SERVICE TAX
2020-TIOL-1565-CESTAT-MUM
HDFC Standard Life Insurance Company Ltd Vs CCE
ST - Both the appellants are in business of offering 'life insurance' products to policyholders in exchange for premium - The dispute is not about evasion of tax - There is no allegation that the credit taken by appellant, at the time of procurement of services, were not in accordance with the law - The allegation is restricted to the subsequent failure in neutralizing the credit to the extent of not being attributable to taxable 'output services' - It is of interest, therefore, that the mandate of rule 6(3) of CCR, 2004, intended for compensatory reversals of such portion of credit of tax paid on 'input services' that was permitted to be availed in entirety on procurement but not utilized entirely for rendering of 'taxable services', and to be invoked upon failure to maintain separate accounts for the two categories, is claimed as the statutory empowerment in impugned order - The dispute has its genesis in not subjecting the entirety of premium to tax from the time that service in relation to 'life insurance' was incorporated in section 65(105) of FA, 1994 but was, by a series of amendments, expanded within the premium payable by policy holder - Even after the last of the changes before that tax regime ended on 30th June 2012, the entirety of premium was not subject to tax as a certain portion therein could not be attributed to service - Even the two inclusions, effected in 2008 and 2010, could not be said to have incorporated a new service for taxation as the former depended on deeming of service for coverage by a new enumeration without going beyond the premium and the latter, too, not only did not travel beyond the premium but also remained within 'life insurance' as the activity under coverage - Hence, new identifiable 'taxable services' were not the subject of the impugned levy - Even if these were to considered as new 'taxable services' the question of harmonizing the proposition of Revenue with the scheme of tax arises - Invoking of section 73 for recovery is restricted only to such consideration that was legally subject to tax for the period of dispute and retrospective taxability, or non-taxability, as in this case, is not contemplated therein - Hence, Tribunal can reasonably deduce that legislative intent of inclusive aspect of 'exempted service' did not contemplate subsequent incorporation as the test of exemption - Nevertheless, Tribunal must travel on to ascertain the legislative intent - There are certain activities that may well be beyond the competence of the Union to tax and, thereby, beyond contemplation for inclusion in section 65(105) of Finance Act, 1994 - 'Trading' is one which comes to mind immediately and yet another is 'works contract' with a catena of decisions based on exclusion of competence to tax by the Union - Such services being beyond the realm of taxation are, acknowledgedly, existent by negation of jurisdiction - It is but natural that the incidence of tax on 'inputs' and 'input services' employed for rendering such services must be borne by provider of service and recovered through pricing instead of being privileged to neutralize it by set off of taxes paid - The deliberate addition of inclusive aspect in the definition of 'exempted services' is thus warranted to provide for that - Furthermore, the collection of premia in excess of the actuarial determination of probability of payout from holders of policies that are not vanilla 'life insurance' is intended for investment to enable payment of the endowment contracted with the policy holder - Such investments yield returns that allow for compensating the policy holder and cannot, therefore, be consideration for service that is taxable under the entry proposed in the notice - While the premium for 'risk cover' is aggregated and subsumed, as it is, for administration of insurance business and investment is also not delinked from the binarity probability – death or life – that impacts the timing of payout - It is the consideration for this bundle of services that was intended to be taxed at different stages in the evolution of the entry relating to 'life insurance' and the only service rendered by the appellants - Investment is not a service rendered to the policy holder and, even when it was incorporated in section 65 (105) (zzzzf), the disaggregation was a delineation artificially effected by law to tax a portion of the administrative costs incurred by the insurer in pursuance of its business - Hence, it can be concluded that there is only one service and that is 'risk cover' with attendant payouts contingent upon death or maturity; subsequent taxation by creating a service within, and assigning a value to it, was not intended to cover a new service - Both were extractions from the expenditures incurred by the insurer in relation to the policy - In the light of lack of definition of 'service', the finding that the inclusive portion of the definition of 'exempted service' is restricted to certain services and settled law supra, the proposition of Revenue fails - The appeals are, therefore, allowed by setting aside the impugned order: CESTAT
- Appeals allowed: MUMBAI CESTAT
2020-TIOL-1564-CESTAT-DEL
Entertainment World Developers Pvt Ltd Vs CC, CE & ST
ST - Rule 2(l) of CCR, 2004 - Appellant is registered with the Service Tax Department for various services including Renting of Immovable Property, Selling of space or time slots, Maintenance or repairs etc. - Advertisement and Business Promotion, Bank Charges, Brokerage, Housekeeping Services, Insurance Service, Legal and Professional Service, Manpower Consultancy Service, Rent for hiring of immovable property, Security services, Telephone & Internet Services are Input services, credit admissible: CESTAT [para 12]
ST - Renting of immovable property service - Appellant has submitted that they have filed declaration under VCES, 2013 for tax dues of Rs.83,09,571/- on 24.12.2013, for the period April, 2011 to December, 2012 which includes the outstanding amount of Rs. 66,48,166/-, therefore, the show cause notice for the said amount of Rs. 66,48,166/- is not maintainable - Adjudicating authority is directed to verify the challans for payment of service tax alongwith calculation as furnished by the appellant - The appellant is directed to file a copy of the calculation chart alongwith evidence of payment of service tax before the adjudicating authority for verification - If any amount is found to be short paid, the same shall be deposited on being so pointed out by the adjudicating authority - The excess amount deposited, if any, shall be adjusted in accordance with law - The appeal is allowed with consequential benefits: CESTAT [para 13]
- Appeal allowed: DELHI CESTAT
CENTRAL EXCISE
2020-TIOL-1563-CESTAT-DEL
CCE Vs Hindustan Zinc Ltd
CX - Once the proportionate reversal of CENVAT credit takes place, it tantamounts to non availing of the input service credit - Such being the position, the imposition of penalty of Rs. 30,00,000/- upon the Respondent in respect of the electricity sold to the Electricity Board is bad in law - Cross-objections by the assessee are accordingly, allowed and the imposition penalty of Rs. 30,00,000/- upon the Respondent is set aside: CESTAT [para 11, 12, 14]
- Cross objections allowed: DELHI CESTAT
CUSTOMS
2020-TIOL-171-SC-NDPS-LB
Tofan Singh Vs State Of Tamil Nadu
Statement recorded u/s 67 cannot be used as a confessional statement in the trial of an offence under the NDPS Act: SC by Majority
Officers who are invested with powers u/s 53 of the NDPS Act are 'police officers' within the meaning of s.25 of the Evidence Act: SC by Majority
Confessional statement made to NCB officers would be barred under s.25 of the Evidence Act, and cannot be taken into account in order to convict an accused under the NDPS Act: SC by Majority
NDPS - Any interpretation which would whittle down the fundamental rights of an accused based solely on the designation of a particular officer, would fall foul of Article 14: SC by Majority
Arriving at a conclusion that a confessional statement made before an officer designated under NDPS Act can be the basis to convict a person would be doing away with s.25 of the Evidence Act, and be a direct infringement of the constitutional guarantees contained in Articles 14, 20(3) and 21: SC by Majority
Facts:
+ Division Bench of the Supreme Court had in its order dated 8 th October 2013 [2013-TIOL-51-SC-NDPS] opined that the matter needs to be referred to a larger Bench for re-consideration of the issue as to whether the officer investigating the matter under NDPS Act would qualify as police officer or not.
+ Furthermore, the other related issue viz. whether the statement recorded by the investigating officer under Section 67 of the Act can be treated as confessional statement or not, even if the officer is not treated as police officer also needs to be referred to the larger Bench, inasmuch as it is intermixed with a facet of the 1st issue as to whether such a statement is to be treated as statement under Section 161 of the Code or it partakes the character of statement under Section 164 of the Code.
Held:
Majority Order:
++ The officer who is designated under section 53 [of the NDPS Act] can, by a legal fiction, be deemed to be an officer in charge of a police station, or can be given the powers of an officer in charge of a police station to investigate the offences under the NDPS Act.
++ Whether he is deemed as an officer in charge of a police station, or given such powers, are only different sides of the same coin – the aforesaid officer is not, in either circumstance, a police officer who belongs to the police force of the State. To concede that a deeming fiction would give full powers of investigation, including the filing of a final report, to the designated officer, as against the powers of an officer in charge of a police station being given to a designated officer having only limited powers to investigate, does not stand to reason, and would be contrary to the express language and intendment of section 53(1).
++ Another argument is that police officers or policemen who belong to the police force are recognized in the NDPS Act as being separate and distinct from the officers of the Department of Narcotics, etc. This argument has no legs on which to stand when it is clear that the expression “police officers” does not only mean a police officer who belongs to the State police force, but includes officers who may belong to other departments, such as the Department of Excise in Raja Ram Jaiswal , who are otherwise invested with all powers of investigation so as to attract the provisions of section 25 of the Evidence Act.
++ Further, if the distinction between police officer as narrowly defined and the officers of the Narcotics Control Bureau is something that is to be stressed, then any interpretation which would whittle down the fundamental rights of an accused based solely on the designation of a particular officer, would fall foul of Article 14, as the classification between the two types of officers would have no rational relation to the object sought to be achieved by the statute in question, which is the prevention and detection of crime.
++ To arrive at the conclusion that a confessional statement made before an officer designated under section 42 or section 53 [of NDPS Act] can be the basis to convict a person under the NDPS Act, without any non obstante clause doing away with section 25 of the Evidence Act, and without any safeguards, would be a direct infringement of the constitutional guarantees contained in Articles 14, 20(3) and 21 of the Constitution of India.
++ The judgment in Kanhaiyalal (supra) then goes on to follow Raj Kumar Karwal (supra) in paragraphs 44 and 45. For the reasons stated, both these judgments do not state the law correctly, and are thus overruled by us. Other judgments that expressly refer to and rely upon these judgments, or upon the principles laid down by these judgments also stand overruled.
++ Judgments of Noor Aga (supra) and Nirmal Singh Pehlwan v. Inspector, Customs (2011) 12 SCC 298 are correct in law.
Conclusion:
+ Officers who are invested with powers under section 53 of the NDPS Act are “police officers” within the meaning of section 25 of the Evidence Act, as a result of which any confessional statement made to them would be barred under the provisions of section 25 of the Evidence Act, and cannot be taken into account in order to convict an accused under the NDPS Act.
+ A statement recorded under section 67 of the NDPS Act cannot be used as a confessional statement in the trial of an offence under the NDPS Act.
Minority view:
++ A statute may expressly make Section 173 of the Cr.P.C applicable to inquiries and investigations under that statute. However, in the case of a statute like the NDPS Act, where the provisions of the Cr.P.C do not apply to any inquiry/investigation, except as provided therein, it cannot be held that the officer has all the powers of a police officer to file a report under Section 173 of the Cr.P.C.
++ The NDPS Act does not even contain any provision for filing a report in a Court of law which is akin to a police report under Section 173 of the Cr.P.C.
++ As per the well established norms of judicial discipline and propriety, a Bench of lesser strength cannot revisit the proposition laid down by at least three Constitution Benches, that an officer can be deemed to be a police officer within the meaning of Section 25 of the Evidence Act only if the officer is empowered to exercise all the powers of a police officer including the power to file a report under Section 173 of the Cr.P.C.
++ Provisions of the Cr.P.C do not apply to an inquiry/investigation under the NDPS Act except to the limited extent provided in Section 50(5) and 51. Section 173 of the Cr.P.C has not been made applicable to the NDPS Act.
++ Judgment of this Court in Raj Kumar Karwal (supra), which has reaffirmed the verdict of three Constitution Benches does not require reconsideration. Nor does Kanhaiyalal (supra) require reconsideration.
- Reference answered: UPREME COURT OF INDIA
2020-TIOL-1824-HC-P&H-CUS
Abnashi Leather Store Vs UoI
Cus - In February 2019, petitioner placed an order for import of one consignment comprising of 'Bovine Crust Leather' from its supplier situated in Pakistan - On 16.02.2019, petitioner filed Bill of Entry after entry of goods within the territory of India at the Attari Border, for clearance of the goods imported at the port of Land Customs Station, Attari, Amritsar - However, respondent No.1, vide Notification No.05/2019 dated 16.02.2019 enhanced the Customs Duty on all goods imported from Pakistan @ 200% - On 20.02.2019, respondent No.3 re-assessed the Bill of Entry to 200% customs duty as against the original tariff rate as declared in the bill of entry - Petitioner, vide letters dated 16.02.2020 requested respondent NO.4 not to initiate auction proceedings and further requested respondent No.2 to permit clearance of the goods since Bill of Entry was filled prior to notification dated 16.02.2019 - The respondents neither responded to the communication of petitioner nor permitted the release of goods, therefore, present petition filed challenging the validity and legality of Notification dated 16.02.2019 as also the reassessment of Bill of Entry dated 16.02.2019 passed by the respondents to levy duty as per the said notification.
Held: Question for adjudication in the instant petition has already been answered by a Division Bench of this Court, vide judgment dated 26.08.2019 passed in M/s Rasrasna Food Pvt. Ltd. = 2019-TIOL-1950-HC-P&H-CUS [duly confirmed by the Hon'ble Supreme Court vide its decision dated 23.09.2020 [2020-TIOL-157-SC-CUS-LB]] - Writ petition stands allowed and it is held that the petitioners would be liable to pay duty as was applicable at the time of filing/generating of bill of entry on EDI system coupled with the fact of the imported goods having entered territory of India on 16.02.2019 prior to the issuance of the impugned notification - The Respondent(s) directed to release goods within seven days on payment of duty as declared and assessed, if not already paid, ignoring the impugned Notification No. 5/2019 : High Court
- Petition allowed: PUNJAB AND HARYANA HIGH COURT
2020-TIOL-1823-HC-KERALA-CUS
M Sivasankar Vs Superintendent Of Customs
Cus - Kerala Gold smuggling case - Case registered by Customs Commissioner ATC is based on an allegation that the persons named Sarith, Swapna and Sundeep along with several other accused smuggled primary gold from abroad through diplomatic channel of UAE consulate - Applicant, who was working as Principal Secretary (Information Technology) and also as Secretary to the Chief Minister of Kerala, seeks pre-arrest bail - applicant apprehends that in case he is arrested, he too (like Sarith) may be subjected to third degree methods of questioning, which would jeopardise his health; that applicant is willing to cooperate with the investigation and there is no reason to believe that he may abscond; that custodial interrogation is, therefore, not required; that he is willing to abide by any condition that may be imposed by this Court.
Held: An offence under the Customs Act is undoubtedly an economic offence of grave nature and the Supreme Court has held in a number of cases, including in P. Chidambaram v. Directorate of Enforcement [(2019) 9 SCC 24] , that power under Section 438 Cr.PC being an extraordinary remedy has to be exercised sparingly; more so, in cases of economic offences, and that economic offences stand as a different class as they affect the economic fabric of the society; that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail - The applicant has not yet been made an accused but he apprehends arrest - There are no sufficient materials to show that he will be arrested - Merely because he was questioned for 60 hours by the Customs Department does not indicate that he is intended to be made an accused - The fact that the applicant was in constant contact with one of the prime witness, namely Swapna Suresh, and that he had even volunteered to help her by contacting his Chartered Accountant and asking him to assist her in managing her finances indicates that there is a fair possibility that applicant knew about the involvement of Swapna Suresh in the alleged smuggling activity - Whether the applicant was himself actively involved in the commission of the offence is something which is to be investigated and found out - Relying on the decision of the Supreme Court in Padam Narain Aggarwal (2008-TIOL-187-SC-CUS), Bench finds that the power of the Customs Department to question the applicant under Section 108 cannot be curtailed by granting anticipatory bail - The relief sought for is undoubtedly premature - Therefore, the applicant is not entitled to anticipatory bail - The bail application, is therefore, dismissed: High Court [para 10, 11]
- Application dismissed: KERALA HIGH COURT
2020-TIOL-1822-HC-MAD-CUS
Sri Abhisek India Vs CC
Cus - Petition is filed seeking for a direction to the respondents to refund the amount of Rs.3,07,141/- claimed vide application dated 11.02.2014 by giving effect to the order dated 20.12.2013 passed by the Commissioner (Appeals), Trichy - Petitioner states that in response to their application, the third respondent vide letter dated 10.03.2014 informed that the department proposes to file appeal against the order of Commissioner(A) and, therefore, the petitioner would be required to await the outcome of the proposed appeal - Petititioner further informs that, to their knowledge, no appeal has been preferred by the department - No counter affidavit filed till date by respondent revenue.
Held: Court is of the considered view that no useful purpose would be served if this writ petition is kept pending - Court, therefore, directs the third respondent to consider the refund application of the petitioner dated 11.02.2014 seeking for the refund of excess duty paid by them within a period of four weeks and pass final orders on merits and in accordance with law - Petition disposed of: High Court [para 4, 6, 8]
- Petition disposed of: MADRAS HIGH COURT
2020-TIOL-1562-CESTAT-MAD
Suresh Rajaram Vs CC
Cus - The assessee tried to bring the gold bars from Singapore into India without payment of applicable duties and without even declaring the same when he was duty bound to do so - The purchase of the same and final destination/usage may not be of any significance when such an act of smuggling is carried out, since what is important is primarily the declaration, followed by the payment of applicable duties/taxes - Even though the assessee has pleaded ignorance and co-operation, the same would at best be a mitigating factor which ipso facto would not take away the guilt of trying to bring in the goods without payment of duty - Further, assessee has also pleaded that he was a law abiding citizen but when the law mandates a minimum declaration which has not been complied with here in the case on hand, the plea of assessee would also not going to help them - Moreover, the serious dispute as to the dates on invoices with consecutive numbers is alone an incriminating factor not at all explained by assessee - No merit found in the appeal and therefore, same is rejected: CESTAT
- Appeal rejected: CHENNAI CESTAT |
