the strictest terms - The respondent prays for time to submit another report - At the request, the matter is adjourned: HC

- Matter adjourned : GUJARAT HIGH COURT

SERVICE TAX

2019-TIOL-3412-CESTAT-KOL

Mackintosh Burn Ltd Vs CST

ST - The assessee is a state owned PSU engaged in execution of works contract for construction/repair of roads, distress bridges, non-commercial infrastructure, civil structures, government buildings, civic amenities of public interest by way of provision of labour/services and supply of goods in execution of such contracts - The Service Tax is demanded on various assorted services provided by assessee for contravention of Sec. 68 of FA, 1994 - The repair and maintenance of roads and Government buildings are retrospectively exempted by FA, 2012 and therefore question of demanding tax thereon does not arise - Further, the Supreme Court in case of Larsen & Toubro Ltd. has held that a Works Contract cannot be taxed under any other category of service like Erection, Commissioning or Installation Services - O n the day of passing of impugned Order, the provision of Sec. 97 and sec. 98 were not in the statute book and the judgment of Supreme Court in Larsen & Toubro Ltd. was passed subsequently, hence, the Commissioner did not have the benefit of examining the aforesaid contracts in the light of Sec. 97 and Sec. 98 and judgment of the Supreme Court in said case - Matter is remanded back to the adjudicating authority for passing orders afresh in the light of Sec. 97 and Sec. 98: CESTAT

- Matter remanded : KOLKATA CESTAT

2019-TIOL-3411-CESTAT-CHD

Fresenius Kabi Oncology Ltd Vs Commissioner, CGST

ST - The assessee is in appeal against impugned order wherein the refund claim has been rejected under Rule 5 of CCR, 2004 r/w Notfn 27/2012-ST - As per condition of notification, the Cenvat credit availed on services in question is required to be reversed - It is alleged by department that the assessee has not reversed credit availed on the services in question - Both the authorities below have rejected the refund on the ground that Cenvat credit should be reversed while filing Service Tax return - Later on, the assessee has reversed the Cenvat credit in GSTR-3B return - As the facts in hand are similar to the facts in case of Global Analytics India Pvt.Ltd. , therefore, following the precedent decision, the refund claim cannot be denied to assessee: CESTAT

- Appeal allowed : CHANDIGARH CESTAT

 

 

 

 

CENTRAL EXCISE

2019-TIOL-3410-CESTAT-DEL

CC, CGST & CE Vs WM Logistics India Pvt Ltd

CX - The assessee is a 100% subsidiary of WM Logistics LLC, USA - As per agreement with its parent company, the assessee provided product development support service for collection and disposal activities of WML, USA - The assessee was registered for providing taxable service including Information Technology Software Service - The dispute pertains to the refund filed by the assessee for the relevant period for refund of accumulated credit in terms of Rule 5 of CCR 2004 r/w Notfn No 27/2012-CE - The assessee claimed to have exported its output service and such claim was supported with necessary documents as per the Notfn - Such refund claim was rejected by the original authority on grounds that the assessee failed to submit the documentary evidence - On appeal, the Commr.(A) allowed the refund claimed by the assessee - Hence the present appeal.

Held - The assessee's counsel claimed that in similar facts and circumstances, the Tribunal in the assessee's own case allowed the appeal in favor of the assessee - Such orders of the Tribunal attrained finality as the Revenue did not file an appeal against such orders - As such decision has been accepted by the competent authority, there is no merit in the present appeal: CESTAT

- Revenue's appeal dismissed : DELHI CESTAT

2019-TIOL-3409-CESTAT-CHD

Platinum It Solutions Vs CC & CE

CX - The SCN has been issued to assessee on the basis of cost data that they are selling the goods below the cost price, therefore, the selling price cannot be the assessable value of goods in question - Assessee is located in State of Jammu and Kashmir taking self credit/ refund of duty paid in cash - The duty paid in cash is an incentive to assessee and if the same is taken into account then the assessee has earned the profit on goods sold - In fact, cash incentive was given by way of duty paid in cash has been shared with their buyers - Therefore, assessee earned profit on the goods sold by them - In that circumstance, the whole case of Revenue alleged in SCN is not sustainable - Moreover, the assessee has been receiving selfcredit/ refund of duty paid in cash and those orders have attained finality, therefore, the assessments done finally by way of sanctioning refund cannot be reopened by way issuance of SCN as held by Gauhati High Court in case of Jellalpore Tea Estate - In that circumstance also, the SCN is not sustainable - Moreover, the Commissioner in adjudication order has treated buyer as related person as there is no allegation in SCN that the assessee has sold the goods to the buyer, who is their related person - Therefore, the Commissioner has travelled beyond the scope of SCN in the eyes of law - Moreover, the Revenue has taken a ground to allege relationship between assessee and the buyer on the basis of huge amount outstanding in balance sheet against the buyer, the same cannot be the reason to allege relationship between buyer and the assessee - Therefore, impugned order is not sustainable in the eyes of law and the same is set aside: CESTAT

- Appeal allowed : CHANDIGARH CESTAT

 

 

 

 

CUSTOMS

2019-TIOL-2659-HC-MAD-CUS

Boston Leather Exports Vs ACC

Cus - Petitioner seeks for a mandamus directing the respondents to remove an alert raised against the petitioner's IEC in the Customs EDI System – That since the first respondent having realized the sum of Rs.4,50,089/- already from the bank account maintained by the petitioner, is not justified in continuing the alert in the EDI System, which totally paralyzed the petitioner's business - counsel appearing for the Revenue submitted that since the petitioner is yet to pay a sum of Rs.4,06,988/- towards the interest till 31.01.2019, the alert in the EDI System exists and once the petitioner discharge such liability, the said alert will be removed.

Held: Considering the fact that the liability of the petitioner to pay the duty drawback, penalty and interest has not attained its finality, as admittedly, the revision filed against the orders of Authority is still pending, Court is of the view that the interest of both parties will be protected, if the writ petition is disposed of with the following terms – that the petitioner shall furnish a personal bond for a sum of Rs.4,06,988/- before the first respondent, representing the above said interest amount, within a period of two weeks from the date of receipt of a copy of this order and on receipt of such personal bond, the respondents are directed to remove the alert, as exists against the petitioner in the Customs EDI System immediately: High Court [para 9]

-Petition disposed of : MADRAS HIGH COURT