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2021-TIOL-1171-HC-P&H-CX
Swati Menthol And Allied Chemicals Ltd Vs CGST & CE
CX - Petition is for issuance of a writ inthe nature of certiorari seeking quashing of show cause noticesdated 02.03.2010 and dated 06.05.2010proposing to recover the deficit in payment of exciseduty etc. on the ground of 11 years' delay in adjudication till now. Held: Subjectmatter in the present petition is squarely covered by the ratio ofpronouncement in the case of M/s GPI Textiles Limited ( 2018-TIOL-1686-HC-P&H-CX )vide judgment dated 02.08.2018 wherein it is held that the words'where it is possible to do so' in section 11A(11) of the CEA, 1944 for determining the amount of duty will not stretch the period to decades as is in thecases in hand – Impugned show causenotices having been issued long back, more than a decade, are notsustainable in the eyes of law, and thus, deserve to be quashed - Present petition stands allowed: High Court
- Petition allowed: PUNJAB AND HARYANA HIGH COURT
2021-TIOL-1170-HC-MUM-ST
Qualcomm India Pvt Ltd Vs UoI
ST - Refund - Rule 5 of CCR, 2004 - If an application for refund is made, the same is required to be adjudicated within three months of receipt of the application - But if the refund is granted after three months of receipt of the application, then the applicant would be entitled to interest on such delayed refund as a matter of right - The interest would cover the period from the date immediately after expiry of the period of three months from the date of receipt of the application till the date of payment of the refund - Obviously, there is delay and the refund was granted much after expiry of three months from the date of receipt of the application - Only defence put up is that there was no intentional delay by the respondents - Section 11BB of CEA, 1944 does not speak about or exempts any delay which is not intentional - The section does not distinguish delay which is intentional and delay which is unintentional - Once there is delay in payment of refund within three months from the date of receipt of application, rigour of section 11BB sets in and payment of interest on the delayed refund becomes obligatory - It follows automatically; as a matter of law being a mandate of the statute - Non-granting of interest in such a case would amount to failure to discharge statutory duty / obligation by the refund sanctioning authority for which the aggrieved claimant can seek a writ of mandamus from the Writ Court under Article 226 of the Constitution of India - Writ petition succeeds - Petitioner would be entitled to interest under section 11BB of the Central Excise Act, 1944 on the amounts refunded to it - Respondent Nos. 2 and 3 shall work out the interest amount payable to the petitioner in respect of the refund claims for the relevant periods which shall be paid to the petitioner within three months: High Court [para 24 to 26]
- Petition allowed: BOMBAYHIGH COURT
2021-TIOL-1169-HC-MUM-CUS
Mbility Services Vs Pr.CC
Cus - Petitioner seeks quashing and setting aside the Seizure Memo dated 28.8.20 issued by the 5th Respondent operating under the aegis of the First Respondent and hold and declare that the proceedings of seizure and detention pertaining to the said memo are illegal; to direct the Respondents themselves, their officers, subordinates, servants and agents to refund the amount of Rs.85,30,191 pertaining to the refund claims arising out of Integrated Goods and Service Tax paid. Held: + It is seen that in every case in which anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty must be preceded by an adjudicatory process in which principles of natural justice are required to be followed but before initiation of such adjudicatory process, show-cause notice under section 124 is required to be given to the owner or to the concerned person mentioning therein the grounds of proposed confiscation or penalty whereafter an opportunity of making representation is required to be given followed by reasonable opportunity of hearing. [para 34]
+ While dealing with section 110, if within six months (extendable by another six months), no notice under section 124(a) is given post seizure; the goods shall be returned to the person from whose possession those were seized. However, the aforesaid rigor of law would not be applicable when the seized goods are provisionally released under section 110A. Does that mean that the show-cause notice contemplated under section 124 can be indefinitely deferred or delayed post seizure where the seized goods are provisionally released. In our view, such a construction would not be a reasonable one because a seizure of goods in contemplation of confiscation is a drastic measure and is required to be adjudicated promptly. [para 35]
+ In the instant case, the impugned seizure memo is dated 28.08.2020. Already sufficient time has elapsed. Therefore, it would be in the interest of justice if the same is adjudicated early.
+ Since the question as to whether section 111(o) and section 113(i) may require adjudication on facts, Bench, therefore, deems it fit and proper to relegate the petitioner to the forum of adjudicatory authority for a decision on the validity or otherwise of the impugned seizure and the consequential fall out. [para 36]
+ Notice shall be issued within a period of three weeks. Entire proceeding of adjudication shall thereafter be completed within a period of eight weeks from the date of issue of notice under section 124(a) of the Customs Act. [para 38]
- Petition disposed of: BOMBAYHIGH COURT
2021-TIOL-1168-HC-DEL-CUS
Gurcharan Singh Vs Ministry of Finance
Cus - It is the petitioner's case that the oxygen concentrator was shipped to him by his nephew who is located in New York, United States of America - Petitioner challenges the notification 30/2021-Cus dated 01.05.2021 imposing IGST @12% on Oxygen Concentrator imported for personal use - Petitioner invokes article 21 of the Constitution of India - Respondent has issued an adhoc exemption order 4/2021-Cus dated 03.05.2021 which has exempted imposition of IGST on oxygen concentrators imported by the State Government, or via any entity, relief agency or statutory body, authorised by the State Government and which exemption is, presently, available till 30.06.2021 - Bench had passed an order dated 05.05.5021 = 2021-TIOL-1045-HC-DEL-CUS to nudge the respondent department to take a decision to extend the exemption, to even individuals, to enable them to obtain imported oxygen concentrators by way of a gift, albeit, without having to pay IGST - Counsel for Revenue informed that the matter is still under consideration – Bench had observed that in case the oxygen concentrator, sought to be imported by the petitioner, reaches the concerned customs barrier, the same will be released, subject to the petitioner depositing, with the Court, an amount equivalent to IGST presently payable by him, in accordance with the impugned notification, within three days - Upon the petitioner depositing the said amount, the Registry will invest the same in an interest-bearing fixed deposit, maintained with a nationalised bank – Matter was listed on 18.05.2021.
Held:
+ The issues which come to fore, in this matter, are:
i. Whether the State's action, of imposing IGST on oxygen concentrators, which were directly imported by individuals, albeit free of cost, without the aid of a canalising agency runs afoul of Article 14 of the Constitution? ii. Whether Article 21 of the Constitution, which includes the right to health and affordable treatment, would require the State to demonstrate that levy and collection of the impugned tax in times of pandemic, war, famine, floods, and such like conditions would subserve public interest?
iii. Whether Article 21 of the Constitution, imposes on the State, a positive obligation to provide adequate resources for protecting and preserving the health and well-being of persons residing within its jurisdiction?
iv. What relief, if any, can be granted to the petitioner?
+ Tax, which is an exaction, is ordinarily sustained, because the Courts presume [unless established otherwise] that it serves, inter alia, a higher purpose such as redistribution of wealth, providing a level playing field to local enterprises/manufacturers, generation of revenue for funding projects and causes, which are undertaken in public weal and for disincentivizing activities which degrade the environment and health of the public at large. [para 10.1]
+ The conditions prescribed in the notification dated 03.05.2021, prevent the petitioner from claiming exemption from imposition of IGST, although, the oxygen concentrator imported by him is gifted [i.e., has been received free of cost] and is for personal use.
+ Condition no. 1, which exempts from the imposition of IGST only those oxygen concentrators that are imported, for COVID relief through a canalizing agency creates, to our minds, a manifestly arbitrary and unreasonable distinction between two identically circumstanced users depending on how the oxygen concentrator has been imported. Imposition of IGST is, thus, as per notification dated 03.05.2021, completely waived, i.e., exempted, if the oxygen concentrator is imported through a canalizing agency. [para 13] + The exclusion of individuals, such as the petitioner, from the benefits of the 03.05.2021 notification only because they chose to receive the oxygen concentrators as a gift, albeit directly, without going through a canalizing agency is, in our opinion, violative of Article 14 of the Constitution.
+ While it is permissible for the State to identify a class of persons, to whom tax exemption would be extended, it is not permissible for the State to exclude a set of persons who would ordinarily fall within the exempted class by creating an artificial, unreasonable, and substantially unsustainable distinction. [para 14]
+ There is no justification whatsoever in excluding individuals from the purview of notification dated 03.05.2021 only on the ground that they received oxygen concentrators directly as gifts from their friends and/or relatives located outside the country. [para 14.1] + What makes the discrimination egregious is the fact that when notification dated 24.04.2021 was issued exempting imposition of BCD on oxygen concentrators; there was recognition by the State that "public interest" required it to take such a step.
+ Likewise, the notification dated 03.05.2021, which was issued by the State, in the exercise of powers under Section 25(2) of the Customs Act, notes that the said step is taken on account of -exceptional circumstances prevailing due to the COVID-19 pandemic.
+ Given the fact that both notifications were issued in the wake of the pandemic, raging across the country, it makes little sense as to why individuals such as petitioner, are sought to be excluded from the beneficence which is bestowed on persons who fall within the sway of the notification dated 03.05.2021. [para 14.2]
+ What is, to be borne in mind, is not the benefits the State has granted up until now. What is instead, required to be judicially reviewed is the action of the State, in not treating, even-handedly, persons, who ordinarily should fall in the same class users. The distinction, drawn, as noted above, is manifestly arbitrary, unreasonable, unfair and wholly unsustainable. [para 14.4]
+ As indicated by us, right at the outset, tax is an exaction that does not, ordinarily, recognize equity. It must, however, in our view, bend to the will of equity in times of calamity which causes wholesale degradation in the human ability to contribute to the coffers of the State. [para 15]
+ Exaction by the State, in the form of tax, in good and normal times, is, ordinarily, sustained by the Courts as they defer to the legislative wisdom- that the imposition of the tax is for the greater good of the public; unless proved to the contrary. However, in times of peril, the Courts must examine the stand taken by the State to defend an action instituted to lay challenge to a tax - on anvil of Article 21 of the Constitution; as it is not the form but the impact of the tax which will determine its tenability. [para 15.1] + The Courts and the State have to adopt a humanistic approach, which, in our view, is a facet of Article 21 of the Constitution. The failure to do so both, by the Court and by the State, would lead to an unbridgeable chasm between law and justice, resulting in, disruption of social order. [para 15.2]
+ It is important to remind ourselves that no respectable man would want to turn himself into a -charity case. It is trite to state that if one aspires for a civilized society, then those who are obligated by law should pay their taxes. Likewise, the State should relent, or at least lessen the burden of exactions which take the form of taxes, duties, rates and cess, in the very least, in times of war, famine, floods, epidemics and pandemics since such an approach allows a person to live a life of dignity which is, a facet of Article 21 of the Constitution. [para 15.6]
+ The State could blunt the force of exaction by adopting one or more measures such as delaying its collections, granting rebates, or, as in this case, permitting, import of vital medical equipment, drugs, medicines, for a defined period, till such time, normalcy is restored.
+ The State could have, if it intended to treat, persons who are similarly circumstanced as the petitioner, at par with those who fall within the sway of the notification dated 03.05.2021- extended the exemption to them as well and withdrawn the same once normalcy was restored. [para 15.7] + To reiterate very briefly, a taxing statute can be tested on the anvil of Article 14, inter alia, on the ground that the justification for classification proffered by the State is artificial and unreasonable. [para 17.1]
+ In our view, a declaratory relief can be accorded, to the effect, that imposition of IGST on oxygen concentrators, imported as gifts, i.e., free of cost, for personal use, is violative of Article 14 of the Constitution on the ground that an artificial, unfair and unreasonable distinction has been drawn between persons, who are similarly circumstanced as the petitioner and those who import oxygen concentrators through a canalizing agency. [para 17.2]
+ The logical sequitur of this would be that persons who are similarly circumstanced as the petitioner, i.e., those who obtain imported oxygen concentrators as gifts, for personal use, cannot also be equated with those who import oxygen concentrators for commercial use. Therefore, notification bearing no. 30/2021-Customs, dated 01.05.2021, will also have to be quashed. [para 17.3] + The power to issue an exemption notification under Section 25 of the Customs Act is vested in the State. Having said so, the Court, to our minds, is not prevented from judicially reviewing an exemption notification once it is issued by the State. [para 17.4]
+ The definition of drugs given in Section 3(b)26 of the Drugs and Cosmetics Act would include medical equipment such as an oxygen concentrator which is used inter alia in the treatment, mitigation, and/or prevention of the disease [i.e. coronavirus]. The expression substance found in Section 3(b) of the Drugs and Cosmetics Act would bring within its ambit, oxygen concentrator.
+ Besides this, it requires to be noticed that in the wake of coronavirus, raging through the country, the State has issued several notifications, such as notifications dated 20.04.2021, 24.04.2021, 30.04.2021, 01.05.2021, and 03.05.2021 as also the press release dated 03.05.2021 – which only buttresses the view taken by us that oxygen concentrators are to be treated as drugs in terms of General Exemption Notification No. 190. [para 17.5] Conclusion: ++ Imposition of IGST on oxygen concentrators which are imported by individuals and are received by them as gifts [i.e. free of cost] for personal use, is unconstitutional. [para 19]
++ Notification no. 30/2021-Cus dated 01.05.2021 is quashed. [para 19.1]
++ To obviate misuse of the oxygen concentrators, by the petitioner and/or persons similarly circumstanced, she/he/they would have to furnish a letter of undertaking to the officer designated by the State that the same would not be put to commercial use. [para 19.2] ++ The Registry is directed to release the money, deposited with it, by the petitioner, along with interest, if any accrued, at the earliest. [para 21]
- Petition disposed of: DELHI HIGH COURT
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