2021-TIOL-618-HC-MUM-ST

New India Civil Erectors Pvt Ltd Vs UoI

ST - SVLDRS, 2019 - An enquiry or investigation or audit post 30.06.2019 would not act as a bar to filing of declaration under the 'voluntary disclosure' category: HC

ST - SVLDRS, 2019 - Petitioner seeks quashing of order dated 29.01.2020 passed by the designated committee i.e., respondent No.4 rejecting the declaration of the petitioner dated 26.12.2019 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and further seeks a direction to the said respondent to reconsider the declaration of the petitioner under the said scheme and grant the admissible relief(s) to the petitioner - Petitioner's declaration dated 29.12.2019 was rejected on the ground that petitioner had filed the declaration after initiation of enquiry on 19.12.2019 - Therefore, petitioner was not eligible to file declaration under the category of voluntary disclosure in terms of section 125(1)(f) of the Finance (No.2) Act, 2019.

Held: In the present case, petitioner filed declaration in terms of the scheme on 29.12.2019 under the category of voluntary disclosure declaring service tax payable for the period 01.04.2015 to 30.06.2017 at Rs.92,13,450.00 - From the language of sub-section (1) of section 125 it can safely be said that eligibility to make a declaration is the norm and ineligibility is the exception - As per clause (f)( i ), a person making a voluntary disclosure after being subjected to any enquiry or investigation or audit shall not be eligible to make a declaration under the scheme - As per exclusion clauses (a), (c) and (e), those persons who have filed appeal before the appellate forum and such appeal had been heard finally on or before 30.06.2019 or those persons who have been issued a show cause notice under an indirect tax enactment and final hearing had taken place on or before 30.06.2019 or those persons who have been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation had not been quantified on or before 30.06.2019 would not be eligible to make a declaration - Clause (e) is just above clause (f) which deals with voluntary disclosure - Clause (e) says that a person who has been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit had not been quantified on or before 30.06.2019 would not be eligible to make a declaration - Immediately following clause (e) is clause (f) which says that a person making a voluntary declaration after being subjected to any enquiry or investigation or audit would not be eligible to make a declaration - If clauses (e) and (f) are to be read in a harmonious manner then logically it follows that the enquiry or investigation or audit referred to in clause (f)( i ) would necessarily have to be initiated on or before 30.06.2019 - As per the proviso to sub-section (1) of section 126, no verification shall be made by the designated committee in case where a voluntary disclosure of an amount of duty has been made by the declarant - This is perhaps because of the fact that under section 124(1)(e), where tax dues are payable on account of voluntary disclosure then no relief is available with respect to the tax dues - A careful reading of the query [Q.10, Q.39 of FAQ] and the answer given thereto would make it clear that if an enquiry or investigation or audit was initiated on or before 30.06.2019 then such a person would not be eligible to make a declaration under the voluntary disclosure category - Logical corollary to this would be that an enquiry or investigation or audit post 30.06.2019 would not act as a bar to filing of declaration under the voluntary disclosure category - Though clause (f) of sub-section (1) of section 125 does not mention the date 30.06.2019 by simply saying that a person making a voluntary disclosure after being subjected to any enquiry or investigation or audit would not be eligible to make a declaration, the said provision if read and understood in the proper context would mean making of a voluntary disclosure after being subjected to an enquiry or investigation or audit on or before 30.06.2019 - Such a view if taken would be a reasonable construct consistent with the objective of the scheme - Respondent No.4 was not justified in rejecting the declaration of the petitioner dated 26.12.2019 on the ground that petitioner was not eligible to file declaration under the category of voluntary disclosure since enquiry was initiated against the petitioner on 19.12.2019 where after petitioner filed declaration: High Court [para 23.3, 25, 27.1, 28]

ST - SVLDRS, 2019 - Petitioner's declaration was rejected without seeking any clarification from the petitioner or without giving any opportunity of hearing to the petitioner - Non-compliance to the principles of natural justice would impeach the decision making process rendering the decision invalid in law - Thought Blurb Vs. Union of India - 2020-TIOL-1813-HC-MUM-ST & Capgemini Technology Services India Limited - 2020-TIOL-1625-HC-MUM-ST relied upon: High Court [para 31]

ST - SVLDRS, 2019 - Order dated 29.01.2020 is quashed and set aside and matter is remanded back to respondent No.4 for taking a fresh decision on the declaration filed by the petitioner on 26.12.2019 treating the same as a valid declaration under the voluntary disclosure category and thereafter grant the admissible relief to the petitioner - Order to be passed within a period of eight weeks: High Court [para 32]

- Petition allowed: BOMBAY HIGH COURT

2021-TIOL-617-HC-DEL-CUS

Air Customs Vs Begaim Akynova

Cus - The respondent is a foreign national - The present petition was filed to contest findings of the Chief Metropolitan Magistrate, New Delhi, allowing permission to the respondent to her home country for a period of 45 days.

Held - Order of CMM, New Delhi, allowing respondent to travel abroad, is set aside due to having been passed without application of mind & for procedural irregularity: HC

+ Significantly, it has been chosen to have been submitted through the application, the contents of which have been reproduced hereinabove that the applicant vide paragraph 4 of this application, had preferred an application seeking permission to travel abroad before the learned CMM's Court in December, 2019, however, the same was dismissed on 10.12.2019; that the applicant preferred a revision petition before the Sessions Court considering the excruciating circumstances of the other co-accused Aida Askerbkova, the applicant had chosen not to press on her relief, that the Sessions Court had passed an order denying permission to the applicant to travel to her home but thereafter the applicant has averred in paragraph 5 that the applicant along with the coaccused chose to prefer an appeal under Section 482 of the Cr.P.C., 1973 before the Delhi High Court, wherein vide order dated 31.08.2020, this Court allowed the accused Aida Askerbkova to travel to her home and subsequently the Tribunal, Commission of Customs has imposed a fine of Rs.20 lakhs on the applicant;

+ Significantly, there is not an iota or a whisper of any averment in the application that was filed by the applicant before the learned CMM, New Delhi to the effect that the prayer made by the present respondent i.e. the applicant before the CMM, New Delhi to travel abroad to her hometown was expressly declined vide order dated 31.08.2020 of this Court in CRL.M.C.1529/2020 vide observations in paragraph 24 thereof;

+ It is essential to observe that even if the circumstances after the order dated 31.08.2020 had in any manner been changed, it was always open to the applicant to file the application before the Trial Court seeking permission to travel abroad to seek redressal in accordance with law by either seeking a review of the order dated 31.08.2020 of this Court or filing a fresh petition in relation thereto or assailing the order dated 31.08.2020 of this Court before the Hon'ble Supreme Court but in any event there could not have been any concealment of the facts that vide order dated 31.08.2020 in CRL.M.C.1529/2020, the prayer made by Begaim Akynova, holder of Khazakistan passport no.8622501 i.e. the applicant herein in relation to the very same complaint case qua which the allegations had been made against Begaim Akynova and the co-accused in relation to their apprehension on 13.09.2019 at the IGI Airport, New Delhi, with a recovery of 1875 gms of gold from Begaim Akynova holder of Khazakistan passport no.8622501 had been considered and the same was declined;

+ Such silence in the pleadings before the Trial Court is apparently deliberate and cannot be overlooked. Whilst setting aside the order dated 06.01.2021 of the CMM, PHC, New Delhi vide which permission was granted to the respondent herein to travel abroad, which order is hereby set aside in toto, it is essential to observe that most unfortunately there is even a representation for the Department i.e. Department of Customs also on the date 06.01.2021 before the Trial Court;

+ Be that as it may, the same itself does not suffice for the learned counsel who put in appearance even on behalf of the Department of Customs on 06.01.2021 before the learned Trial Court, to have not made any inquiries from the Customs Department specifically in view of the averments in paragraph 5 of the application that had been filed on behalf of the respondent dated 16.12.2020 before the Trial Court, in as much as, there is not even a whisper of an averment in the application dated 16.12.2020 filed by the applicant thereof i.e. the respondent herein as to the fate of that application;

+ In the circumstances, the matter be also placed before the Inspecting Committee of Judges of this Court qua the learned Trial Court in relation to the virtual non application of mind in the instant case and disregard to the hierarchy of Courts.

- Revenue's Application Allowed: DELHI HIGH COURT

2021-TIOL-153-CESTAT-MUM

Edelweiss Tokio Life Insurance Company Ltd Vs CST

ST - Tax initially paid under reverse charge and later collected from insurance agents by adjusting commission paid, cannot be directed to be deposited u/s 73A(2) of FA, 1994: CESTAT

ST - First allegation is that the appellant had failed to include the value of expenses reimbursed to the agents, namely, travel, conveyance and vehicle running expenses, training expenses, printing and stationary, and business development/marketing and sales promotion expenses in the gross taxable value - The second allegation is that the appellant had wrongly collected service tax from the insurance agents which they have paid under reverse charge basis in terms of rule 2(1)(d)(iii) of Service Tax Rules, 1994, and thereby contravened Section 73A(2) of Finance Act, 1994 - SCNs were issued from time-to-time for the period from 01.4.2011 to 31.3.2015 proposing recovery of service tax totalling to Rs.7,52,31,926/- along with interest and penalty - Demands were confirmed, therefore, the present appeal.

Held:

+ Insofar as proposal to include expenses incurred by the insurance agents under Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 is concerned, the said Rule 5(1) has been struck down by the Delhi High Court - 2012-TIOL-966-HC-DEL-ST as ultra vires to Section 66 and 67 of Finance Act, 1994 and the said judgement has been upheld by the Supreme Court in Intercontinental Consultants and Technocrats Pvt Ltd case - 2018-TIOL-76-SC-ST . Consequently, confirmation of demand by the adjudicating authority by including the reimbursable expenses in the gross taxable value cannot be sustained: CESTAT [para 9, 10]

+ On the second issue i.e. whether the service tax initially paid by the appellant under reverse charge mechanism in accordance with Rule 2(1)(d)(iii) of the Service Tax Rules, 1994 and later adjusted with the commission paid to the insurance agents is recoverable under Section 73A(2) of the Finance Act, 1994, Bench finds that the issue has been addressed at length by this Tribunal in Bajaj Allianz Life Insurance Company Ltd case - 2019-TIOL-2748-CESTAT-MUM and where it is held that service tax initially paid by the Appellants and later collected from the insurance agents by adjusting the commission paid, cannot be directed to be deposited under Section 73A(2) of Finance Act, 1994; that the expenses incurred in pre-recruitment training and post licence training of insurance agents by the Appellants cannot form part of the gross taxable value of commission paid to the Insurance Agents in determining the service tax liability: CESTAT [para 11]

+ No merit in the impugned order. Accordingly, the same is set aside and the appeal is allowed with consequential relief. [para 12]

- Appeal allowed: MUMBAI CESTAT

2021-TIOL-152-CESTAT-MUM

State Street Syntel Service Pvt Ltd Vs CCGST

ST - Amount received by employer from employee in lieu of 'notice period' on termination of employment is not liable to service tax since such act does not give rise to rendition of service either by employer or employee: CESTAT

ST - Appellant was issued with a SCN alleging non-payment of service tax amounting to Rs. 2,86,209/- during the period 2012-13 to 2015-16 on account of recovery of certain amounts from their employees who opted termination of employment or resignation from service before serving the notice period prescribed under the contract of employment, in violation of Section 66E(e) of Finance Act, 1994 - demand confirmed and upheld by lower authorities, hence appeal.

Held: Bench finds that the issue of levy of service tax on the amount received by the employer from the employee in lieu of 'notice period' on termination of employment is no more res integra and covered by the judgment of the Madras High Court in GET and D India Ltd's case - 2020-TIOL-183- HC-MAD-ST - Held therein that Notice pay, in lieu of sudden termination, does not give rise to the rendition of service either by the employer or the employee - No merit in the order passed by the Commissioner (Appeals), consequently, the same is set aside and the appeal allowed with consequential relief: CESTAT [para 6, 7]

- Appeal allowed: MUMBAI CESTAT