Address by Shri Nitin Gadkari at TIOL Awards 2021

I-T - Merely paying taxes at normal rates on particular income will not determine its character as being from explained sources: ITAT

I-T - If findings of CIT(A) are based on provisions of law, there is no reason to interfere with those findings: ITAT

I-T - Deposit of employees's contribution towards ESI and PF though paid before due date of filing of return, does not call for disallowance: ITAT

GST - Order blocking ITC is unsustainable where bereft of any reasons or any reflection of AO being satisfied about necessity for passing such order: HC

CX - Excise remission allowed to new industrial unit setup in non-industrial area where Khasra No is specified in General Exemption No 51: HC

2022-TIOL-360-HC-AHM-GST

New Nalbandh Traders Vs State Of Gujarat

GST - The present petition was filed seeking that directions be issued to the Respondent-Department calling for the papers and proceedings leading to the records relating to blocking of Input Tax Credit of the Petitioner - The petitioner also sought that directions be issued regarding blocking of Input Tax Credit of the Petitioner which has been shown on the login credential of GSTN portal of the Petitioner - It is the case of the petitioner that when it received the goods from the said supplier, it also received tax invoices, weighment slips, e-way bills etc. which are the documents prescribed for the purchase under the provisions of the CGST Act, 2017 - It is also the case of the petitioner that the purchase made by it were duly reflected in the Form GSTR - 3B, Form GSTR - 2A and Form GSTR - 2B respectively - It is the case of the petitioner that it came to know about such blocking of the ITC through E-mail and SMS on 28.07.2021 - Upon receipt of an E-mail and SMS referred to above, the petitioner checked up with the GST portal wherein it is was displayed that the ITC had been blocked without assigning any reasons - It is the case of the petitioner that he inquired with the Department as to on what basis, the ITC was blocked but, there was no response at the end of the Department - In such circumstances referred to, the petitioner filed petition. Held - + As regards the following of principles of natural justice, the law is now well settled. In cases involving civil consequences, these principles would be required to be followed although, the width, amplitude and extent of their applicability may differ from case to case depending upon the nature of the power to be exercised and the speed with which the power is to be used. Usually, it would suppose prior hearing before it's exercise (See Swadeshi Cotton Mills Vs. Union of India : (1981) 1 SCC 664 and Nirma Industries Limited and another Vs. Securities and Exchange Board of India : (2013) 8 SCC 20) . But, it is not necessary that such prior hearing would be granted in each and every case. Sometimes, the power may be conferred to meet some urgency and in such a case expedition would be the hallmark of the power. In such a case, it would be practically impossible to give prior notice or prior hearing and here the rule of natural justice would expect that at least a post decisional hearing or remedial hearing is granted so that the damage done due to irrational exercise of power, if any, can be removed before things get worse. In Smt. Maneka Gandhi (supra), it was laid down that where there is an emergent situation requiring immediate action, giving of prior notice or opportunity to be heard may not be practicable but a full remedial hearing would have to be granted. The power conferred upon the Commissioner under rule 86-A is one of such kind. It has civil consequences though for a limited period not exceeding one year and has an element of urgency which perhaps explains why the rule does not expressly speak of any show cause notice or opportunity of hearing before the ECL is blocked. Of course, in order to guard against arbitrary exercise of power, the rule creates certain checks which are found in the twin requirements explained by us earlier. But, in our view, that may not be enough, given the nature of power, and what settled principles of law tell us in the matter. They would, in such a case, require this Court to read into the provisions of rule 86-A something not expressly stated therein, and so, we find that post decisional or remedial hearing would have to be granted to the person affected by blocking of his ECL. We may add that such post decisional hearing may be granted within a reasonable period of time which may not be beyond two weeks from the date of the order blocking the ECL. After such hearing is granted, the authority may proceed to confirm the order for such period as may be permissible under the rule or revoke the order, as the case may be. (Para 17); + The second pre-requisite of rule 86-A is of recording of reasons in writing. It comes with the use of the word "may", which, in our opinion, needs to be construed as conveying an imperative command of the rule maker, and that means, reasons must be recorded in writing in each and every case. This is because of the fact that any order which brings to bear adverse consequences upon the person against whom the order is passed, must disclose the reasons for it so that the person affected thereby would know why he is being made to suffer or otherwise he would not be able to seek appropriate redressal of his grievance arising from such an order. Right to know the reasons behind an administrative order having civil consequences is a well embedded principle forming part of doctrine of fair play which runs like a thread through the warp and weft of the fabric of our Constitutional order made up by Articles 14 and 21 of the Constitution of India. In the case of Andhra Bank V/s. Official Liquidator : (2005) 3 SCJ 762 , the Apex Court has held that an unreasoned order does not subserve the doctrine of fair play. It then follows that the word, "may" used before the words, "for the reasons recorded in writing" signifies nothing but a mandatory duty of the competent authority to record reasons in writing. (Para 18); + It has been held in a catena of judgments that a bona fide recipient should not be made to suffer on account of a supplier's default. In Quest Merchandising India Pvt. Ltd. v . Govt. of NCT of Delhi, W.P. (C) 6093 of 2017 dated 26.10.2017 (Delhi High Court) , the assessee had duly paid the tax to the supplier, but the supplier had not deposited the tax with the Government. The assessee argued that the purchasing dealer can check on the web portal of the department if the selling dealer is a fictitious person or a person whose registration stands cancelled. The Court held that the purchasing dealer was being asked to do the impossible, i.e. to anticipate the selling dealer who will not deposit the tax collected by him from such purchasing dealers to the Government, and therefore avoid transacting with such selling dealers. The Delhi High Court read down the concerned provision to not include a buyer who has bona fide entered into the purchase transactions with validly registered dealers who have issued the tax invoices against the transaction. The Court explained that such provision, if not read down, is violative of Article 14 of the Constitution for being inherently arbitrary. The only case when such provision applies is if the tax authorities come across some material to show that the purchasing dealer and the selling dealer, acted in collusion in detriment to the exchequer. However, in the event that the selling dealer has failed to deposit the tax collected, the remedy for the authorities is to proceed against the defaulting selling dealer to recover such tax and not to deny the purchasing dealer his input. The Supreme Court affirmed the said case and dismissed the Revenue's petition seeking special leave to appeal against this decision. (Para 24.4); + this writ application succeed in part and is partly allowed accordingly - The impugned order of blocking of the ECL of the writ applicant is hereby quashed and set aside: HC

- Writ petition allowed: GUJARAT HIGH COURT

2022-TIOL-359-HC-DEL-GST

Commercial Food Services Vs Govt. of NCT of Delhi

GST - The petitioner is engaged in providing healthcare kitchen and dietary services - It filed the present petition to assail the order passed by the Respondent Department wherein the contract awarded to the petitioner for roviding healthcare, kitchen and dietary services in Shri Dada Dev Matri and Sheeshu Chikitshyalaya has been cancelled and the petitioners have been blacklisted for a period of two years. Held - The explanation advanced by the petitioner for being unaware that its GST registration had been cancelled, does not inspire confidence - In these circumstances, keeping in view the manner in which the petitioner secured the contract, there is no infirmity in the Respondent's decision to terminate its contract with the petitioner - The Respondent's decision to blacklist the petitioner for a period of two years wholly unwarranted - For one, it is a well-known fact that the economy has suffered a major setback ever since the onset of the COVID-19 pandemic and small business, such as the petitioner, are bearing the brunt of this - Hence there is no reason to doubt the petitioner's explanation for the financial difficulties that occasioned the default in paying returns and eventually led to the suspension and cancellation of its GST registration - It appears that the Appellate Authority at the GST Department was of similar mind when it accepted the petitioner's explanation for its defaults, forgave the same and directed restoration of its GST number - While the petitioner's actions may not have been completely above the board and invite suspicion, the Respondent's decision to terminate the contract in question and then blacklist the petitioner for a period of two years does appear to be quite excessive, disproportionate and unnecessary given the circumstances - Small proprietorships, such as the petitioner's, are already flailing in this economy and finding it hard to survive and the Respondent, being a State, cannot be blind to this reality - Permitting a punitive action of this nature to continue would deal a greater blow to the survival of small businesses such as the petitioner - Hence the Respondent ought to re-consider the decision to blacklist the petitioner and, while doing so, duly take into account the significant fact that the GST Department has itself adopted a compassionate view towards the prevailing circumstances and the strata to which the petitioner and its sole proprietor belong: HC

- Writ petition disposed of: DELHI HIGH COURT

2022-TIOL-358-HC-UKHAND-CX

Shiva Power Vs Secretary

CX - The assessee is a partnership firm, which filed the present petition seeking that an order passed by the Deputy Commissioner be quashed, insofar as the order directed the assessee to pay Central Excise duty on future clearances - Excise duty had also been levied on past clearances notified under Notification No 50/2003 - The assessee further challenged the opinion expressed by the Department officers on extension of benefit of exemption to new industrial units established in the category "industrial activities in non-industrial areas" - The assessee also sought that exemption be allowed on the strength of Central Excise Notification 50/2003. Held - The issue at hand is whether under the Industrial Policy, a new unit setup in a non-industrial area, but notified the Khasra No. in General Exemption No. 51, will be eligible to get the benefit of the New Industrial Policy of remission of the Central Excise, or only an existing unit doing 25% of development in a non-industrial area is only entitled to such remission to be exclusion of the new units - It is seen that the issue involved is already set at rest by the Full Bench of this Court, wherein it was held that remission of Central Excise is also available to a new industrial unit setup in a non-industrial area, but where the Khasra No. is specified in General Exemption No. 51 - There is neither plausible rationale, nor it is an intelligible differentia to uphold the contention that only existing units with substantial development are eligible to get the tax/duty remission and holiday - Hence the order in question is quashed, as is the opinion expressed by the Department regarding eligibility for exemption: HC

- Writ petition allowed: UTTARAKHAND HIGH COURT

2022-TIOL-216-CESTAT-DEL

Pr.CC Vs Salasar Synthetics

Cus - The issue involved is, whether the assessee have misdeclared import consignment of gold/silver dore bars - Gold is sold by weight and not by number of pieces - Admittedly, the gross weight of packing as reduced by packing materials, net weight of gold dorebars matches with the import documents - Thus, there is no case of mis-declaration or any excess weight of gold dore bars found by Revenue - Thus, whole exercise/proceedings for confiscation and penalty is only for alleged excess quantity, that dore gold bars are more than the numbers mentioned in packing list and the invoice, is wholly mis-conceived - No case of any mis-declaration is made out: CESTAT

- Appeal dismissed: DELHI CESTAT

2022-TIOL-215-CESTAT-BANG

Roquette Riddhi Siddhi Pvt Ltd Vs CCE

CX - Appellant is availing cenvt credit on inputs and input services used in their final product - During course of manufacture, some by-product emerges on clearance of which appellant has not paid any duty - Revenue views that the appellant has taken cenvat credit for invoices issued prior to 01/09/2014 on 18/09/2014 and in terms of Notfn 21/2014-CE (NT) , appellant is required to take cenvat credit within 6 months from issuance of invoice - Issue arises is, whether the appellant is required to reverse proportionate cenvat credit on inputs and input services consumed in by-product while manufacturing the final goods - Said issue has been settled by Tribunal in case of Anil Products Ltd. which has been affirmed by Gujarat High Court - The provisions of Rule 6 are not applicable to appellants - Therefore, appellant is not required to reverse the proportionate cenvat credit used in by-product while manufacturing their final product - Accordingly, the demand on the said count is set aside - As regards to issue of cenvat credit on invoices issued prior to 01/09/2014, said issue has been settled by Tribunal in case of Bharat Aluminium Company Limited 2019-TIOL-2567-CESTAT-DEL - As the issue has already been settled and no more res integra, therefore, appellants have correctly taken the cenvat credit on 18/09/2014 for the invoices issued prior to 01/09/2014 - Impugned order is set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT

2022-TIOL-214-CESTAT-BANG

DGP And State Police Chief Vs CCE, C & ST

ST - The appellant is discharging function of security of property and person - Apart from that, appellant is providing certain security personnel to certain Government agencies, Central/State, public sector undertakings and other private persons and charging the amount as provided under Section 8 of Kerala State Police Act - The amounts so recovered have been deposited into Government treasury under different heads - Issue arises is as to whether providing armed security guards to public sector undertakings, State/Central Government Departments or other persons is covered under Security Agency Service - As the issue has already been settled by various decisions of Tribunal, therefore, issue is no more res integra - Accordingly, appellant is not liable to pay service tax being appellants are discharging sovereign functions in terms of Kerala State Police Act - Therefore, demand of service tax is not sustainable against appellant: CESTAT

- Appeals allowed: BANGALORE CESTAT