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SERVICE TAX
2020-TIOL-1554-CESTAT-DEL
DLF Assets Pvt Ltd Vs CST
ST - Impugned order has confirmed the demand of service tax on the ground that for the period from March 3, 2009 upto May 19, 2009, exemption on services rendered to SEZ units was available only by way of refund and thus the appellant was not eligible for ab-initio exemption, which was introduced subsequently by amending Notification No. 15/2009-ST w.e.f May 20, 2009.
Held: This issue was examined by the Telangana and Andhra Pradesh High Court in GMR Aerospace Engineering Limited and another Vs. Union of Inida and Others - Writ Petition No. 13546 of 2018 dated 27 December 2018 - Section 26(2) of the SEZ Act does provide that the Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemptions shall be granted to the Developer under sub-section (1) but what is important to note, and as was also observed by the Andhra Pradesh High Court, the word "prescribe" would mean "prescribed by rules made by the Central Government under the SEZ Act" in view of the definition of "prescribed" under section 2(w) of the SEZ Act - The Notification dated March 3, 2009, which has been issued under section 93 of the Finance Act, therefore, has no application: CESTAT [para 19, 21]
ST - The second issue that arises for consideration is about the signage income - Under the agreement, the appellant rented out office space in the two SEZ units in return for a specified rent amount and in addition also rented out some space to these units for displaying their name for identification purpose, for which the applicant charged signage charges - Thus, according to the applicant, the activity of renting out space for display of name is part and parcel of the renting of immovable property service rendered by the appellant - Commissioner, however, held that the appellant had classified signage income as sale of space or time for advertisement services, and exemption thereon was not admissible as the same was not covered under the list of approved services.
Held: In the first instance, irrespective of classification of the said service, the said service had been used by the SEZ units for their authorized operations - There is no dispute on this aspect either in the show cause notice or in the impugned order - In such circumstances, for the reasons stated above while dealing with the first issue, such service would be exempt from payment of service tax under the SEZ Act and the confirmation of demand of service tax on this service cannot be sustained – moreover, permission by the appellant to the lessee to put its name under the facade would not mean that the appellant has provided space to display, advertise or showcase any product or service: CESTAT [para 22, 23, 25]
- Appeal allowed: DELHI CESTAT
2020-TIOL-1553-CESTAT-DEL
RK Transport Company Vs CCE & C
ST - Valuation - Supreme Court in Bhayana Builders 2018-TIOL-66-SC-ST has categorically held that in a case where the service provider receives free of cost goods/material from the service recipient and no amount is charged towards such goods/material, therefore, the value of such goods/materials cannot be said to be included in the gross amount charged by the service provider for such service provided or to be provided by him under section 67 of the Finance Act and consequently, cannot be included in the value of taxable services - confirmation of demand of Rs. 14,07,98,655/- cannot be sustained: CESTAT [para 18]
ST - CENVAT - Whether credit is admissible on 'tippers' as inputs under rule 2(k) of the Credit Rules - In Sumya Mining Ltd. 2017-TIOL-2432-CESTAT-DEL , the Tribunal held that even for the period prior to June, 2010 credit was admissible on 'tippers' as 'inputs' used by the service provider in providing output services - Thus, credit had been correctly availed by the Appellant as 'tippers' qualify as 'input' under rule 2(k) of the Credit Rules - The demand that has been confirmed cannot, therefore, be sustained and is liable to be set aside: CESTAT [para 25, 26]
ST - Interest liability - When credit was reversed by the Appellant without utilization, no interest can be recovered from the Appellant: CESTAT [para 28]
- Appeal allowed: DELHI CESTAT
CENTRAL EXCISE
2020-TIOL-1794-HC-MUM-CX
Tata Motors Ltd Vs UoI
SVLDRS - The assessee-company had filed an a writ petition, seeking stay on recovery of interest and penalty levied on the applicant - The same was granted subject to the assessee furnishing bank guarantee of an amount which would cover the interest and penalty - The assessee furnished bank guarantee and later obtained extension of validity period - Meanwhile, the Central Govt introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - In order to avail benefit thereunder, the assessee sought leave of this court to withdraw its petition.
Held - As discharge certificate was issued to the assessee under the scheme in form No.SVLDRS-4, the Registry of this Court is directed to return the Bank Guarantee to the assessee: HC
- Writ petition disposed of: BOMBAY HIGH COURT
2020-TIOL-1555-CESTAT-AHM
Banco Aluminium Ltd Vs CCE & ST
CX - Issue is whether the appellants are entitled for Cenvat credit in respect of inputs procured by themselves and used in the manufacture of job work goods and cleared under Notification No. 214/86-CE dated 25.03.1986.
Held: Issue is no longer res-integra as in various judgments including the judgments in the appellant's own case, this Tribunal has held that inputs used in the manufacture of job work goods, under Notification No. 214/86-CE dated 25.03.1986, are entitled for credit, particularly by virtue of specific provision under Rule 3(1) of CCR - In view of the above judgments and also with the support of Larger Bench decision in the case of Sterlite Industries Limited - 2005-TIOL-305-CESTAT-MUM-LB , the appellant is entitled for Cenvat credit - impugned orders set aside and appeals allowed: CESTAT [para 4, 5]
- Appeals allowed: AHMEDABAD CESTAT
CUSTOMS
2020-TIOL-170-SC-NDPS-LB
M Ravindran Vs DRI
NDPS - Appellant was arrested and remanded to judicial custody on 04.08.2018 for the alleged offences punishable under the NDPS Act - After completion of 180 days from the remand date, that is, 31.01.2019, the Appellant (Accused No.11) filed application for bail under Section 167(2) of the Code of Criminal Procedure, 1973 on the ground that the investigation was not complete and chargesheet had not yet been filed - Accordingly, on 05.02.2019, the Trial Court granted bail - The Madras High Court, by the impugned judgment, allowed the appeal of the IO, DRI and consequently cancelled the order of bail granted by the Trial Court - Being aggrieved, the Appellant has approached the Supreme Court questioning the judgment of the High Court.
Held:
+ In common legal parlance, the right to bail under the Proviso to Section 167(2) is commonly referred to as 'default bail' or 'compulsive bail' as it is granted on account of the default of the investigating agency in not completing the investigation within the prescribed time, irrespective of the merits of the case. [para 6]
+ In the matter on hand, it is admitted that the Public Prosecutor had not filed any such report within the 180 - day period for seeking extension of time up to one year [s.36A of NDPS Act refers] for filing final report/additional complaint before the Trial Court. [para 6.2]
+ While computing the period under Section 167(2), the day on which accused was remanded to judicial custody has to be excluded and the day on which challan/charge-sheet is filed in the court has to be included. It is not disputed that in compliance of the aforementioned statutory provisions and judgments of this Court, the Appellant waited for 180 days from the date of remand (excluding the remand day) and thereafter filed application for bail under Section 167(2), CrPC at 10:30 a.m. on 01.02.2019 inasmuch as till 31.01.2019 or till 10:30 a.m. of 01.02.2019, the complainant had not yet filed final report/additional complaint against the Appellant. On the same day, as mentioned supra, during the course of hearing of the bail application, the Respondent/complainant lodged an additional complaint at 4:25 p.m., and thus sought dismissal of the bail petition. [para 7, 8]
+ Majority opinion in Uday Mohanlal Acharya held that the accused is deemed to have exercised his right to default bail under Section 167(2), CrPC the moment he files the application for bail and offers to abide by the terms and conditions of bail. The prosecution cannot frustrate the object of Section 167(2), CrPC by subsequently filing a chargesheet or additional complaint while the bail application is pending consideration or final disposal before a Magistrate or a higher forum. [para 10.2]
+ Section 167(2) provides for a clear mandate that the investigative agency must collect the required evidence within the prescribed time period, failing which the accused can no longer be detained. This ensures that the investigating officers are compelled to act swiftly and efficiently without misusing the prospect of further remand. This also ensures that the Court takes cognizance of the case without any undue delay from the date of giving information of the offence, so that society at large does not lose faith and develop cynicism towards the criminal justice system. [para 11.5]
+ Section 167(2) is integrally linked to the constitutional commitment under Article 21 promising protection of life and personal liberty against unlawful and arbitrary detention, and must be interpreted in a manner which serves this purpose. [para 11.6]
+ Indefeasible right to default bail under Section 167(2) is an integral part of the right to personal liberty under Article 21, and the said right to bail cannot be suspended even during a pandemic situation as is prevailing currently. It was emphasized [in S. Kasi v. State Through The Inspector of Police Samaynallur Police Station Madurai District (Criminal Appeal No. 452 of 2020 dated 19th June, 2020), 2020 SCC OnLine SC 529 ] that the right of the accused to be set at liberty takes precedence over the right of the State to carry on the investigation and submit a chargesheet. [para 11.7]
+ Additionally, it is well-settled that in case of any ambiguity in the construction of a penal statute, the Courts must favour the interpretation which leans towards protecting the rights of the accused, given the ubiquitous power disparity between the individual accused and the State machinery. This is applicable not only in the case of substantive penal statutes but also in the case of procedures providing for the curtailment of the liberty of the accused. [para 11.8]
+ With respect to the CrPC particularly, the Statement of Objects and Reasons is an important aid of construction. Section 167(2) has to be interpreted keeping in mind the three-fold objectives expressed by the legislature namely ensuring a fair trial, expeditious investigation and trial, and setting down a rationalized procedure that protects the interests of indigent sections of society. These objects are nothing but subsets of the overarching fundamental right guaranteed under Article 21. [para 11.8]
+ Right of accused to be released on bail cannot be defeated merely because the prosecution files the charge-sheet prior to furnishing of bail and fulfil the conditions of bail of furnishing bonds, etc., so long as he furnishes the bail within the time stipulated by the Court. [para 13.1]
+ View taken in Uday Mohanlal Acharya is a binding precedent. It has been followed by a subsequent three-Judge Bench in Sayed Mohd. Ahmad Kazmi. [para 16.2]
+ Opinion rendered by the two-Judge Bench in paragraphs 54 and 58 of Pragyna Singh Thakur, to the effect that "even if an application for bail is filed on the ground that charge-sheet was not filed within 90 days, but before consideration of the same and before being released on bail, the said right to be released on bail would be lost" or "can only be on merits", must be held per incuriam. [para 16.2]
+ It must be emphasized that the paramount consideration of the legislature while enacting Section 167(2) and the Proviso thereto was that the investigation must be completed expeditiously, and that the accused should not be detained for an unreasonably long period as was the situation prevailing under the 1898 Code. This would be in consonance with the obligation cast upon the State under Article 21 to follow a fair, just and reasonable procedure prior to depriving any person of his personal liberty. [para 16.3]
+ High Court has wrongly entered into merits of the matter while coming to the conclusion. The reasons assigned and the conclusions arrived at by the High Court are unacceptable. [para 17.2]
+ Once the accused files an application for bail under the Proviso to Section 167(2) he is deemed to have 'availed of' or enforced his right to be released on default bail, accruing after expiry of the stipulated time limit for investigation. Thus, if the accused applies for bail under Section 167(2), CrPC read with Section 36A(4), NDPS Act upon expiry of 180 days or the extended period, as the case may be, the Court must release him on bail forthwith without any unnecessary delay after getting necessary information from the public prosecutor, as mentioned supra. Such prompt action will restrict the prosecution from frustrating the legislative mandate to release the accused on bail in case of default by the investigative agency. [para 18.1]
+ The right to be released on default bail continues to remain enforceable if the accused has applied for such bail, notwithstanding pendency of the bail application; or subsequent filing of the charge-sheet or a report seeking extension of time by the prosecution before the Court; or filing of the charge-sheet during the interregnum when challenge to the rejection of the bail application is pending before a higher Court. [para 18.2]
+ However, where the accused fails to apply for default bail when the right accrues to him, and subsequently a charge-sheet, additional complaint or a report seeking extension of time is preferred before the Magistrate, the right to default bail would be extinguished. The Magistrate would be at liberty to take cognizance of the case or grant further time for completion of the investigation, as the case may be, though the accused may still be released on bail under other provisions of the CrPC. [para 18.3]
+ Notwithstanding the order of default bail passed by the Court, by virtue of Explanation I to Section 167(2), the actual release of the accused from custody is contingent on the directions passed by the competent Court granting bail. If the accused fails to furnish bail and/or comply with the terms and conditions of the bail order within the time stipulated by the Court, his continued detention in custody is valid. [para 18.4]
+ Impugned judgment of the High Court stands set aside and the Trial Court judgment stands confirmed. However, Bench additionally directs that apart from furnishing the sureties as directed by the Trial Court, the Appellant accused should also surrender his passport, undertake to report to the Respondent Directorate when required for purposes of investigation, and also undertake to not leave Chennai city limits without the leave of the Trial Court. This should alleviate any concerns about the Appellant absconding from the jurisdiction of the Court. [para 19]
- Appeal allowed: SUPREME COURT OF INDIA
2020-TIOL-169-SC-NDPS-LB
Rajesh Dhiman Vs State Of Himachal Pradesh
NDPS - The appellants were apprehended by the police riding together on a motorcycle, during the relevant period, and were asked to produce documents of vehicle being driven by them - The appellants were given the option of being searched before a magistrate or a gazetted officer, but the appellants agreed to be searched on the spot by the police party - Though the police attempted to convince local residents to act as witnesses, but people refused - The police recovered a bag from one of the appellants - Such bag was found to contain Charas and weighed 3.100 Kgs - Upon completion of personal search, the appellants were formally arrested - During trial, the prosecution relied on statements of various witnesses and other documentary evidence - The appellant herein propounded a different story, claiming to have given a lift to a stranger and that the bag belonged to the third person who escaped upon the trio being stopped by the police - The Special Judge acquitted the appellants hlding that the charges under the NDPS Act had not been proven beyond reasonable doubt - It was observed that witnesses on the spot were not examined or had turned hostile - Hence the Special Judge held that each element of the prosecution's case had come under the cloud of suspicion for want of independent corroboration - Failure to include any other locally resident as a neutral witness in terms of Section 100(4) of the CrPC, were also held to cast serious aspersions on the prosecution version - The Special Judge also held that the complainant himself was the Investigating Officer, which prejudiced the fairness of the investigation - Hence the Trial Court held that no charas was recovered from the appellants as deposed by the independent witnesses - On appeal, the High Court set aside the acquittal of the appellants herein and convicted them for possession of Charas u/s 20 of the NDPS Act - The High Court observed that although association of independent witnesses in NDPS cases is always desirable but their non-examination would not per se be fatal to the prosecution case, especially when due efforts are made by the police to secure their presence - Hence it was held that there were no grounds to draw adverse inference against non examination of independent witnesses, as a prosecution witness had deposed about the unsuccessful attempts made to involve persons from the locality as witness - The High Court re-appreciated the entire evidence on record and firmly held that the chain of events commencing from seizure of contraband to its chemical analysis, was complete in all respects - In absence of bias, it was wrong to discard the otherwise impeccable statements of the official witnesses - The High Court held that the police officers' testimony had to undergo vigorous standards of scrutiny and corroboration, which had been satisfied in this case - Hence the quantity of Charas recovered was held to be commercial and a 10 year sentence of rigorous imprisonment with fine, was imposed.
Held - Regaring the appellants' claim of bias on account of the complainant and the IO being the same person, the observations relied on by the appellants are not findings or conclusions - Perusal of the judgment relied on reveals it to be contention put forth by one of the parties & that the bench therein eventually rejected such contention - Besides, the alternative version of events projected by the appellants is vague and improbable - It is not comprehensible as to how non investigation of a defence theory disclosed only at an advanced stage of trial, could indicate bias on part of the police - As correctly appreciated by the High Court in detail, non-examination of independent witnesses would not ipso facto entitle one to seek acquittal - Though a heighted standard of care is imposed on the court in such instances but there is nothing to suggest that the High Court was not cognizant of this duty - Rather, the consequence of upholding the trial Court's reasoning would amount to compulsory examination of each and every witness attached to the formation of a document - Not only is the imposition of such a standard of proof unsupported by statute but it is also unreasonably onerous - The High Court has rightly relied upon the testimonies of the government officials having found them to be impeccable after detailed re-appreciation of the entire evidence - The appellants' claim that the High Court erred in not considering non-compliance with Section 50 of the NDPS Act at the stage of appeal, is also premised upon a mistaken understanding of the law - Given how the narcotics have been discovered from a backpack, as per both the prosecution and defence versions, there arises no need to examine compliance with Section 50 of NDPS Act - Hence the judgment of the High Court is upheld - The bail bonds of the appellants are cancelled and they are directed to be taken into custody to serve their remaining sentence: SC
- Appeals dismissed/ In favor of Revenue: SUPREME COURT OF INDIA
2020-TIOL-168-SC-NDPS-LB
Raveen Kumar Vs State Of Himachal Pradesh
NDPS - A vehicle being driven by the appellant was stopped and searched by a police party, during the relevant period - Amongst other articles, a bag was recovered - Suspecting it to contain contraband narcotics, the police summoned two witnesses and the appellant was informed about the statutory right to be searched in the presence of a magistrate or gazetted office - The appellant consented to be searched by the police party itself - The bag was searched and charas was found - Using scales obtained from a nearby shop, the same was weighed at 1.23 Kgs - On chemica analysis of the substance, it was found to be charas with resin content of 34.5% - The appellant was charged with offence u/s 20 of the NDPS Act - Over the course of trial, the prosecution examined 5 witnesses and various documents, including statements given by the witnesses and the appellant's written consent for search - The appellant did not lead any defence and focused on highlighting contradictions between statements of police witnesses - The Special Judge then acquitted the appellant, holding that possession of a prohibited substance had not been proven beyond reasonable doubt - It also became the sole factor to conclude that the police, in fact, had previous information of the alleged smuggling and the chance recovery was nothing but a deliberately crafted narrative to circumvent the legal safeguards under the NDPS Act, which consequently weakened the very foundations of the case - Inconsistencies were also found in the statements of the prosecution witnesses - Thereafter, the High Court reversed the findings of the Trial Court, finding them to be fallacious - The High Court found that the statements of one witness had erroneously been discarded, even though statements recorded by this witness mostly corroborated the prosecution's version - It was also held that conviction was possible even in the absence of independent witnesses - It was also shown that the statements of other witnesses could be reconciled and any contradiction was immaterial - Hence the High Court held that there was nothing to infer that there was any prior information and the case was clearly one of chance recovery, thus ameliorating the requirements to comply with Section 42 of the NDPS Act - Moreover, considering the resin content in the charas, the remaining quantity was not found to be commercial quantity - Hence the High Court scaled down the punishment to 2 years imprisonment with fine.
Held - There is no legal necessity for the Supreme Court to re-appreciate the entire evidence, solely on the premise that the High Court convicted the appellant for the first time in exercise of appellate jurisdiction - In respect of prosecution's reply to bail application, the High Court correctly noted in the present case that no opportunity to controvert this reply document was given to the prosecution - The prosecution witness was not confronted with it - Besides, such reply does not carry any weight since the Trial Court had rejected bail application by the appellant, holding that the police had no prior information about the appellant carrying charas and that there was general information about the appellant engaging in such activity - Since irrelevant material was impermissibly relied upon by the trial Court to arrive at an acquittal, the High Court was adequately justified to interfere with and reverse the findings - The High Court's findings in respect of the contradiction between the statements of prosecution witnesses, are unimpeachable - There might be some confusion over timing of removal of other substances found, but these trivialities are immaterial - Considering the amended provisions of Section 20(ii)(c) of the NDPS Act, the total quantity of contraband found is 1.230 Kgs, which clearly is 'commercial quantity' - In light of the same, the sentence pronounced by the High Court is far too charitable - Hence the bail bonds of the appellant are cancelled - The appellant is to be taken into custody to serve the remainder of the sentence: SC
- Appeal dismissed/ In favor of Revenue: SUPREME COURT OF INDIA
2020-TIOL-1556-CESTAT-MUM
Safe Pack Vs CCE
Cus - Appellant is a 100% EOU - Since positive NFE was not achieved by the appellant as per paragraph (3)(d)(ii) of notification dated 31.03.2003, the Central Excise Department had initiated show cause proceedings against the appellant, which culminated into the adjudication order dated 31.03.2010, wherein duty demand of Rs.5.44 Lacs was confirmed along with interest and equal amount of penalty was imposed on the appellant under Section 112(a) of the Customs Act, 1962 – As Commissioner(A) upheld this order, assessee is in appeal.
Held: Appellant had imported the capital goods without payment of duty under bond as per notification dated 31.03.2003 - Paragraph 4 in the said notification provides that removal of the capital goods from the place of installation in the EOU can be done subject to fulfilment of the conditions/limitations imposed in the Export and Import Policy - It has also been provided that capital goods can be taken to any other unit in a Special Economic Zone or to other Export Oriented Undertaking etc., without payment of duty for the purpose of manufacture and export of the final product - Para- 6.15(b) of the Foreign Trade Policy (FTP) provides for transferring of capital goods to another EOU/EHTP/STP/BTP/SEZ or for disposing the same in DTA on payment of duties - Further, Para-6.18 visualises the procedure for exit from EOU Scheme - Para- 6.15 of the Hand Book of Procedure (HBP) provides that the supplies to other EOU/SEZ/EHTP/STP/BTP units shall be counted towards NFE, provided that such goods are permissible for procurement by these units - The procedure of exit of a manufacturing unit from the EOU Scheme is contained in para 6.18 in the FTP - It is not the case of Revenue that the appellant had not complied with the above provisions laid down in the FTP and the HBP - Since the capital goods were supplied by the appellant to the SEZ unit, duly approved by the Development Commissioner; the requirements of the Export and Import Policy have been duly complied with - Thus, the adjudged demands cannot be fastened on the appellant: CESTAT [para 4, 5]
- Appeal allowed: MUMBAI CESTAT |
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