2020-TIOL-593-HC-DEL-ST

Aargus Global Logistics Pvt Ltd Vs UoI

ST - Petitioner has preferred the present petition to seek directions quashing Rule 5A of the Service Tax Rules, 1994 by declaring that it is in conflict with various provisions of the Finance Act, 1994, and it is beyond the rule- making power of Respondent No. 1 and ultra vires the Finance Act, 1994 - In the alternative, the Petitioner seeks a writ of Certiorari declaring Rule 5A of the Service Tax Rules, 1994 as having lapsed w.e.f. 01.07.2017 i.e. after introduction of the Central Rules and Services Tax Act (CSGT), 2017, on the premise that there is no saving of the said provision under the CGST Act - Petitioner also assails the notices dated 06.11.2019 and 13.01.2020 issued by Respondent No. 2 requiring the Petitioner to provide several documents and records, on the ground that the same is without jurisdiction and authority of law.

Held:

++ From Section 94 of the Finance Act, 1994 it would be seen that the Central Government has been empowered to make Rules for carrying out the provision of Chapter 5 of the Finance Act, 1994, which contains the provisions in relation to levy of service tax, therefore, the Central Government is empowered to make rules with a view to enforce and recover service tax - The specific aspects in respect of which the Rules may be framed as enumerated in clauses (a) to (m) of Section 94(2) do not take away the general and omnibus power to make Rules conferred by the opening words of Section 94 (2) - The Parliament consciously while enumerating the specific matters in respect of which Rules may be framed, preserved the general Rule making power of the Central Government - The only statutory limitation placed on the said Rule making power is that the Rule(s) should be framed for the purpose of enforcing the service tax regime, therefore, the power of the Central Government to frame rules for carrying out the provisions of the service tax regime was exhaustive, and there is absolutely nothing to suggest that the said power did not encompass the power to frame a Rule of the kind as Rule 5A, as framed w.e.f. 28.12.2007.

++ The failure of the Parliament to mention the word “Rules”, along with the Finance Act, 1994 in Section 174 (2) of the CGST Act, 2017, according to the Petitioner, means that the Service Tax Rules were not saved even for the purpose of enforcing the saving provisions - This submission is completely meritless since, firstly, the Parliament omitted Chapter V of the Finance Act, 1994 by amending the same and no part of the Finance Act, 1994 was repealed by the provision of the CGST Act - This omission came into effect only from the date of enforcement of the CGST Act and not earlier, therefore, Chapter V of the Finance Act, 1994 remained on the statute book till the enforcement of the CGST Act.

++ Secondly, even this Amendment of the Finance Act, 1994 (by Section 173 of the CGST Act) saves what was otherwise provided in the Act, which included what is provided in Section 174 - Therefore, to the extent the provisions of Chapter V of the Finance Act, 1994 are saved, they do not stand omitted by amendment of the Finance Act, 1994.

++ Thirdly, the Rules under Chapter V of the Finance Act, 1994, were framed to carry out the provisions of Chapter V of the Finance Act, 1994 - The rules are subordinate legislation and without the said Rules, the provisions of Chapter V of that Act itself could not be worked - The Service Tax Rules were framed under Chapter V of the Finance Act, 1994 - Those rules are, therefore, saved by Clause (b) of Section 174(2) which states that, inter alia, anything duly done under the Chapter V of the Finance Act, 1994 shall not be affected by the amendment of the Finance Act, 1994 - Thus, the amendment of the Finance Act, 1994 does not affect the Service Tax Rules - Far from exhibiting a different intention, Section 174 of the CGST Act expressly seeks to preserve the powers of the Competent Authorities to, inter alia, institute investigation, inquiry etc. - In fact, even if Section 174(2) of the CGST Act were not to expressly so provide, the said power of the Competent Authorities stood preserved by virtue of Section 6 of the General Clauses Act - Rule 5A(2) of the Service Tax Rules empowers the Competent Officer to demand records maintained or prepared in terms of Sub Rule (2) of Rule 5 - Thus, the assessee is obliged to maintain and provide all the records prepared or maintained by it for accounting of transactions with regard to providing of any service; receipt or procurement of input services and payment for such input services; receipt, purchase, manufacture, storage, sale or delivery, as the case may be, in regard to inputs and capital goods; other activities such as manufacture and sale of goods, if any and; all other financial records maintained by him in the normal course of business.

++ Perusal of the notice dated 06.11.2019 shows that the Respondents have called for records which the Petitioner is obliged to maintain in terms of Rule 5 of the Service Tax Rules, therefore, Bench does not find merit in this submission either - No merits in the petition, hence dismissed: High Court [para 9, 10, 14, 15, 16, 17, 18]

- Petition dismissed: DELHI HIGH COURT

2020-TIOL-465-CESTAT-DEL

Punjab National Bank Vs CCGST

ST - The assessee is a leading public sector bank - During the relevant period, it reflected the amount of cenvat credit taken by it - It was provided by way of transitional provision that an assessee shall be entitled for continuation of service tax credit under the new scheme of CGST/ SGST, only the amount reflected in the ST-3 return - Accordingly, in form TRAN-1 under the CGST Act, the assessee reflected the original amount of credit - SCN was issued by the Revenue on grounds that no provision existed for refund of service tax other than by way if adjustment under the Finance Act 1994 - It also appeared that the refund is in contravention of Rule 5 of CCR 2004 - The refund was proposed to be rejected as per Section 11B of the CEA - Such proposals were sustained on adjudication - Hence the present appeal.

Held: The rejection of cenvat credit is on the observation relying on the verification report of the jurisdictional Range Officer - There is no such report/copy was provided to the assessee - No opportunity provided to inspect the report and offer their comments - Hence the same is miscarriage of justice by denying adequate opportunity of hearing to the assessee. Accordingly, this appeal is allowed by way of remand to the adjudicating authority: CESTAT

- Case remanded: DELHI CESTAT

CUSTOMS

2020-TIOL-463-CESTAT-HYD

CCE & C Vs Big Apple Computers

Cus - The assessee imported monitors and T.V. tuners - On assessment, the Revenue changed the classification as under CTH85285900 and 85299090 - On appeal, the Commr.(A) held that the items were classifiable under CTH 85285100 and 84733030 respectively - Hence the present appeal by the Revenue.

Held: It is seen that the assessee had sought to cross examine certain officials of changed the classification of the goods - Such request for cross examination was denied without assigning any specific reasons - The assessee claimed to be in a position to establish that the classification as declared by it is correct - Hence the same is a classic matter of adjudication being done after denying the principles of natural justice - It is settled principle in law that a matter cannot be adjudicated behind the importer's back, who should be given adequate opportunity to state its case with documentary evidence to support its claim of classification of the subject goods - Hence the matter be examined thoroughly by the adjudicating authority - Appeal allowed by way of remand: CESTAT

- Case remanded: HYDERABAD CESTAT