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SERVICE TAX
2020-TIOL-1855-HC-DEL-ST
Bhawna Malhotra Vs UoI
ST - SVLDRS, 2019 - Petitioner states that the respondent has rejected the petitioner's rectification application on the ground that Section 128 of the Finance Act, 2019 confers limited powers upon the Designated Committee and it is not empowered to rectify errors committed by the petitioner/applicant/ declarant/assessee - Petitioner emphasises that the error in the present case was a "clerical" error that was apparent on the face of the record and the designated committee was statutorily obliged to rectify the same; that if the rectification is carried out, no undue benefit would accrue to the petitioner; that Section 154 of the Customs Act, 1962, which is pari materia to Section 128 of SVLDRS, has been held by Courts to include in its sweep the errors committed by the importer/declarant.
Held: From a reading of Section 128, it is apparent that the designated committee can modify its order to correct an arithmetical error or clerical error which is apparent on the face of record - Section 128 of SVLDRS does not state that an error/mistake apparent on the face of the record that can be rectified is of the designated committee alone - An error/mistake apparent on the face of record means a patent, manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it - In pursuance to the show cause notice dated 24th October, 2018, the petitioner had filed the declaration dated 30th December, 2019 - It is not disputed that at the time of filing the declaration, the said show cause notice was pending - In the counter affidavit filed on behalf of respondent no.2, it has been admitted that the petitioner would have been entitled to the benefits of the Scheme if the declaration had been filed under the correct category i.e. "litigation" - Accordingly, the petitioner was bound to file her declaration under the "litigation" category, however, she filed her declaration under the wrong category i.e. "voluntary disclosure" - The petitioner realised the aforesaid error after issuance of Form SVLDRS-3 dated 03rd January, 2020 by respondent no.2 and made a representation dated 29th January, 2020 to the Assistant Commissioner, SVLDRS seeking rectification i.e. within the prescribed time of 30 days under Section 128 of SVLDRS - It is pertinent to mention that if a declarant/assessee/applicant claimed relief in the category of "litigation" and tax dues was Rs. 50,00,000/- or less, as actually entitled in the present case - then she would be entitled to relief of 70% of the tax dues - However, if the declarant/assessee/ applicant filed the declaration under "voluntary disclosure" category, as petitioner did in the present case, then no relief with respect to the tax dues was available - Consequently, the petitioner by making a declaration under "voluntary disclosure" category instead of "litigation" category stood to gain nothing - In view of the aforesaid facts, this Court is of the opinion that the petitioner's mistake is not only a procedural/clerical error that is apparent on the face of the record but is also of an inadvertent nature not deliberately made to claim an undue benefit which the party was otherwise not entitled - Consequently, an error committed by the assessee, which inevitably leads to an error in the order of the designated committee, can be rectified by the designated committee under Section 128 of SVLDRS - Court is also of the view that if the narrow approach adopted by the respondent no.2 is accepted, the same would defeat the very intent and purpose of SVLDRS - Stand of the respondent no. 2 that there is no bar on filing of multiple declarations by any assessee is misconceived on facts and untenable in law - Also no useful purpose would be served by making the petitioner to file repeated declarations when the petitioner had already sought for necessary rectification in the first declaration filed by her - issues raised in the present writ petition are no longer res integra as the Gauhati High Court in similar facts in M/s. Urban Systems Vs. Union of India and 4 Ors., = 2020-TIOL-1494-HC-GUW-ST , has allowed a writ petition - impugned order is set aside and the respondent No.2 is directed to rectify the declaration dated 30th December, 2019 and consider it as one filed under the "litigation" category instead of "voluntary disclosure" and process the same in accordance with law within four weeks - writ petition stands disposed of: High Court [para 12 to 18, 20 to 24]
- Petition disposed of: DELHI HIGH COURT
2020-TIOL-1847-HC-DEL-ST
Vianaar Homes Pvt Ltd Vs Assistant Commissioner
ST - Challenge is laid to the jurisdiction, authority and legality of the action of the Respondents initiated in terms of Rule 5A of the Service Tax Rules, 1994, read with Section 174(2)(e) of the Central Goods and Services Tax Act, 2017 for conducting audit/verification of documents and records at the business premises of the Petitioner for the period of F.Y. 2014-15 to 2016-17 (up to June 2017) or for the period since last audited [ the disputed period ].
Held: Mere bringing into force of the CGST Rules, 2017 does not mean that the Service Tax Rules, 1994 are not saved - If we interpret that the Rules are not saved and kept operative, the saving clause, as well as applicability of Section 6 of the General Clauses Act, would be rendered meaningless -In the disputed period (for which the scrutiny and audit is being carried out by the Respondents) Chapter V of the Finance Act, 1994 was very much on the statute book - The obligation to pay service tax arose at the time of rendering taxable service, which fell during the disputed period, at which time Chapter V was very much in force - Rule 5A of Service Tax Rules, 1944 framed under the repealed/omitted chapter V of the Finance Act, 1994, is saved - Court has in Aargus Global ( 2020-TIOL-593-HC-DEL-ST ) come to the conclusion that Section 174 of the CGST Act, 2017 expressly seeks to preserve the powers of the central authority to, inter alia , institute or continue an investigation, inquiry etc. and no contrary intention is exhibited from the said provision: High Court [para 8, 13, 15, 21, 22, 23, 30, 31, 33, 34]
Facts:
+ Petitioner has challenged, interalia the letter dated 01.11.2019 by virtue whereof the Respondents have commenced the audit/verification, on the ground that the same is void ab initio, being wholly without jurisdiction as well as without any statutory or legal authority.
+ The primary hypothesis for assailing the action of the Respondents is founded on the premise that w.e.f. 01.07.2017, by the advent of the CGST Act, the Respondents cannot take recourse to a subordinate legislation (i.e. Rule 5A Service Tax Rules, 1994) framed under Chapter V on the Finance Act, 1994, which, by virtue of Section 173 of CGST Act, stands omitted.
+ According to the Petitioner, the repeal and saving provision viz . Section 174 does not specifically save Rule 5A of the Service Tax Rules, 1994.
+ Without prejudice to the afore-noted contention, it is contended that the saving provision and Section 6 of the General Clauses Act, 1897 saves only those cases where the obligation/liability stood incurred or accrued prior to the date of repeal.
+ The duty, tax etc. that is within contemplation of the saving clause is only that which falls within the ambit of section 72 & 73 of the Finance Act, 1994; thatRule 5A proceedings are in the nature of a roving enquiry that would not result in tax becoming due, and, therefore, cannot be resorted to in the facts of the present case.
Held:
+ Court has in Aargus Global ( 2020-TIOL-593-HC-DEL-ST ) rejected the argument that Rule 5A of the Service Tax Rules does not survive the enactment of CGST Act, 2017.
+ The Court has extensively examined Section 173 and Section 174 of the CGST Act and come to the conclusion that the intention of the Parliament was clearly to save not only the ongoing but also the initiation of fresh investigation, enquiry, verification etc. in respect of the acts and omission relating to inter alia the erstwhile service tax regime.
+ This Court has also held that Service Tax Rules, 1994, being subordinate legislation would fall within the range of the parent Act that has been specifically saved, and, it's non-inclusion by title, in the saving clause, would not have a bearing on the applicability of the saving statute.
+ The Court has come to the conclusion that Section 174 of the CGST Act, 2017 expressly seeks to preserve the powers of the central authority to, inter alia , institute or continue an investigation, inquiry etc. and no contrary intention is exhibited from the said provision.
+ The Court purposely delved into the effect of Section 6 of the General Clauses Act and held that the power of the competent authority stood preserved also by virtue of the said provision.
+ Bench tends to agree with senior standing counsel that nothing really survives in the present petition. The aforesaid decision in fact entirely traverses all the contentions urged in the present petition.
+ There is no particular ground that can be regarded as distinctly alive or necessitating another probe.
+ In the instant case, the repeal and re-enactment is by way of a Central Act. Section 6 of the General Clauses Act squarely applies. This is also specifically provided in the repeal and saving provision of Section 174. The legislative intent is palpable from the saving provision which unequivocally and unambiguously stipulates that the rights, obligations, privileges and liabilities acquired, accrued or incurred etc. shall not be affected by the repeal. The repeal of old laws, and the new corresponding tax replacing the service tax regime in a modified form, imperatively requires the old provisions to continue and apply.
+ Furthermore, the earlier view that section 6 applies only in the case of repeal and not omission as held in Rayala Corporation ( 2002-TIOL-295-SC-FERA-LB ), and followed in Kolhapur Canesugar case [ 2002-TIOL-188-SC-CX-CB ] , no longer holds good in view of the later decisions of the Supreme Court in Fibre Boards Pvt. Ltd. v. CIT Bangalore , [ 2015-TIOL-178-SC-IT ], and M/S Shree Bhagwati Rolling Mills v. CCE ,[ 2015-TIOL-283-SC-CX ] which have discussed Rayala Corporation (supra) and Kolhapur Canesuga r (supra) cases at length.
+ Given that sub-section 2 of Section 174 of the CGST Act expressly saves all pending and new proceedings to be initiated under the old regime, and sub-section 3 of Section 174 allows the operation of Section 6 of the General Clauses Act, the judgment of Kolhapur Canesugar (supra) is inapplicable.
+ Service tax was originally levied only on a few services, but w.e.f. 01.07.2012, the service tax regime was based on the concept of “Negative List”, which meant that all services, except those which found mention in the list were amenable to service tax. Besides service tax, the indirect taxes in our tax system included excise duty, value added taxes, etc.
+ Recently, the centre and the states jointly decided to revamp the indirect tax structure. For this purpose, the Constitution (One Hundred and FirstAmendment) Act, 2016 was promulgated.
+ This introduced the Goods and Services Tax regime in India. Following this amendment, GST laws [comprising of Central GST, Union Territory GST, Integrated GST and State GST Acts], were promulgated and the country steered into a new indirect taxation regime.
+ The CGST Act, being one of the GST laws, is thus essentially a consolidating Act that subsumes many indirect taxes. The reason we are highlighting the concept of GST and drawing out this distinction is to understand the legislative intent of the saving provisions.
+ The CGST laws thus re-enact the indirect taxes, including service tax and excise duty, but in a fundamentally altered form. The concepts of service tax, excise duty or VAT, no longer exist in their original form under the new system of taxation.
+ After the repeal of the erstwhile legislations, with effect from the date of commencement of GST laws, most of the indirect taxes (including service tax), have ceased to exist and have resurrected in the unique form of GST.
+ As we moved into a new system, the legislature ensured that the repealed laws are saved for a smooth transition. It provided an extensive saving clause under the CGST Act.
+ Despite the elaborate saving clause, the Parliament in its wisdom also added a sub-section (3) to section 174 in following words: " The mention of the particular matters referred to in sub-sections (1) and (2) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with regard to the effect of repeal ”.
+ Clause 174(3) serves the purpose of ensuring the general application of section 6 of the General Clauses Act, 1897, notwithstanding what has been specifically provided under the saving Section 174. This saving provision safeguards, inter alia, that the shift to the new taxation would not affect the previous operation of the amended Act or the repealed Acts.
+ The noticeable aspect is the use of the expression “including scrutiny and audit” and “any other legal proceedings” . The former, as a bracketed portion, works like an explanation.
+ The saving clause is framed in the widest possible language. Sub-section (e) to Section 174(2) also stipulates that such investigation, inquiry etc. may be “instituted, continued or enforce d ” as if the Acts had not been so amended or repealed.
+ Thus, both the saving statute as well as section 6 of the General Clauses Act save the institution of verification and audit proceedings. The conduct of these proceedings is governed by the Service Tax Rules, 1994. Therefore, we would say that section 24 of the General Clauses Act would have a substantial bearing.
+ The factual situation before us is clearly one which is envisaged under the said provision. Section 24 becomes applicable where one enactment is repealed and re-enacted.
+ By virtue of this provision, the rules made under the old Act are to continue in force and shall be deemed to have been made under the new Act. Section 24 of the General Clauses Act, 1897 thus introduces a concept of extending the life of rules, regulations and by-laws made under the old Act.
+ The purpose of Section 24 is to uninterruptedly continue the subordinate legislation that may be made under the Central Act which is repealed and re-enacted, with or without modification. The repealing Act often comes with saving clauses to preserve certain provisions, which if allowed to be obliterated with the repealed Act, would not only destroy the continuity of the object and purpose of the repealing Act, but wreck great hardship and injustice.
+ Thus, general saving statutes such as the General Clauses Act take care of this situation. Section 24 has to be read along with the re-enacted Act in order to comprehend whether the rules framed under the old Act are kept alive even after the repeal of the old Act.
+ If we interpret that the Rules are not saved and kept operative, the saving clause, as well as applicability of Section 6 of the General Clauses Act, would be rendered meaningless. In fact the entire purpose of section 24 is to redress the present situation.
+ Petitioner wants us to draw an inference that although Chapter V of the Finance Act is saved, but these Rules therein are not. This is a wholly incorrect view. In our considered opinion, the CGST Rules stand on a different footing, separate and distinct from the Service Tax Rules, 1994. They do not impinge on the same subject matter.
+ Thus, for the reasons discussed above, coupled with absence of a clear legislative intent to supersede then same, the mere bringing into force of the CGST Rules, 2017 does not mean that the Service Tax Rules, 1994 are not saved.
+ In the instant case, the repeal of the old Act and re-enactment of the new Act is simultaneous. According to the legislature, the repeal alongwith re-enactment was necessary to update the law to make it most suitable to the contemporary concept of indirect taxation.
+ However it did not mean that all investigations, enquiries, audits, assessment proceedings, adjudications and other legal proceedings which form the subject matter of the Service Tax Rules stood abrogated the moment the new law was enacted, or that the officers carrying out the above exercise were stripped of their power to continue with the same because the Service Tax Rules were purportedly not saved.
+ In the disputed period (for which the scrutiny and audit is being carried out by the Respondents) Chapter V of the Finance Act, 1994 was very much on the statute book. The present proceedings cannot be carried out under the GST Rules, because, as explained earlier, the concept of taxation under the GST regime is not the same.
+ For the purpose of adjudication and other aspects related to service tax, the mechanism provided under the Service Tax Rules has to be followed. Thus, Bench is of the opinion that the CGST Rules, 2017 cannot be understood to have superseded the Service Tax Rules, 1994.
+ The service tax rules will continue to govern and apply for the purpose of Chapter V of the Finance Act, 1994. Any interpretation to the contrary would do violence to the repeal and saving clause and section 6 of the General Clauses Act. Moreover, Section 174(2) refers to the deletion of Chapter V of the Finance Act 1994 as an “amendment”, which, as discussed earlier in Parle Biscuits [ 2004-TIOL-105-SC-CT ] , is settled to mean and include a “repeal”, and thus, the amendment of the Finance Act 1994 is squarely covered under the ambit of Section 24 of the General Clauses Act.
+ Petitioner's contention is that the officers visiting the premises for scrutiny and audit are not Proper Officers as envisaged in the Act and Rules. Here, the Petitioner is under a wrong impression gathered by reading the notifications appointing certain officers as GST officers.
+ The proviso to section 3 of CGST Act stipulates a deeming provision by virtue whereof, the Central Excise Officer who is appointed under the Central Excise Act, is deemed to be an officer under the provisions of the CGST Act. This means that the Central Excise Officer continues to be vested with the powers under the Central Excise Act concurrently, and by virtue of the afore-noted proviso, they are deemed to be officers under the CGST Act as well. The appointments under the Central Excise Act were by way of notifications and such officers are continuing to discharge the functions of Central Excise Officers. One such Notification No. 12/2017-Central Excise (N.T.)
+ Nonetheless, w.e.f. 22.06.2017, i.e. the day section 3 of CGST came into force, there are two parallel notifications – one under the CGST Act and another under Central Excise Act. Nothing has been shown by the Petitioner to establish that the officers carrying out the verification and audit are not the Proper Officers, except for citing the Notification No. 2/2017-Central Tax. By reading this notification, we cannot draw an inference to the contrary, in the manner that the Petitioner has conceived. Thus, we are of the view that the Petitioner's contention is without substance and if the officer carrying out scrutiny and audit is also vested with the powers under the Central Excise Act, he would be well within his powers to do so.
+ Bench does not find any merit in the Petitioner's submission that the expression “duty, tax, surcharge, fine, penalty, interest as are due or may become due” appearing in section 174(2)(d) can only mean such duty which has been crystalized prior to the 01.07.2017.
+ The audit/verification is a process prior to adjudication. If audit/verification would lead to any tax not paid or short paid, the adjudicatory process would necessarily follow. It can, therefore, not be construed that the service tax shall become due only consequent to the exercise of powers under sections 72 and 73 of the Finance Act, 1994.
+ The obligation to pay service tax arose at the time of rendering taxable service, which fell during the disputed period, at which time Chapter V was very much in force.
+ If service tax has not been paid or short paid, the Service Tax Department would acquire the right to recover the said tax. This is done inter alia on the basis of the best judgment assessment under section 72, and by initiating recovery proceedings under section 73 of the Finance Act, 1994.
+ Therefore,' such duty' cannot be construed to mean only that which forms the subject matter of proceedings under section 72 and 73 of the Finance Act. The necessary corollary is that the investigation, inquiry, verification (including scrutiny and audit) that falls within the ambit of section 174(2) of the Act would include proceedings that were initiated prior to action under section 72 and 73 of the Finance Act, 1994.
+ The Supreme Court in Harnek Singh (2002) 3 SCC 48, while interpreting the words " anything duly done or suffered thereunder ” used in clause (b) of Section 6 of GCA (which are also found in Section 174(2)(b) of the CGST Act), has observed that these words used by the legislature in a saving clause are intended to provide, unless a different intention appears, that the repeal of an Act would not affect anything duly done or suffered thereunder.
+ Thus, having regard to the language used in the saving clause of the CGST Act as well as Sections 6 and 24 of the General Clauses Act, along with the legislative intent behind the repeal and enactment, Bench holds that Rule 5A of Service Tax Rules, 1944 framed under the repealed/omitted chapter V of the Finance Act, 1994, is saved.
+ There is no merit in the petition, hence dismissed.
- Petition dismissed : DELHI HIGH COURT
2020-TIOL-1585-CESTAT-MAD
Rockey Marketing Chennai Pvt Ltd Vs CST
ST - Appellants had entered into a Business Solutions Agreement and another Business Promotion Agreement with M/s.Amazon Ltd. - The appellants were thus engaged not only in trading but also providing taxable service - The appellants utilized input services provided by M/s.Amazon for engaging in trading as well as providing taxable service - They were advised that they were not eligible to avail credit on such service tax paid to M/s.Amazon and, therefore they, as an abundant caution to avoid penal proceedings, reversed the credit by making cash payment along with interest for the input tax credit availed by them - This was informed to the department vide their letter dt. 17.12.2015 - Later, they obtained legal advice that they would be eligible to take proportionate credit on the taxable services provided by them - Since the appellants had utilized the input services for trading (exempted services) as well as taxable output services, they opted for reversal of proportionate credit as provided under Rule 6(3A)(ii) of CCR, 2004 - As the credit reversed ( by making cash payment ) was in excess of the proportionate credit to be reversed, they filed refund claims of Rs.47,38,050/- and Rs.6,17,934/- respectively on 17.2.2016 - Original authority rejected the refund claim entirely but the Commissioner (Appeals) held that appellants have to reverse/pay credit along with interest as per Rule 6(3A)(i) @ 7% of the value of exempted services and, therefore, are eligible for refund of only Rs.4,31,586/- and appropriate interest - Aggrieved, the appellants are before Tribunal.
Held: It can be seen that the appellant has been compelled to reverse credit @ 7% of the value of exempted services under Rule 6(3)(i) read with Rule 6(3D)(c) only for the reason they have not followed the procedure of intimating the department with regard to the option exercised - The Tribunal in the case of Philips Carbon Black Ltd . ( FINAL ORDER NO.76973-76975/2019 dated December 17, 2019 ) has observed that non-compliance with the procedure prescribed under Rule 6(3A) of the CCR does not result in losing substantive right to avail the option of reversing proportionate credit as envisaged in Rule 6(3)(ii); that the procedural lapse is condonable and denial of substantive right is unjustified - Bench has no hesitation to hold that the view taken by the Commissioner (Appeals) that the appellant has to reverse credit as per Rule 6(3)(i) is against the provisions of law - Appellant has furnished details of the credit availed and the amount reversed by them along with the letters issued to department - This amount, however, has to be verified - As t he indirect tax regime has been shifted from Service Tax to GST, appellant would be eligible for cash refund of such amount - For the limited purpose of quantification of the amount eligible for refund, matter is remanded to the adjudicating authority - Needless to say, refund being of input service credit, the question of unjust enrichment does not arise - The appeal is allowed: CESTAT [para 4, 5]
- Appeal allowed: CHENNAI CESTAT
2020-TIOL-1576-CESTAT-BANG
South Indian Bank Vs CC, CE & ST
ST - Insurance service provided by Deposit Insurance and Credit Guarantee Corporation to the banks is an "input service" - CENVAT credit of service tax paid for this service can be availed by the banks for rendering 'output services' - Following the ratio of the Larger Bench decision of this Tribunal in SOUTH INDIAN BANK - 2020-TIOL-861-CESTAT-BANG-LB , the appeals of the banks are allowed and the appeals filed by the Department are dismissed : CESTAT [para 5, 6]
- Assessee appeals allowed/Revenue appeals dismissed: BANGALORE CESTAT
2020-TIOL-1575-CESTAT-BANG
Microsoft India R & D Pvt Ltd Vs CST
ST - Refund - Rule 5 of CCR read with notification 5/2006-CX(NT) - Assistant Commissioner rejected the claim of refund and the appeal filed before the Commissioner(A) was rejected on the ground of being time barred - In appeal before the CESTAT, the appellant submits that they never received the copy of the Order-in-Original till a photocopy of the same was received by Registered Post on 07/12/2012 and thereafter the appeal was filed on 05/02/2013 which is within a period of two months from date of receipt of the Order-in-Original thereby complying the provisions of Section 85(3A) of the Finance Act, 1994 - AR submitted that the photocopy of the Order-in-Original was also sent to the same registered address to which the Order-in-Original was dispatched and since the said photocopy of the Order-in- Original was received by the appellant on the same address, therefore, it is presumed that the Order-in-Original was served on the appellant; that the burden of proof that the order was not received is on the appellant.
Held: As per the respondent, the Order-in-Original dt. 29/02/2012 was issued on 09/03/2012 and the appellant has filed the appeal before the Commissioner on 05/02/2013 which is beyond the period as prescribed in Section 85(3A) of the Finance Act, 1994 - Bench finds that the Department has not been able to establish by any cogent evidence that the Order-in-Original was actually delivered to the appellant - Further, the appellant was not aware of the issuance of the Order-in-Original dt. 29/02/2012 and they wrote 3 follow-up letters dt. 11/07/2012, 21/08/2012 and 17/10/2012 enquiring about the status of the adjudication but these letters, in spite of the fact that they were received by the Department, were not responded to at all by the Department and the Department did not inform the appellant regarding the status of their adjudication - Not only this, the appellant has also filed a RTI application before the CBEC but the same has not yielded any result - High Court of Rajasthan in the case of R.P. Casting Pvt. Ltd. 2016-TIOL-1173-HC-RAJ-CX and Vinod Choudhary 2016-TIOL-956-HC-RAJ-CX have also categorically held that the Department has to prove the delivery of the orders and dispatch of the order is not sufficient for the purpose of calculating the period of limitation for filing the appeal before the Commissioner(Appeals) - Larger Bench in Margra Industries Ltd - 2006-TIOL-1223-CESTAT-DEL-LB has come to the conclusion that dispatch of adjudication order by speed post and registered post would not amount to actual service in the absence of proof of delivery - impugned order is not sustainable in law, therefore, same is set aside and the matter is remanded to the Commissioner(A) for deciding the appeal on merits after following the principles of natural justice: CESTAT [para 7 to 9]
- Matter remanded: BANGALORE CESTAT
CENTRAL EXCISE 2020-TIOL-1574-CESTAT-DEL
Arora Products Vs CCE & CGST
CX - The issue arises is, whether the demand of interest is to be calculated from the date of clearance of goods upto the date of actual payment of duty or from the date of determination of due amount till actual date of payment of duty - Similar issue arose before Division Bench of Tribunal in case of Lucas TVS Ltd. 2010-TIOL-445-CESTAT-MAD , wherein the facts were that vide adjudication orders dated 9.1.1995 and 10.02.1995, the demand of over Rs.34 lakhs was determined - These demands were set aside by Commissioner (A) vide an order dated 20.06.1995 - The O-I-A was set aside by Tribunal and the matter was remanded to Commissioner (A) vide Final Order dated 24.01.1997 - The demand was re-confirmed by Commissioner (A) vide order dated 26.12.2000 - It was the contention of Revenue that since the demand of Rs.34 lakhs, earlier confirmed in Jan., /Feb., 1995, although set aside by the Commissioner (A) earlier in June, 1995, was restored by subsequent order of Commissioner (A) dated 26.12.2000 - As the determination of duty had taken effect in Jan./Feb., 1995, therefore, due to delay in payment of duty, the assessee was liable to pay interest from August, 1995 - This Tribunal held that final determination can be said to have been made on 26.12.2000 with passing of the order of Commissioner (A) after remand - The Tribunal applying the ratio of ruling of Bombay High Court in case of Blue Star & Another held that the assessee is not liable to pay interest for the period Jan./Feb, 1995 to December, 2000 - In further appeal by the Revenue, the Madras High Court in 2016-TIOL-75-HC-MAD-CX taking notice of the provisions of interest and further taking notice of the ratio laid down by Bombay High Court in Blue Star Ltd. case, held that setting aside of the original order and remanding the matter for de novo consideration means, that there is no order and party is relegated to fresh adjudication and adjudication culminates into an order - Accordingly, holding that determination of duty liability took place only in December, 2000, upheld setting aside of interest for the period from 26.08.1995 to 31.03.2001 - Following the ratio of Madras High Court in case of Lucas TVS Ltd. , the Commissioner (A) has redetermined the duty liability by his order dated 28.02.2015, as the demand was set aside for the period 14.01.2007 to 09.03.2010 and only re-determined for the period August, 2005 to Jan. 2007 - Accordingly, assessee is liable to pay interest for one month i.e. from 1.3.2015 to 31.03.2015, which they have admittedly paid - Accordingly, the impugned order is set aside: CESTAT
- Appeal allowed: DELHI CESTAT
CUSTOMS 2020-TIOL-1854-HC-KERALA-CUS
Swapna Prabha Suresh Vs Superintendent of Customs
Cus - Smuggling of Gold - At the request of the respondent, petitioner's custody was given to the Customs for five days - According to the petitioner, during that five day period she was coerced into giving another statement under Section 108 of the Act, copy of which was not given to her, but is being utilised by other investigating agencies like the Enforcement Directorate and the National Investigation Agency while interrogating her - Hence, it became imperative for the petitioner to obtain a copy of those statements and an application under Rule 222 of the Criminal Rules of Practice ('the Rules') was submitted before the Additional Chief Judicial Magistrate (E.O), for obtaining copies of the Section 108 statements of the petitioner and the other accused along with copies of the occurrence report, seizure mahazar etc. - By Annexure A1 order, the Magistrate directed to issue copies of documents, other than the Section 108 statements - Copies of the Section 108 statements was not issued for the reason that the statements were produced in sealed cover as directed by the Court and the Special Prosecutor had requested to keep them confidential - The interdiction in Section 172(3) Cr.P.C was also cited as a reason to deny the copies - Referring to Rule 222 of the Rules, petitioner submitted that copies of documents produced in court or in the custody of the court are bound to be issued, on an application being filed by a party to the proceedings - Assailing the finding based on Section 172(3) Cr.P.C, it is contended that a statement under Section 108 of the Act is distinct and different from a statement under Section 161 Cr.P.C and hence the interdiction in 172(3) of the Code is not applicable.
Held: Issue arising for consideration is regarding the right of an accused, in a case registered by the Customs, to obtain copies of the Section 108 statements from the jurisdictional court - Difference between Section 108 statement under the Act and Section 161 statement under the Code was considered by the Apex Court in Naresh J. Sukhawani v. Union of India, = 2002-TIOL-387-SC-CUS and wherein it is observed that the statement made before the Customs officials is not a statement recorded under Section 161 of the Criminal Procedure Code, 1973 - Bench finds substance in the contention of the petitioner that the interdiction in Section 172(3) Cr.P.C cannot be relied upon to deny copies of their Section 108 statements to the accused - It is not in dispute that the Section 108 statements were made available for perusal of the court in a sealed cover - The Prosecutor had also requested to keep the statements confidential - Therefore, the statements cannot be termed as documents produced in or in the custody of the court, copies of which are liable to be issued under Rule 222 - Further, as per Rule 225, copies of correspondence or of proceedings which are confidential or are strictly judicial shall not be granted, except under the orders of the court - Hence, discretion is vested with the court to refuse copies, if the documents or proceedings are confidential or strictly judicial in nature - The Magistrate having refused to issue copies of the Section 108 statements finding them to be confidential, Bench finds no reason to interfere with the impugned order - As per the statement filed on behalf of the respondent, copies of relevant papers mandatorily required, including the Section 108 statements was furnished to the petitioner, along with the order made against her under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 and, therefore, the grievance raised in this Crl.MC stands substantially allayed - Crl.M.C is dismissed: High Court [para 13, 14]
- Application dismissed: KERALA HIGH COURT
2020-TIOL-1852-HC-AHM-CUS
Pr.CC Vs Mulchand M Zaveri
Cus - Tribunal has taken the view that if penalty has been imposed upon the firm, a separate penalty cannot be imposed on the partner of the firm under Section 114A of the Act, 1962 – Revenue challenges this conclusion and also views that the Tribunal has committed substantial error of law by reducing the redemption fine considering the quantum of duty evaded in the consignment rather than considering market price of the confiscated goods for determining the quantum of redemption fine.
Held: Bench is of the view that none of the two questions proposed by the Revenue could be termed as the substantial questions of law - In Stoneman Marble Industries ( 2011-TIOL-12-SC-CUS ), it has been held that redemption fine and penalty would essentially be a question of fact – appeal fails and is, therefore, dismissed: High Court [para 5 to 7]
- Appeal dismissed: GUJARAT HIGH COURT
2020-TIOL-1850-HC-AHM-CUS
Imrose Traders Vs UoI
Cus - Short point involved is whether the old and used tires which are reuseable fall within the ambit of the "prohibited goods" - Petitioner informs that the imported goods are lying at the Mundra Port and prays that an interim order be passed to release the goods subject to terms and conditions.
Held: Bench takes notice of the fact that an interim order in identical situation was passed by coordinate Bench in the Civil Application No.9587 of 2015 = 2015-TIOL-3059-HC-AHM-CUS ; that the main matter is still pending for final hearing; that vide the interim order, the respondents were directed to forthwith permit assessment and clearance of the goods imported subject to the conditions viz. (a) The Customs authorities shall depute a Surveyor to check whether the tyres are reuseable with or without retreading; (b) The petitioner shall not clear any goods which are not reuseable and, (c) The responsible person concerned will file an undertaking to the effect that they will sell the imported goods in a manner that they will be reused - The situation being identical in the matter, similar interim directions are issued subject to similar conditions as referred to above - It is provided that the respondents would ensure compliance of the interim directions by the returnable date on 14.12.2020 - Registry shall also notify the Special Civil Application No.8492 of 2015 = 2015-TIOL-3059-HC-AHM-CUS along with the present writ application for hearing: High Court [para 4 to 6]
- Interim order passed: GUJARAT HIGH COURT
2020-TIOL-1573-CESTAT-KOL Ankit Agarwal Vs CC
Cus - The appellant, an individual, had been apprehended by officers of Commissioner of Customs (Preventive) - At that time, the officers claimed that the appellant had been carrying 3 pieces of Gold, weighing 1 Kg each - The Gold was examined and found to be of foreign origin - Hence it was seized, along with a cellphone belonging to the appellant - The appellant's statements were recorded - The appellant was arrested and produced before the CMM, and was later released on bail - Subsequently, an SCN was issued to the appellant, proposing to confiscate the Gold and also to impose penalty on the appellant - Thereafter and o-i-o was passed, confirming the proposals in the SCN - Hence the present appeal.
Held - It is seen that no Panchnama was drawn - Though the Panch witnesses signed on the seizure memo, their particulars like age, parents name, address etc. were not noted - The sanctity of search and seizure is vitiated as proper procedure was not followed; moreover, as the cross examination of the panch witnesses was not accorded, a serious doubt is cast on the reliability of the entire proceedings - These are not facts of the case but the basic legal issues involved in the case - Even though it is a Departmental proceeding, the appellant's right to raise legal issues cannot be taken away - Besides, no proper search of the appellant was conducted at the Railway station from whence he was apprehended - As per the SCN, pieces of gold were found with the appellant at the Railway station as well as the Customs House - The reasons for summoning a person, instead of searching and seizing on the same spot and taking him to the Customs House for detailed search etc. has not been properly explained in the show cause notice and in the o-i-o - However, the authorized representative for the Department submitted that as it was a public place and lot of commotion is likely to develop, the appellant has been summoned to the Customs House for seizure and recording statement etc - However, this is not mentioned in the SCN - Moreover, no Panchnama appears to have been drawn either at the Railway station or at the Customs House. Such method of investigation not only vitiates the proceedings but also casts reasonable doubt on the reliability of the narrative of the Department - We find that that the signatures of two persons, were taken at place meant for the signatures of witnesses, on the inventory; It is also not clear whether the same is a seizure memo - However, as alleged by the appellants name of the father, age, address of the witnesses is not mentioned - This is very unusual for the investigating agencies & it is not understood as to why the officers did not draw a Panchnama in an important case like the present one - As Panchnama is an account of proceedings by the witnesses, the absence of Panchnama takes away the sanctity of the proceedings - It has been submitted by the appellant that initially, he and Shri Kathuria were apprehended from the railway station and were brought to Customs House and were kept in two separate rooms, the SCN mentions that only the appellant was apprehended - In his statement Shri Kathuria is stated to have told that he did not have any dealings with the appellant, though he knew the appellant - Thus the Revenue did not establish that the gold in question was of foreign origin and was smuggled - Therefore, seizure of such gold is not maintainable: CESTAT
- Assessee's appeal allowed: KOLKATA CESTAT |
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