2022-TIOL-403-HC-AHM-CX
L And T Hydrocarbon Engineering Ltd Vs UoI
CX - Larsen & Toubro Ltd. proposed to hive off/demerge its Hydrocarbon Division as a going concern to a separate legal entity - The demerger is governed by the procedure as prescribed under the Companies Act, 1956 particularly Section 394 thereof - As required under the said Companies Act, Larsen & Toubro Ltd. filed the Company Scheme Petition on 28th June 2013 before the Bombay High Court and the scheme was approved by the Bombay High Court vide its Order dated 20th December 2013 - Copy of the order dated 20th December 2003 passed by the High Court was filed with the Registrar of companies on 16.1.2014, therefore, 16th January 2014 became the effective date - Writ applicant (i.e. the successor entity) vide the application dated 1st April 2014 formally applied to the jurisdictional central excise authority for the new central excise registration in its own name as a new legal entity - Jurisdictional Central Excise officer accepted the said application of the writ applicant and granted fresh central excise registration on 7th April 2014 - Pending the filing of the scheme with the High Court and its approval, the business of Larsen & Toubro Ltd. including its Hydrocarbon Division continued as in the past - Impugned show cause notice dated 31st December 2018 came to be issued to the writ applicant raising the demand of Rs.19,61,06,399/- towards the excise duty for the clearances between December 2013 and March 2014 - The demand of excise duty of Rs.96,20,02,091/- for the clearances effected from December 2013 to March 2014 availing exemption for the supplies against the ICB contract was also sought to be raised - Applicant challenges the said notices on inter alia the ground that the absence of pre-show cause notice consultation in accordance with the CBEC master circular No. 1053/2/2017-CX dated 10th March 2017 is fatal to the impugned show cause notice; that the excise duty has been discharged by Larsen and Toubro Limited i.e. the transferor / demerged entity; that even if it is considered as discharge of excise duty by a wrong person, such duty so paid should be adjusted against the duty payable if any by the correct person; that asking the writ applicant [L&T Hydrocarbon Engineering Ltd.] herein to discharge the very same liability of payment of excise duty i.e. the very duty paid by the Larsen and Toubro Limited would amount to double taxation of the same transaction, and therefore, manifestly illegal.
Held:
+ If in a given case, ex-facie, the ingredients for invoking the extended period of limitation are not attracted based on the very averments in the show cause notice, the notice would be ex-facie barred by limitation. It is now well settled that the question of limitation is a question of jurisdiction. [para 60, 61]
+ In the case on hand, the facts are not in dispute. A pure question of law is to be decided based on the very averments made by the Respondent in the show cause notice. Therefore, the present writ application could be said to be maintainable. [para 72]
+ Insofar as the demand of excise duty of Rs.19,61,06,399/- as detailed in Annexure A to the show cause notice is concerned, the excise invoice has been duly issued by the predecessor entity. On such clearances, the applicable excise duty liability was discharged by the Larsen & Toubro Ltd. This is also evident from the ER-1 return filed by the predecessor. These facts are duly noted and accepted in para 3.8, 3.9, 4.3, 4.5 and 6 reply of the impugned show cause notice. In other words, the demand is raised on the very same dispatches on which same amount of excise duty has been duly discharged by the predecessor. The demand of excise duty from the successor entity is exactly of the same amount as already paid by predecessor. Hence, the present case is a clear case of double taxation. [para 73]
+ In the present case, the Central Government was a party to the scheme through the Office of the Regional Director, Ministry of Corporate Affairs, Western Region Mumbai. Thus, the respondent No. 1 was aware of the Scheme at all times. Once, the Scheme has been approved by the High Court and has attained finality, the Respondent is now barred to raise any objection to the said scheme in the present proceeding. [para 81]
+ The contention of the A.S.G. is that since the present case originated from the intelligence gathered from the DGGI such pre-consulting is not required. The said contention runs contrary to the recent clarification issued by the Board. For the very objection now being raised, a clarification was sought by the DGGI office from the Board as to whether the DGGI formations will fall under the exclusion category of the master circular dated 10th March 2017 read with the circular dated 19th November 2020. The Board vide the Circular No. F.No . 116/13/2020-CX-3 Dated 11.11.2021 clarified that the exclusion from the pre-show cause notice consultation is case specific and not formation specific. Therefore, merely because in the present case, the case originated on account of investigation of the DGGI will not be a sufficient ground for not following the mandatory procedure prescribed by the Board which is binding on the department. Therefore, it was mandatory for the adjudicating authority in the present case to conduct the pre-show cause notice consultation and in absence of the same the present proceedings could be said to be bad in law and deserves to be quashed and set aside. [para 84]
+ It is clear that a mere mechanical repetition of the language of the provision in the show cause notice would not confer jurisdiction on the Collector of Central Excise to issue a show cause notice under Section 11A of the Act beyond the period of six months taking advantage of the proviso to the Section. [para 103]
+ The taxable event for the levy of excise duty is manufacture. In that sense, it is not even a tax on goods. Demanding excise duty once again on the same taxable event, even on the ground that the liability towards the excise duty ought to have been discharged only by the transferee would amount to double tax. [para 109]
+ The present impugned notice is raising excise duty demand on the very same goods on which the duty has already been paid by the L&T (albeit at nil rate availing the exemption) and accepted by the department. This also is a clear case of double taxation in the sense that same goods are being subject to excise duty against two persons which is impermissible. [para 122]
+ Without anything more, the registration granted by the central excise department to the predecessor Larsen & Toubro Limited could be said to have automatically stood vested as a registration in favour of the writ applicant. The formal application made on 1st April 2014 by the writ applicant for fresh registration could be said to be a compliance of the procedural requirement out of the abundant caution and was an unnecessary step. It is more in the nature of intimation of the department to formally correct the name of the writ applicant in its record. Hence, the objection that the writ applicant has not taken a registration in its name prior to 1st April 2014 is also invalid. [para 125]
Conclusion: [para 127]
[a] The Revenue is not correct in its stance that in the case on hand, the pre-show cause notice consultation was not necessary as the impugned show cause notice is for preventive / related to an offence. Just because, the origin of the show cause notice is the intelligence gathered from the Additional Director General, the same by itself would not bring the show cause notice within the ambit of preventive / offence.
[b] The extended period of limitation under Section 11A(4) of the Act, 1944 is not applicable in the case on hand as it is the case of the Revenue that the goods were removed illicitly without a statutory invoice. The failure to follow any procedure may be an error or omission on the part of the assessee, but the same, by itself, would not amount to suppression. The question of suppression would arise only when an assessee makes an attempt to obtain a benefit not available to him under the law.
[c] The amalgamation has its origin in the statute and is statutory in character, the transfer and vesting is by operation of law and not an act of a transferor - company nor an assignment by it, but is the result of a statutory instrument. A scheme of amalgamation when sanctioned by the company court under the relevant provisions of the Companies Act is distinct and different from a mere agreement signed by the necessary parties. When an agreement takes place, the transfer of assets takes place by the force of the company's court order and/or by operation of law; it ceases to be a contractual or a consensual transfer. The respondents are bound by the order dated 20th December 2013 passed by the Bombay High Court approving the scheme of demerger.
[d] The writ application challenging the legality and validity of the show cause notice is maintainable as no disputed questions of fact are involved and the legal issues have been decided on the basis of the facts as admitted by the parties. The impugned show cause notice could be said to be lacking inherent jurisdiction and therefore, asking the writ applicant to avail of an alternative remedy, therefore, could not arise.
+ The impugned show cause notices are hereby quashed and set aside. [para 128]
- Petitions allowed: GUJARAT HIGH COURT
2022-TIOL-241-CESTAT-DEL
Subhash Light House Vs CCGST
ST - The issue involved is, whether the supply of mobile gensets by appellant during F.Y. 2011-12 to 2015-16 for some specific events or where clients required transportable gensets for short-term period, and supplied along with technicians/operators, who run the gensets as per instructions of clients, whether falls under definition of 'deemed sale' in terms of Article 366 (29A) of the Constitution of India read with Sales Tax Law - In view of the Article 366(29A)(d) of Constitution, transfer of right to use any goods for any purpose, whether or not for a specified period, for cash, deferred payment or other valuable consideration, has to be considered as deemed sale or purchase of goods - The use of gensets is purely on the requirement or order of clients - It is not necessary that the gensets provided to the client is surely put to use or generate electricity for the period of time for which it is hired by client, but the genset is dedicated/ delivered to the client and is under his effective control and pocession - In view of such condition, the effective control of gensets is purely in hands of clients of appellant, as the client is at his liberty to run or not to run the gensets hired by him for generation of electricity - In any case, he is liable to pay the hire or lease rent - The Commissioner and the appellant have both relied upon the judgment of Apex Court in case of Bharat Sanchar Nigam Ltd. 2006-TIOL-15-SC-ST-LB - The criteria fixed by Apex Court to constitute the right to use is with the client(s) of appellant, even though the operator of gensets and the fuel is supplied by appellant - Since the supply of gensets meets the criteria mentioned by Apex Court, supply of gensets is considered as sale of goods in terms of Article 266(29A) of Constitution of India - Moreover, appellant had duly discharged his liability under VAT/Sales Tax law as per VAT/ CST returns submitted in paper book before this Court - Therefore, there remains no liability on the part of appellant under Service Tax law - The impugned order is set aside - It being an issue of interpretation and no case of concealment found is made out, accordingly, extended period of limitation is not available: CESTAT
- Appeal allowed: DELHI CESTAT
2022-TIOL-240-CESTAT-BANG
Tata Consumer Products Ltd Vs CCT & CE
CX - Refund claim of assessee was partly rejected - Though the appellate authority has taken note of claim of appellant as regards the inadvertent/clerical error, but has not accepted on the ground that the same was not brought to notice of adjudicating authority - It is not the case therefore that the error was not inadvertent, rejection is for different reason and hence it is clear that the inadvertent error is bona fide and on this, the First Appellate Authority should have called a report from adjudicating authority and then passed appropriate order as per law - Matter is remanded back to the file of adjudicating authority who shall verify the inadvertent error which is not disbelieved by First Appellate Authority, who shall also verify the closing balance in cenvat credit as on the date of appellant's claim: CESTAT
- Matter remanded: BANGALORE CESTAT
2022-TIOL-239-CESTAT-MAD
Thirumalai Thiyagarajan Vs CC
Cus - The only issue to be decided is, whether the penalty under Section 112(a) of Customs Act, 1962 is rightly levied - All the persons alleged to be involved have given somewhat reliable information and hence, a deeper investigation as to the involvement of Mr. Simmerjith Singh was very much essential - It was this Simmerjith Singh who, according to appellant, gave the IEC of M/s. J.J. Enterprises to him along with the relevant documents and hence, there is no conclusive evidence to term the appellant as the 'mastermind' - The quantum of penalty which is normally levied as a deterrent, is very high and hence, the same is directed to be reduced: CESTAT
- Appeal partly allowed: CHENNAI CESTAT |
