2022-TIOL-52-SC-ST
CCE Vs Sepco Electric Power Construction Corporation
ST - Demand confirmed along with interest and penalties on ground that assessee had provided consulting engineer service to M/s BALCO in terms of Contract for engineering and technical services for captive power projects - Merely because it had entered into four contracts for completing scope of work would not take away from fact that it was an operation of erection and commissioning on a turnkey basis and therefore the service rendered was works contract service which was not liable to ST prior to 1.6.2007 - Particular contract under consideration is however not a works contract per se, because there was no transfer of property in goods involved in execution of that contract - The CESTAT held that the Assessee, being a body corporate was not covered under definition of consulting engineer and consequently, service rendered by them could not be classified under Consulting Engineer Service under which impugned demand is confirmed.
Held - The short question which is posed for the consideration of this Court is, the scope of definition of "consulting engineer" under Section 65(31) of the Finance Act, 1994, specifically as to whether a "body corporate" is covered within its sweep prior to the amendment in 2005 - a "firm" and a" company" can be said to be a "consulting engineer" as defined under the Finance Act, 1994 and liable to pay the service tax as a service provider - , in the definition of "consulting engineer", a "body corporate" is included and/or to be read into so as to bring a "body corporate" being a service provider providing the consultancy engineering services within the service tax net, as such, it is not necessary to consider whether the subsequent amendment amending the definition of "consulting engineer" by way of 2005 amendment adding a "body corporate" within the definition of "consulting engineer" would be retrospective or clarificatory: SC
+ At this stage, it is required to be noted that post 2005, the definition of "consulting engineer" under Section 65(31) has been amended and now it specifically includes a "body corporate". Therefore, as such, with respect to the proceedings post amendment 2005, there will be no difficulty. After the amendment, any "body corporate", a service provider providing the services as "consulting engineer" is liable to pay the service tax. The only question which remains is, whether under the erstwhile definition of "consulting engineer" under Section 65(31) of the Finance Act, 1994, a "body corporate" providing services as "consulting engineer" was liable to pay the service tax or not?; (Para 5.2)
+ Before it is considered, the effect of the amendment incorporating the words "any body corporate", post 2005, we have to consider whether the original definition of "consulting engineer" under the Finance Act, 1994 may include "any body corporate" or not; (Para 6.2)
+ Under the Finance Act, 1994, the definition of "consulting engineer" in Section 65(31) covers services provided to a client by a professionally qualified engineer or an engineering firm consisting of professionally qualified engineers. The taxable attribute is that the services must be rendered in a professional capacity; (Para 7)
+ From the relevant provisions under the Finance Act, 1994, referred to hereinabove, "taxable service" means any service provided or to be provided. Under the relevant provisions of Finance Act, 1994, at many places, the word used is "person". For example, as per Section 68, every "person" providing taxable service to any "person" shall pay service tax. Section 69 provides that every "person" liable to pay the service tax….may make an application for registration. In Section 70 also, the words used are "every person liable to pay the service tax…"; (Para 7.1)
+ If the submission on behalf of the respondent is accepted, in that case, it would remove all companies providing technical services, advice or consultancy to their clients from the service tax net, while any such services rendered by an individual or a partnership firm would continue to remain taxable. That does not seem to be an intention on the part of the legislature to exclude the "body corporate" from the definition of "consulting engineer". There does not seem to be any logic to exclude "body corporate" from the definition of "consulting engineer". If the submission on behalf of the respondent is accepted and the "body corporate" is excluded from the service tax, in that case, it would not only lead to absurdity but also would create two different classes providing the same services. That cannot be the intention of the legislature to create two separate classes providing the same services and to exclude one class; (Para 8)
+ Applying the law laid down by this Court in the aforesaid decisions on law of interpretation of a taxing statute, it is required to be considered, whether a "body corporate" was excluded from the service tax net under the Finance Act, 1994; (Para 9)
+ At this stage, it is required to be noted that prior to amendment 2005, by Circular/Trade Notice dated 4.7.1997, the definition of "consulting engineer" under the Finance Act, 1994 was specifically explained and as per the said Trade Notice, "consulting engineer" means any professionally qualified engineer or engineering firm who, either directly or indirectly, venders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering. It also further clarified that "consulting engineer" shall include self-employed professionally qualified engineer who may or may not have employed others to assist him or it could an engineering firm - whether organised as a sole proprietorship - partnership, a private or a Public Ltd. company. From the aforesaid, it can be seen that it was never the intention of the legislation to exclude a "body corporate" from the definition of "consulting engineer" and from the "service tax net"; (Para 10)
+ As observed hereinabove, in many places under the Finance Act, 1994, the Parliament/Legislature has used the word "person" (Sections 68, 69 and 70). At this stage, Section 3(42) of the General Clauses Act, 1897 is also required to be referred to, considered and applied. The word "person" includes any company or association or body of individuals, whether incorporated or not. Therefore, there is no logic and/or reason to exclude a" body corporate" from the definition of "consulting engineer" and to exclude the services of a "consulting engineer" rendered by a "body corporate" to exclude and/or exempt from the service tax net. Such an interpretation would lead to anomaly and absurdity. As observed hereinabove, it will create two different classes providing the same services which could not be the intention of the Parliament/Legislature. Therefore, we are in complete agreement with the view taken by the High Court of Karnataka in the case of TCS (supra) and the Calcutta High Court in the case of M.N. Dastur, taking the view that a "firm" and a" company" can be said to be a "consulting engineer" as defined under the Finance Act, 1994 and liable to pay the service tax as a service provider; (Para 11)
+ In view of our above finding that under the Finance Act, 1994, in the definition of "consulting engineer", a "body corporate" is included and/or to be read into so as to bring a "body corporate" being a service provider providing the consultancy engineering services within the service tax net, as such, it is not necessary to consider whether the subsequent amendment amending the definition of "consulting engineer" by way of 2005 amendment adding a "body corporate" within the definition of "consulting engineer" would be retrospective and/or whether it can be said to be a clarificatory in nature or not and the said issue would become academic now; (Para 12)
+ In view of our discussion and for the reasons stated above, the impugned judgment and order dated 04.12.2015 passed by the CESTAT is unsustainable. It is held that the respondent, being a service provider providing consultancy engineering services, was/is liable to pay the service tax for such services being "consulting engineer" within the definition of Section 65(31) of the Finance Act, 1994 and therefore and thereby liable to pay the service tax under Section 66 r/w Section 68 of the Finance Act, 1994. The impugned judgment and order dated 04.12.2015 passed by the CESTAT in Appeal No. ST/136/2007 is hereby quashed and set aside. However, from the impugned judgment and order passed by the CESTAT, it appears that the CESTAT has considered only one issue namely whether for the period pre 01.05.2006 - the Finance Bill, 2006 whether "body corporate" was covered within the definition of "consulting engineer" under Section 65 (31) of the Finance Act, 1994 and had not considered any other issues/grounds raised in the Memo of Appeal before the CESTAT. Therefore, the matter is remanded to the CESTAT to examine and decide the appeal on other grounds, if any, raised in the Appeal Memo before it afresh in accordance with law and on its own merits and in light of the observations made hereinabove and the law laid down by this Court in the present judgment and order. The aforesaid exercise shall be completed by the learned CESTAT within a period of three months from the date of receipt of the present order, which shall be produced by the Revenue before the CESTAT within a period of four weeks from today without fail; (Para 13)
- Revenue's appeal allowed: SUPREME COURT OF INDIA
2022-TIOL-51-SC-CUS
CC & CE Vs D L Steels
Cus - The assessee imported two consignments of Anardana from Pakistan - Goods were classified under tariff sub-heading 1209.99.90, attracting basic custom duty at the rate of 5% plus education cess at the rate of 2% - However, the Revenue contended that the goods must fall under sub-heading 0813.40.90, and accordingly, are liable for basic custom duty at the rate of 30% plus education cess at the rate of 2% - SCN was issued to the assessee stating that the goods being fresh pomegranate falls under the Heading 0810, and the goods, being nothing but the dried form of fresh pomegranate fruit seeds, would fall under Heading 0813, an entry which covers the dried form of all items falling under Headings 0807 to 0810. Consequently, sub-heading 0813.40.90 would be applicable to the goods - While the goods were provisionally released on execution of bond, subsequently an assessment order was passed wherein the adjudicating authority confirmed differential duty u/s 28(2) of the Customs Act and personal peanlty u/s 114A r/w Section 112 of the Customs Act along with interest u/s 28AB of the Act - Similar orders based on identical grounds classifying the goods under sub-heading 0813.40.90, imposing differential duty, interest, and penalty were passed in the cases of the other respondents as well - On appeal, the Commr(A) held that the Anardana was made of dried fruit and so was not consumed as a fresh fruit & so it was observed that accordingly, Heading 0810, which applies to the type of pomegranate which is consumed as a fruit, would have no relevance to the type of pomegranate from which the goods are obtained - Commr(A) also accepted the assessee's contention that as per the policy condition attached to sub-heading 1209.99.90 of the Indian Export/Import Policy, which specifically states - “import of pomegranate seeds will be free” - Thereafter, the Revenue's appeal to the CESTAT was dismissed too, citing the certificate of Dr. Y.S. Parmar University of Horticulture and Forestry, Solan, to hold that the goods do not fall under the ambit of Heading 0813 - The CESTAT observed that words in a taxing statute must be construed in the same sense as understood in common or trade parlance, and the Revenue had failed to lead any evidence to support its contention that in trade parlance, the goods are understood as dried fruits - Reference was made to the observation in the Import Policy which had classified the goods under the sub-heading 1209.99.90 - Adverting to the Explanatory Notes to the Heading 1209, it was held that as the goods did not fall in the list of items expressly excluded from sub-heading 1209.99.09, they very well stood included in the sub-heading 1209.99.90 - Accordingly, sub-heading 0813.40.90 was not applicable, and the appeal was dismissed.
Held - The burden is on the Revenue to adduce proper evidence to show that the goods are classifiable under a different heading than that claimed by the assessee - Hence the goods in question are rightly classified under the sub-heading 1209.99.90: SC
+ The first Chapter Note to Chapter 8 stipulates that inedible nuts and fruits are not covered by the Chapter. Clearly, for the purpose of classification, this Note draws a distinction between 'edible' and 'inedible' fruits. Etymologically, the word 'edible' derives from the Latin word ' edibilis ' which means 'eatable'. The word 'edible' as per Webster's New International Dictionary means "fit to be eaten as food; eatable; esculent." The Concise Oxford English Dictionary defines edible as "fit to be eaten". The phrase 'fit to be eaten' can imply an absence of harmful effects. However, while the word 'edible' seems simple, it warrants elaboration as over-simplification will be problematic. Ben Baumgartner, in his article, has referred to several judgments of different courts in the United States of America to argue that the decisions have culminated in the various tests and parameters to determine the meaning of the word 'edible'; (Para 15)
+ The author thereafter goes on to argue that an item should be considered edible if it can be eaten without harmful effects, however, the 'habitually eaten' test would apply if the testing of the goods to check for harmful effects is dangerous. If neither of the two tests yield a result, the matter should be resolved by determining if the item was actually eaten. We need not discuss this article in detail but for the purpose to record that the word 'edible' is capable of diverse and multiple meanings, which are plausible. For the purpose of the present case, the word 'edible' must be construed using the principle of common parlance, which has been discussed supra. The law-makers, while enacting statutes, are cognizant of the way in which a word might be understood in common or trade parlance. Thus, if a meaning different than that attributed to it by people who are conversant in that subject matter was intended to be attached to a word, the same would be specifically delineated by way of a definition. The word 'edible' has no such specific definition attached to it, and therefore, must be interpreted using the common parlance test. The question which so arises is whether the goods - ' anardana ', are dried pomegranates, which when fresh are understood as 'edible' fruits in common parlance. Before we elaborate on the factual aspect, the desideratum requires that we consider sub-heading 081340.90 in Chapter 8; (Para 15)
+ In the context of the present case, once we accept the finding of fact recorded by the CESTAT that ' anardana ' is a dried product of local ' daru ' or wild pomegranate, which grows in mid hill conditions and which fruit in its fresh form is different from the pomegranate included in clause 7 to Heading 08.10, as this wild pomegranate is not consumed as a fresh fruit, the contention of the Revenue must fail. GRI 3, which in the absence of the Heading, Section or Chapter Notes, prescribes the order of priority as - (a) specific description, (b) essential character, and (c) the Heading that occurs last in numerical order, and even GRI 4 - the heading appropriate for the goods "to which they are most akin", supports our conclusion and finding. The submission of the learned counsel for the Respondent is correct that when the Revenue challenges the classification made by the assessees, the onus is on the Revenue to establish that the item in question falls in taxing category as claimed by them. See HPL Chemicals Ltd. vs Commissioner of Central Excise, Chandigarh, Parle Agro Pvt. Ltd. vs Commissioner of Commercial Taxes, Trivandrum, Union of India & Ors. vs Garware Nylons Ltd. & Ors. ; (Para 25)
+ The burden is on the Revenue to adduce proper evidence to show that the goods are classifiable under a different heading than that claimed by the assessee. The finding of fact as recorded by CESTAT gets reinforced by the policy condition attached to the sub-heading 1209.99.00 of the Import Policy which specifically states - 'import of pomegranate seeds will be free'. Without any doubt, sub-heading 1209.99.00 in the Import Policy correlates to sub-heading 1209.99 to Chapter 12 of the HSN. The contention of the Revenue that the Import Policy is in the nature of delegated legislation albeit correct, would not make any difference in the context of the present case as the policy condition in the Export/Import Policy specifically includes pomegranate seeds - as ' anardana ' under sub-heading 1209.99.00, whereas the Schedule to the Customs Tariff Act, 1975 merely reproduces the Heading and the sub-heading of the HSN, without specifically including or excluding pomegranate seeds under the sub-heading 1209.99; (Para 25)
+ the appeals by the Revenue must fail and are liable to be dismissed. However, before parting, we must advert to the reason why we have referred to and reproduced Heading 12.11 and Heading 09.10 under Chapter 9. There are also several sources which suggests that ' anardana ' is primarily used as condiment and in pharmacy for preparation of Ayurvedic medicines. However, we would not express any final opinion in this regard as the Revenue has not relied upon said headings and the show-cause notice which resulted in the adjudication orders and the appellate orders was restricted and confined to claim that the goods would be covered under the sub-heading 0813.40.90; (Para 26)
- Revenue's appeals dismissed: SUPREME COURT OF INDIA
2022-TIOL-955-HC-AHM-CUS
Summit Enterprise Vs Pr.Commissioner/CC
Cus - The petitioner imported two consignment of "Dry Dates" from UAE and filed the Bills of Entry - Said goods were detained by revenue without executing any detention memo, which are still lying uncleared as the same has been illegally detained by revenue - Revenue is demanding container detention charges in spite of order passed by Customs Authorities for waiver of such charges under Regulation 10(1) of Sea Cargo Manifest and Transhipment Regulations, 2018(SCMTR) - The order passed by Customs Authority is binding upon revenue and therefore, same are required to implement the order passed by Customs Authorities for waiver of demmurage charges under Regulation 10(1)(l) of SCMTR - Hence, without going into further details and merits of case, revenue is directed to release the goods which are under their custody and not under detention of Customs Authorities by implementing the said order - It is clarified that if revenue is desirous to challenge the order of Customs Authorities for waiver of demmurage charges, this order shall not come in their way: HC
- Petition disposed of: GUJARAT HIGH COURT
