2021-TIOL-1679-HC-DEL-ST

PHD Chamber of Commerce And Industry Vs UoI

ST - The petition has been filed by Petitioner challenging the SCN as well as the legality and validity of re-initiation of adjudication proceedings after eight years of having closed the matter - A detailed counter affidavit had been filed on behalf of answering Respondents wherein it is averred that vide O-I-O dated 26.03.2021, demand raised against the petitioner vide earlier SCN has been dropped - In view of the aforesaid O-I-O, no further order is required to be passed in present petition, as the grievance of petitioner stands satisfied - The questions of law raised in petition including the period of limitation stipulated in Section 73(4B)(b) of Finance Act, 1994 for determining the amount of Service Tax due under Section 73(2), are kept open: HC

- Writ petition disposed of: DELHI HIGH COURT

2021-TIOL-1678-HC-MAD-ST

K7 Computing Pvt Ltd Vs Commissioner

ST - The appellant has developed anti virus software in the name of 'K7 Total Security' and 'K7 anti virus' and the softwares are downloadable from their website - The primary ground, on which, the writ petition filed was that they did not provide any taxable service - The appellant's argument is predicated on the submission that Section 65(53a) of FA, 1994 defines 'information technology software' and that the software, which has been developed and marketed by them is not capable of being manipulated or providing interactivity to a user - The correctness of this submission was tested by Single Judge wherein it is held that the anti virus software would fall within the expression 'information technology software' as defined under Section 65(53a) of FA, 1994 - The definition of 'information technology software' is wide enough to bring within its fold the anti virus software, which has to be obviously installed in the hardware and it would interact whenever the user of computer engages the system - No grounds found to interfere with the order passed by Single Judge: HC

- Writ appeal dismissed: MADRAS HIGH COURT

2021-TIOL-1677-HC-ALL-CX

Jay Shree Industries Vs UoI

CX - An order-in-original dated 14.08.1997 had been passed creating duty demand of Rs.1,05,99,382/- together with penalty of Rs.60 lac under the Central Excise Act, 1944 - Also, by that order, redemption fine of Rs.30 lac had been determined against the petitioner, in lieu of confiscation of goods under that Act - By opting for the SVLDRS, 2019, the petitioner deposited an amount of Rs.63,59,629/- on 30.06.2020 and applied for issue of discharge certificate u/s 127 of the Scheme - The Designated Committee did not issue the discharge certificate in absence of payment of redemption fine of Rs.30 lakhs - Petitioner filed a Writ Tax no. 483 of 2020 wherein vide order dated 21.10.2020, the petitioner was granted liberty to file a representation relying on the order dated 27.02.2020 passed by the Gujarat High Court in Special Civil Application no. 21744 of 2019 - 2020-TIOL-1493-HC-AHM-CX ] - Since the writ petition came to be dismissed vide order dated 19.11.2020, in view of the order dated 17.11.2020 passed by the Designated authority, the present writ petition - Petitioner submits that "redemption fine" is a "penalty" and, therefore, by virtue of clear language of section 129 of the Scheme, no amount of 'redemption fine' may be demanded; that the decision of the Gujarat High Court has become binding on revenue as the SLP filed has been dismissed vide order dated 03.03.2021 - 2021-TIOL-120-SC-CX  - Counsel for respondent Revenue submits that the scheme does not, in any way, include 'redemption fine' and unless the petitioner were to pay the entire amount of redemption fine, the discharge certificate could not be issued. Held: + The words 'penalty' and 'redemption fine' have not been defined, either under the Central Excise Act, 1944 or the Scheme or the Rules framed thereunder. [para 8] + Undisputedly, the entire amount determined in terms of section 124 of the Scheme,  Rs.63,59,629.20 has been paid by the petitioner, within time. [para 9] + The petitioner's eligibility to apply under the Scheme as provided under section 125 of the Scheme is also undisputed by the revenue. [para 10] + Upon the Discharge Certificate being issued under section 129 of the Scheme, the same would be conclusive as to the matter (resolution of the dispute) and the time period stated in that Certificate. Further, by virtue of clauses (a) (b) and (c) of sub-section (1) of section 129 of the Scheme, such a declarant would not be liable to pay any further amount, either towards duty or interest or penalty with respect to the subject matter in question and the time period covered under the declaration. Second, such a person shall not be prosecuted under the indirect tax enactment with respect to the subject matter and the time period covered under his declaration made. Third, no proceeding would be reopened, and no other proceeding would be initiated against such a person for that subject matter and tax period.  [para 12] + The Gujarat High Court, upon a detailed consideration of the Scheme, reached a conclusion that 'redemption fine' was included in the term 'penalty' appearing under section 129(1)(a) of the Scheme. To reach that conclusion, that Court has looked at the intent and object of the Scheme and reasoned that a person against whom 'redemption fine' may have been imposed is not excluded from making a declaration under section 125(1) of the Scheme. [para 15] + Thus, the order dated 03.03.2021 dismissing the Special Leave to Appeal neither laid down the law of the land nor did the order of the Gujarat High Court merge in that order of the Supreme Court. Therefore, the Gujarat High Court decision has only persuasive value. [In Workmen of Cochin Port Trust v. Board of Trustees of the Cochin Port Trust & Anr. , (1978) 3 SCC 119 & Kunhayammed & Ors. v. State of Kerala & Anr., (2000) 6 SCC 359 = 2002-TIOL-50-SC-LMT-LB relied upon] [para 18] + A person who may be eligible and who may apply and comply with the terms of the Scheme, may be issued the Discharge Certificate, yet, the benefit of the same may remain confined to the extent provided under section 129 of the Scheme only. In short, in our view, in scope and ambit sections 125 and 129 of the Scheme are different and largely independent of each other. Merely because the person may be entitled to apply for issue of a Discharge Certificate it would not determine the consequences of its issue. He may continue to remain liable to pay 'redemption fine' if that liability is not found to have been expressly dissolved under the Scheme. [para 19] + As to applicability of the rule of Contemporanea Expositio , again, with all respect, we find ourselves unable to persuade ourselves to the view taken by the Gujarat High Court. First, other than the communication dated 20.12.2019, none of the communications has been issued by the Central Board of Indirect Taxes and Customs, but by other/subordinate authorities. By virtue of section 133 of the Scheme (quoted above), the Central Board of Indirect Taxes alone is competent to issue mandatory orders, instructions, and directions to the authorities under the Scheme for the purpose of proper administration of its Scheme. Therefore, we are not inclined to look at the other communications (flyers and press notes) relied upon by learned counsel for the petitioner. Second, those communications do not contain expression of any opinion that 'redemption fine' is 'penalty' under section 129 (1) of the Scheme. Third, the communication dated 20.12.2019 clearly does not support the submission advanced by the petitioner. It speaks of 'redemption fine' being different from 'penalty'. [para 22] + In absence of any provision to exclude 'redemption fine'/ penalty in rem from the benefits of the Discharge Certificate contained in section 129 of the Scheme, no such inference may be drawn, against the plain language and intent of the Scheme. In absence of any express exclusion created by the Scheme, 'redemption fine' would always remain a 'penalty' covered under the meaning of that word used in section 129 (1)(a) read with section 121 (u) of the Scheme. Thus, we have reached the same conclusion on the point as the Gujarat High Court, but for reasons of our own.  [para 35] + We have no reason to apply a different yardstick to allow the respondent authorities to overlook the clear and binding statutory provision, in favour of the concession claimed to have been made by the petitioner. The concession, if any, made by the petitioner in the Discharge Certificate proceedings - to deposit the 'redemption fine', would remain contrary to the express provision of law and therefore unenforceable and of no consequence. [para 36] + The communication dated 20.12.2019 issued by the CBIC providing for payment of 'redemption fine' in addition to the settlement amount paid under section 124 of the Scheme and further providing that the Discharge Certificate under the Scheme may not be issued unless that fine has been paid, is clearly contrary to the Scheme. + Upon the petitioner being eligible under section 125 of the Scheme and upon payment of the entire amount due under section 124 of the Scheme and, in absence of any other objection being raised by the revenue, clearly, the petitioner is entitled to issue of the Discharge Certificate. [para 37] + The order dated 17.11.2020 issued by the Designated Committee, SVLDR Scheme, 2019/Commissioner Central Tax, Central Goods & Services Commissionerate, Ghaziabad, requiring the petitioner to deposit the 'redemption fine' as a pre-condition to issue the Discharge Certificate is found to be wholly contrary to law.  + The said order is accordingly set-aside, and a Mandamus is issued to the said respondent to issue the Discharge Certificate to the petitioner within a period of two weeks. [para 38] 

- Petition allowed: ALLAHABAD HIGH COURT