Addl Director General Vs Prime Gold International Ltd

GST - Aggrieved by the order dated 06.01.2020 = 2020-TIOL-90-HC-MAD-GST passed by the Single Judge, disposing of the Writ Petitions filed by M/s.Prime Gold International Limited / Assessee, with the observations that the show cause notice on the basis of the materials collected against the Assessee during investigation may be issued, within the stipulated time frame, as per Section 74 of the Central Goods and Services Tax Act, 2017 and that if show cause notice is not issued within two weeks from the date of the order of the learned Single Judge, the attachment of the goods in question shall be lifted forthwith, Writ Appeals have been filed by Revenue - It seems that these proceedings could not be concluded and even the expected show cause notice, which was to be issued in pursuance of the directions of the learned Singe Judge, could not be issued within the period of two weeks, as directed in the order dated 06.01.2020, due to the pandemic – Counsel for Revenue informs that the Assessee is not cooperating in the matter and has not presented himself for verification of certain preliminary materials collected by the concerned Authority, for which, his presence was necessary – Assessee submits that the imaging of data could be completed only during the second week of March, 2020, i.e., from 11.03.2020 to 13.03.2020 and on 16.03.2020 but the said show cause notice has not been issued by the competent Revenue Authority and therefore, the Appeals of the Revenue deserve to be dismissed.

Held: Bench is of the view that no significant interference is required in the directions given by the Single Judge, except for extending the time limit to comply with the directions given by the Single Judge and setting a new time frame for the said purpose - Since the SCN could not be issued for some reasons beyond the control of either of the parties and a fresh attachment order has been made on 28.03.2020, Bench is of the opinion that the show cause notice should be issued now by the competent Revenue Authority latest within a period of three months from today - This will be conditional upon the Assessee fully cooperating in the matter and further fix the time frame of three months thereafter to conclude the assessment proceedings itself - Respondent / Assessee to appear before the Authority concerned in the first instance on 02.11.2020 and present himself with the relevant materials, information, submissions, on all such dates, when he is summoned by the Authority concerned - No further extension of time would be granted to the Revenue Department for this purpose – Writ appeals disposed of: High Court [para 7]

- Appeals disposed of: MADRAS HIGH COURT

2020-TIOL-1733-HC-AHM-GST

Khushi Sarees Vs State Of Gujarat

GST - Writ applicant is a partnership firm registered with the GST and is engaged in the business of manufacturing of different types of textile fabrics - It appears that an inquiry has been initiated against the firm by the CGST Department, Surat by issuing summons under Section 70(1) of the Act, 2017 dated 25th June, 2020 - It further appears that pending the inquiry, the Department has taken two fold action - First an order in Form GST DRC-01A dated 23rd July, 2020 has been issued and secondly, an order of provisional attachment of property under Section 83 of the Act in Form GST DRC-22 has been passed - Being dissatisfied with the aforesaid action on the part of the GST Authorities, the writ applicant has come up before this Court with the present writ application.

Held:

+ Bench is not inclined to interfere with the order passed in Form GST DRC-01A dated 23rd July, 2020, referred to above.

+ However, Bench is of the view that the order of provisional attachment of the immovable property in the form of residential premises under Section 83 of the Act is not sustainable in law.

+ Section 83 talks about the opinion which is necessary to be formed for the purpose of protecting the interest of the government revenue. Any opinion of the authority to be formed is not subject to objective test. The language leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act in forming its opinion. But, at the same time, there must be material based on which alone the authority could form its opinion that it has become necessary to order provisional attachment of the goods or the bank account to protect the interest of the government revenue. The existence of relevant material is a pre-condition to the formation of opinion.

+ The use of the word "may" indicates not only the discretion, but an obligation to consider that a necessity has arisen to pass an order of provisional attachment with a view to protect the interest of the government revenue. Therefore, the opinion to be formed by the Commissioner or take a case by the delegated authority cannot be on imaginary ground, wishful thinking, howsoever laudable that may be. Such a course is impermissible in law.

+ At the cost of repetition, the formation of the opinion, though subjective, must be based on some credible material disclosing that it is necessary to provisionally attach the goods or the bank account for the purpose of protecting the interest of the government revenue. The statutory requirement of reasonable belief is to safeguard the citizen from vexatious proceedings. "Belief" is a mental operation of accepting a fact as true, so, without any fact, no belief can be formed. It is equally true that it is not necessary for the authority under the Act to state reasons for its belief. But if it is challenged that he had no reasons to believe, in that case, he must disclose the materials upon which his belief was formed, as it has been held by the Supreme Court in Sheonath Singh's case [AIR 1971 SC 2451] , that the Court can examine the materials to find out whether an honest and reasonable person can base his reasonable belief upon such materials although the sufficiency of the reasons for the belief cannot be investigated by the Court.

+ In the case at hand, A.G.P. appearing for the respondents very fairly submitted that not only the impugned order of provisional attachment is bereft of any reason, but there is nothing in the original file on the basis of which this Court may be in a position to ascertain the genuineness of the belief formed by the authority. The word "necessary" means indispensable, requisite; indispensably requisite, useful, incidental or conducive; essential; unavoidable; impossible to be otherwise; not to be avoided; inevitable. The word "necessary" must be construed in the connection in which it is used. The formation of the opinion by the authority should reflect intense application of mind with reference to the material available on record that it had become necessary to order provisional attachment of the goods or the bank account or other articles which may be useful or relevant to any proceedings under the Act.

+ In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority concerned for the purpose of passing an order of provisional attachment under Section 83 of the Act, then such action amounts to malice in law. Malice in its legal sense means such malice as may be assumed from the doing of a wrongful act intentionally but also without just cause or excuse or for want of reasonable or probably cause. Any use of discretionary power exercised for an unauthorized purpose amounts to malice in law. It is immaterial whether the authority acted in good faith or bad faith.

+ Writ application stands partly allowed. The relief with regard to the order in Form GST DRC-01A is not granted, whereas the order of provisional attachment of immovable property under Section 83 of the Act is quashed and set aside. [para 4, 6, 12, 16]

- Application partly allowed: GUJARAT HIGH COURT

2020-TIOL-1732-HC-AHM-GST

Meenakshi Trendz Vs State Of Gujarat

GST - Writ applicant is a partnership firm registered with the GST and is engaged in the business of manufacturing of different types of textile fabrics - It appears that an inquiry has been initiated against the firm by the CGST Department, Surat by issuing summons under Section 70(1) of the Act, 2017 dated 20th September, 2019 - It further appears that pending the inquiry, the Department has taken two fold action - First an order in Form GST DRC-01A dated 24 th July, 2020 has been issued and secondly, an order of provisional attachment of property under Section 83 of the Act in Form GST DRC-22 has been passed - Being dissatisfied with the aforesaid action on the part of the GST Authorities, the writ applicant has come up before this Court with the present writ application.

Held:

+ Bench is not inclined to interfere with the order passed in Form GST DRC-01A dated 24 th July, 2020, referred to above.

+ However, Bench is of the view that the order of provisional attachment of the immovable property in the form of industrial unit under Section 83 of the Act is not sustainable in law.

+ Section 83 talks about the opinion which is necessary to be formed for the purpose of protecting the interest of the government revenue. Any opinion of the authority to be formed is not subject to objective test. The language leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act in forming its opinion. But, at the same time, there must be material based on which alone the authority could form its opinion that it has become necessary to order provisional attachment of the goods or the bank account to protect the interest of the government revenue. The existence of relevant material is a pre-condition to the formation of opinion.

+ The use of the word "may" indicates not only the discretion, but an obligation to consider that a necessity has arisen to pass an order of provisional attachment with a view to protect the interest of the government revenue. Therefore, the opinion to be formed by the Commissioner or take a case by the delegated authority cannot be on imaginary ground, wishful thinking, howsoever laudable that may be. Such a course is impermissible in law.

+ At the cost of repetition, the formation of the opinion, though subjective, must be based on some credible material disclosing that it is necessary to provisionally attach the goods or the bank account for the purpose of protecting the interest of the government revenue. The statutory requirement of reasonable belief is to safeguard the citizen from vexatious proceedings. "Belief" is a mental operation of accepting a fact as true, so, without any fact, no belief can be formed. It is equally true that it is not necessary for the authority under the Act to state reasons for its belief. But if it is challenged that he had no reasons to believe, in that case, he must disclose the materials upon which his belief was formed, as it has been held by the Supreme Court in Sheonath Singh's case [AIR 1971 SC 2451] , that the Court can examine the materials to find out whether an honest and reasonable person can base his reasonable belief upon such materials although the sufficiency of the reasons for the belief cannot be investigated by the Court.

+ In the case at hand, A.G.P. appearing for the respondents very fairly submitted that not only the impugned order of provisional attachment is bereft of any reason, but there is nothing in the original file on the basis of which this Court may be in a position to ascertain the genuineness of the belief formed by the authority. The word "necessary" means indispensable, requisite; indispensably requisite, useful, incidental or conducive; essential; unavoidable; impossible to be otherwise; not to be avoided; inevitable. The word "necessary" must be construed in the connection in which it is used. The formation of the opinion by the authority should reflect intense application of mind with reference to the material available on record that it had become necessary to order provisional attachment of the goods or the bank account or other articles which may be useful or relevant to any proceedings under the Act.

+ In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority concerned for the purpose of passing an order of provisional attachment under Section 83 of the Act, then such action amounts to malice in law. Malice in its legal sense means such malice as may be assumed from the doing of a wrongful act intentionally but also without just cause or excuse or for want of reasonable or probably cause. Any use of discretionary power exercised for an unauthorized purpose amounts to malice in law. It is immaterial whether the authority acted in good faith or bad faith.

+ Writ application stands partly allowed. The relief with regard to the order in Form GST DRC-01A is not granted, whereas the order of provisional attachment of immovable property under Section 83 of the Act is quashed and set aside. [para 4, 6, 12, 16]

- Application partly allowed: GUJARAT HIGH COURT

2020-TIOL-1731-HC-AHM-GST

Anjani Impex Vs State Of Gujarat

GST - Writ applicant is a partnership firm registered with the GST and is engaged in the business of manufacturing of different types of textile fabrics - It appears that an inquiry has been initiated against the firm by the CGST Department, Surat by issuing summons under Section 70(1) of the Act, 2017 dated 30th June, 2020 - It further appears that pending the inquiry, the Department has taken two fold action - First an order in Form GST DRC-01A dated 23rd July, 2020 has been issued and secondly, an order of provisional attachment of property under Section 83 of the Act in Form GST DRC-22 has been passed - Being dissatisfied with the aforesaid action on the part of the GST Authorities, the writ applicant has come up before this Court with the present writ application.

Held:

+ Bench is not inclined to interfere with the order passed in Form GST DRC-01A dated 23rd July, 2020, referred to above.

+ However, Bench is of the view that the order of provisional attachment of the immovable properties in the form of the industrial unit and the residential premises under Section 83 of the Act is not sustainable in law.

+ Section 83 talks about the opinion which is necessary to be formed for the purpose of protecting the interest of the government revenue. Any opinion of the authority to be formed is not subject to objective test. The language leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act in forming its opinion. But, at the same time, there must be material based on which alone the authority could form its opinion that it has become necessary to order provisional attachment of the goods or the bank account to protect the interest of the government revenue. The existence of relevant material is a pre-condition to the formation of opinion.

+ The use of the word "may" indicates not only the discretion, but an obligation to consider that a necessity has arisen to pass an order of provisional attachment with a view to protect the interest of the government revenue. Therefore, the opinion to be formed by the Commissioner or take a case by the delegated authority cannot be on imaginary ground, wishful thinking, howsoever laudable that may be. Such a course is impermissible in law.

+ At the cost of repetition, the formation of the opinion, though subjective, must be based on some credible material disclosing that it is necessary to provisionally attach the goods or the bank account for the purpose of protecting the interest of the government revenue. The statutory requirement of reasonable belief is to safeguard the citizen from vexatious proceedings. "Belief" is a mental operation of accepting a fact as true, so, without any fact, no belief can be formed. It is equally true that it is not necessary for the authority under the Act to state reasons for its belief. But if it is challenged that he had no reasons to believe, in that case, he must disclose the materials upon which his belief was formed, as it has been held by the Supreme Court in Sheonath Singh's case [AIR 1971 SC 2451] , that the Court can examine the materials to find out whether an honest and reasonable person can base his reasonable belief upon such materials although the sufficiency of the reasons for the belief cannot be investigated by the Court.

+ In the case at hand, A.G.P. appearing for the respondents very fairly submitted that not only the impugned order of provisional attachment is bereft of any reason, but there is nothing in the original file on the basis of which this Court may be in a position to ascertain the genuineness of the belief formed by the authority. The word "necessary" means indispensable, requisite; indispensably requisite, useful, incidental or conducive; essential; unavoidable; impossible to be otherwise; not to be avoided; inevitable. The word "necessary" must be construed in the connection in which it is used. The formation of the opinion by the authority should reflect intense application of mind with reference to the material available on record that it had become necessary to order provisional attachment of the goods or the bank account or other articles which may be useful or relevant to any proceedings under the Act.

+ In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority concerned for the purpose of passing an order of provisional attachment under Section 83 of the Act, then such action amounts to malice in law. Malice in its legal sense means such malice as may be assumed from the doing of a wrongful act intentionally but also without just cause or excuse or for want of reasonable or probably cause. Any use of discretionary power exercised for an unauthorized purpose amounts to malice in law. It is immaterial whether the authority acted in good faith or bad faith.

+ Writ application stands partly allowed. The relief with regard to the order in Form GST DRC-01A is not granted, whereas the order of provisional attachment of immovable property under Section 83 of the Act is quashed and set aside. [para 4, 7, 13, 17]

- Application partly allowed: GUJARAT HIGH COURT

2020-TIOL-1729-HC-KERALA-GST

Quality Enterprises Vs ASTO

GST - Petitioner impugns an order passed by the respondent in Form GST Mov 09, whereby goods have been detained by the respondent noticing a discrepancy in the documents that ought to have accompanied the transportation of the goods - Counsel for Revenue submits that as the final order under Section 129, in Form GST Mov 09, has already been passed, the remedy of the petitioner lies in moving an appeal before the appellate authority, and if the petitioner wants a clearance of the goods and the vehicle in the meanwhile, he has to produce a bank guarantee for the amounts confirmed through the detention order - Petitioner has since furnished a bank guarantee before the respondent for enabling an expeditious clearance of the goods and the vehicle.

Held: Since a final order u/s 129(3) in Form GST Mov 09 has already been passed, writ petition is disposed of with a direction to the First Appellate Authority, before whom Ext.P12 appeal has been preferred by the petitioner, to consider and pass orders on Ext.P12 appeal within three weeks after hearing the petitioner either through a physical hearing or through video conferencing - It is made clear that Ext.P14 bank guarantee furnished before the respondent shall not be encashed till such time as orders are passed by the First Appellate Authority as directed and the order communicated to the petitioner: High Court [para 3]

- Petition disposed of: KERALA HIGH COURT

2020-TIOL-1728-HC-KERALA-GST

Wild Tree Resorts By The Legend Pvt Ltd Vs STO

GST - Petitioner had received the assessment orders under Section 62 of the GST Act, on 04.10.2019, and the returns that had to be filed within 30 days after receipt of the order for getting the benefit of setting aside the orders in terms of Section 62 of the GST Act were filed only on 21.11.2019 - Inasmuch as, admittedly, the said returns were filed more than 30 days after the receipt of the orders by the petitioner, the petitioner cannot be heard to contend that Ext.P2 series of orders ought to be set aside in terms of Section 62 of the GST Act - Writ petition is dismissed - However, recovery steps in respect of the confirmed amounts shall be kept in abeyance for a period of three weeks so as to enable the petitioner to avail appellate remedy, in the meanwhile: High Court [para 1]

- Petition dismissed: KERALA HIGH COURT

Mass Corporation Vs ACCT

Whether the Revenue is justified in imposing rate of tax for the entire sales turnover, where the turnover of the assessee is less than the statutory limit of Rs 50 lakhs - NO: HC

- Assessee's writ petition allowed: MADRAS HIGH COURT

2020-TIOL-1721-HC-MAD-CT

Whether findings of the Single Judge in remanding an assessment for reconsideration, warrants any interference with, where the assessee was not given a proper opportunity of personal hearing - NO: HC

- Assessee's writ petition dismissed: MADRAS HIGH COURT

SERVICE TAX

CENTRAL EXCISE

CUSTOMS

2020-TIOL-1727-HC-AHM-CUS

Rama Nagappa Shetty Vs CC

Cus - Penalty imposed on appellant u/s 112(a) of the Customs Act, 1962 and upheld by Tribunal - appeal filed before High Court - appellant tried to distinguish his case on the ground that the appellant was a Non Executive Director having no knowledge about the import transactions made by the company.

Held: On perusal of the impugned orders passed by the adjudicating authority, there is concurrent findings of fact relying upon the statements of Shri V.V. Kamat as well as Shri Srinivasa Naik recorded under section 108 of the Act, wherein, it was stated that the day to day affairs of the company was carried out with the knowledge of the appellant and the same were reported directly to the appellant - Thus the appellant was in knowledge of the day to day affairs of the company and involvement and knowledge of appellant in diversion of the goods in the local market is apparent on the face of the record - In view of the dictum of law laid down in the case of K.I. Pavunny v. Assistant Collector (HQ) Central Excise Collectorate - 2002-TIOL-739-SC-CUS-LB and Amad Noormamad Bakali [2011 (12) GLH 31] with regard to the statement recorded under section 108 of the Act coupled with concurrent findings of fact arrived at by the adjudicating authority and the CESTAT, Bench is not inclined to interfere as no perversity is pointed out in such factual findings arrived at by both the authorities - For the foregoing reasons and considering section 112(a) of the Customs Act which provides that penalty against person who in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation under section 111 or abets the doing or omission of such an act, penalty can be imposed not exceeding the value of the goods or five thousand rupees whichever is greater - Therefore, invoking such provision would require mens rea on part of the appellant which is duly established on record - In that view of the matter, reliance placed on the various decisions by the appellant are not required to be discussed at length as the proposed questions of law cannot be said to be substantial questions of law in view of factual findings arrived at by the adjudicating authority and confirmed by the CESTAT - CESTAT was justified in rejecting the rectification application as any interference in the impugned order passed by the CESTAT would have resulted in review of its own order which is not permissible under the provisions of the Customs Act - Tax appeal is dismissed: High Court [para 16, 18, 19, 20]

- Appeal dismissed: GUJARAT HIGH COURT

2020-TIOL-1725-HC-MAD-CUS

Cus - Appeal filed against the Single Judge order dated 19 May 2020 disposing of the petition filed by the petitioner challenging the communication of the Commissioner of Customs rejecting their applciation filed for issue of Detention certificate to claim waiver of Transshipment Charges billed by the Integrated Air Cargo Complex - It is the contention of the petitioner that Single Judge ought not to have directed payment of Demurrage charges which runs approximately to Rs.67 lakhs against the Appellant, as the delay was not on account of any fault of the Appellant in transshipment of goods from Chennai to Trivandrum in the bonded trucks; that the broad body aircrafts, which brought these goods to Chennai Airport, could not land at Trivandrum Airport because of relevant regulations and they have to land at Chennai and transshipped under the due permission given by the Custom Authorities at Chennai, to the Airport at Trivandum in bonded trucks, where the goods would be cleared in favour of the importers; that on account of certain issues like arrest of some officials of the Customs Department at Chennai in some criminal matter, office staff were not available at Chennai Airport to receive these applications and process the same; that, therefore, delay occurred in allowing transshipment, running from 4 days to 28 days; that for reasons beyond the control of the Appellant, such delay had occurred and, therefore, the Custom Authorities ought to have verified these facts at their own end, whether the delay was attributable to the Appellant company or not; that though finding these reasons to be valid for the said purpose of delay, the Single Judge had remanded the case back to the Commissioner of Customs to verify these facts once again, while setting aside the impugned order dated 10.03.2010, and therefore, the question of payment of Demurrage for the said period of delay does not arise.

Held: Bench is satisfied that while the matter has been remanded back to the Commissioner, the demand made under the said order, on account of Detention Certificate not being issued by the Commissioner of Customs, cannot be sustained for the time being and, therefore, payment thereof, in favour of the respondents 3 and 4 viz., Deputy General Manager Cargo, Airport Authority of India, Chennai, and the Assistant General Manager (F&A), Airport Authority of India, Chennai, cannot arise - Such payment can be made, if, only after such reconsideration on remand, the Commissioner concerned again passes a fresh order and sustains the order against the Appellant - That, therefore, with this slight modification of paragraph 91 of the order of the Single Judge to the extent that the petitioner shall not be required to pay Demurrages in favour of respondents 3 and 4, for the time being, till the Commissioner re-decides the said issue in pursuance of the remand order passed by the Single Judge - Writ Appeal is disposed of - Commissioner to decide the issue once again, as directed by the Single Judge, as expeditiously as possible, preferably within a period of six weeks: High Court Division Bench [para 5]