2023-TIOL-49-SC-ST
CC, CE & ST Vs Interarch Building Products Pvt Ltd
ST - Respondent-assesseeis engaged in the business of manufacture, supply and erection at the site, of prefabricated/pre-engineered steel buildings and parts thereof - The respondent was having centralized registration for Service Tax under "Commercial or Industrial Construction Service" and "Construction Services" - The goods manufactured were cleared from the place of manufacture on payment of central excise duty andthe unit at Greater Noida registered as a Centralized Service Provider, availed CENVAT Credit of (i) Excise duty paid by the units at the time of removal; (ii) duty paid on capital goods and, (iii) service tax paid on input services - They paid service tax on the gross amount of contract for engineering, procurements supply, construction, erection etc. under the category "commercial or industrial construction services" - Department was of the view that the services rendered by the respondent amounted to Works Contract and it was mandatory for the respondent to either follow Rule 2A of Service Tax (Determination of Value) Rules, 2006 or adopt Composition Scheme; that CENVAT Credit of Rs.1,12,60,92,760/- availed and utilised on building material during June, 2007 to March, 2012 was inadmissible - By Order dated 28.03.2004 the Adjudicating Authority disallowed the CENVAT Credit, however, by its order dated 18.11.2015, Tribunal set aside the adjudication order and remanded the matter back to the adjudicating authority – Thereafter, adjudicating authority passed a fresh order dated 31.03.2017 and confirmed the demands – Tribunal, by its impugned order dated09.11.2017 [= 2018-TIOL-35-CESTAT-ALL ] has allowed the appeal preferred by the respondent and has set aside the Order-in-Original passed by the adjudicating authority by observing that the Composition scheme is optional and the provisions of Rule 2A of the said Rules are subject to provisions of Section 67 of the Act, 1994; that it is clear from the provisions of sub-section 4 of Section 67 of the Act, that where value cannot be determined as provided under sub-rule (1) to (3) of Section 67 of the Act, then only the value is to be determined as provided under the Rules; that there is no question on applicability of Rule 2A nor there was any question of forcibly applying the option of Composition Scheme; that in both these circumstances, the respondent was entitled to CENVAT Credit – Aggrieved by this order, Revenue is in appeal before the Supreme Court.
Held:
+ Short question is as to whether an assessee who is liable to pay service tax under Works Contract service has the legal right not to follow Rule 2A of the Service Tax (Determination of Value) Rules, 2006 nor the Composition Scheme on the ground that in terms of Section 67 of the Finance Act, 1994 an assessee is entitled to take the total contract value which includes both goods and services and remit service tax on the entire value as Works Contract service and in the process is also entitled to avail the CENVAT Credit? [para 8]
+ As per the law laid down by this Court [ = 2015-TIOL-187-SC-ST ],in the case of 'Works Contract service', an assessee is liable to pay service tax on the service element/value of the service rendered and the sales tax/tax on the element of goods transferred pursuant to the contract. [para 8.4]
+ Post 01.07.2012, as per Rule 2A, value of service portion in the execution of a works contract shall be equivalent to the gross amount charged for the works contract less the value of property of goods transferred in the execution of the said works contract. [para 8.6]
+ With respect to the 'Works contract service' and/or the Composition Works Contract, the valuation has to be made as per Rule 2A of the Valuation Rules, 2006. Even as per the Composition Scheme vide Notification 32/2007 dated 22.05.2007 [w.e.f 01.06.2007], an assessee has an option to discharge the service tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in Section 66 of the Act by paying equivalent to 2% of the gross amount charged for the works contract.
+ It is to be noted that Rule 3(1) [of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 ] provides notwithstanding anything contained in Section 67 of the Act and Rule 2A of the Service (Determination of Value) Rules, 2006. Therefore, as per the Scheme of the Act, the determination of value of service portion in the execution of the works contract is to be made as per Rule 2A, however with an option to the assessee to avail the benefit of Composition Scheme. Therefore, either the assessee has to go for Composition Scheme or go for Determination of Value as per Rule 2A and the assessee has to pay service tax on the service element and can claim CENVAT Credit on the said amount only. [para 8.9]
+ In view of the above, the impugned judgment and order passed by the CESTAT taking the contrary view is unsustainable by which it is held that the assessee is entitled to take the total contract value which includes both goods and services and remit service tax on the entire value as 'works contract' and the assessee is also entitled to avail the CENVAT Credit on the same. [para 9]
+ However, at the same time, the service tax needs to be paid in terms of Rule 2A of Service Tax (Determination of Value) Rules, 2006 and since the assessee has not opted for composition scheme, the matter is to be remitted back for re-computation of the demands in terms of Rule 2A. As the issue with respect to the extended period of limitation has also not been decided by CESTAT, the matter is to be remanded to the CESTAT to decide the issue of limitation. [para 9.1, 10.1]
+ The definition of 'works contract service' was brought into the Finance Act, 1994 w.e.f. 01.06.2007. Therefore, the demand for the period January, 2007 to 31.05.2007 shall not be maintainable. [para 4.4.1,10]
+ Tribunal has also not decided the issue of extended period of limitation. The aforesaid exercise be completed by the CESTAT on remand within a period of three months.
- Appeal allowed: SUPREME COURT OF INDIA
2023-TIOL-48-SC-SERVICE
State Through CBI Vs Hemendhra Reddy
Service - Prevention of Corruption Act, 1988 - Disproportionate Assets case against Appraiser, Customs Department -The principal question of law that falls for the consideration is whether the High Court was justified in quashing the entire prosecution instituted by the CBI against the accused persons for the alleged offences on the ground that the CBI could not have undertaken further investigation under sub section (8) of Section 173 of the Code of Criminal Procedure, 1973 (CrPC) and filed a charge-sheet having once already submitted a final report under s.s (2) of Section 173 of the CrPC (closure report)? - Whether the High Court was right in taking the view that the Special Court could not have taken cognizance upon the charge-sheet filed by the CBI based on further investigation, having once already filed a closure report in the past and the same having been accepted by the court concerned at the relevant point of time?
Held:
+ Section 173(8) of CrPC deals with further investigation and supplementary report. In the Code of Criminal Procedure, 1898 ('the Old Code'), there was no identical provision to that of Section 173(8) of the CrPC. The same is a newly added provision. It was added on the recommendation of the Law Commission in its 41st Report that the right of the police to make further investigation should be statutorily affirmed. [para 40]
+ In the Old Code, there was no provision prescribing the procedure to be followed by the police for fresh investigation, when fresh facts came to light, upon the submission of the police report and subsequent to taking cognizance by the Magistrate. There was, also, no express provision prohibiting further investigation by the police. [para 41]
+ It is well settled that sub section (8) of Section 173 of the CrPC permits further investigation, and even dehors any direction from the court, it is open to the police to conduct proper investigation, even after the court takes cognizance of any offence on the strength of a police report earlier submitted. [para 64]
+ However, the question before this Court is whether sub section (8) of Section 173 of the CrPC permits further investigation after the Magistrate has accepted a final report (closure report) under sub section (2) of Section 173 of the CrPC. The contention raised on behalf of the accused persons is that acceptance of a closure report would terminate the proceedings finally so as to bar the investigating agency from carrying out any further investigation in connection with the offence. [para 65]
+ In the light of the decision of the Supreme Court [S Papaiah (1997) 7 SCC 614 ,], it appears that though the order passed by the Magistrate accepting a final report under Section 173 is a judicial order, there is no requirement for recalling, reviewing or quashing the said order for carrying out further investigation under Section 173(8) of the CrPC. As held by this Court in the said decision, the provisions of Section 173(8) of the CrPC have been enacted to take care of such like situations also. [para 73]
+ Thus, a conspectus of the aforesaid decisions of this Court rendered in cases where final reports (closure reports) had already been submitted and accepted makes the position of law very clear that even after the final report is laid before the Magistrate and is accepted, it is permissible for the investigating agency to carry out further investigation in the case. In other words, there is no bar against conducting further investigation under Section 173(8) of the CrPC after the final report submitted under Section 173(2) of the CrPC has been accepted. It is also evident, that prior to carrying out a further investigation under Section 173(8) of the CrPC, it is not necessary for the Magistrate to review or recall the order accepting the final report. [para 76]
Summary of conclusion: [para 77]
(i) Even after the final report is laid before the Magistrate and is accepted, it is permissible for the investigating agency to carry out further investigation in the case. In other words, there is no bar against conducting further investigation under Section 173(8) of the CrPC after the final report submitted under Section 173(2) of the CrPC has been accepted.
(ii) Prior to carrying out further investigation under Section 173(8) of the CrPC it is not necessary that the order accepting the final report should be reviewed, recalled or quashed.
(iv) Further investigation is merely a continuation of the earlier investigation, hence it cannot be said that the accused are being subjected to investigation twice over. Moreover, investigation cannot be put at par with prosecution and punishment so as to fall within the ambit of Clause (2) of Article 20 of the Constitution. The principle of double jeopardy would, therefore, not be applicable to further investigation.
(v) There is nothing in the CrPC to suggest that the court is obliged to hear the accused while considering an application for further investigation under Section 173(8) of the CrPC.
DISTURBING PART OF THE PRESENT LITIGATION
++ While it is open to a learned Judge to differ with a view of a Co-ordinate Bench, the sequitur is to make a reference to a larger Bench on papers being placed before the learned Chief Justice. The learned Judge cannot simply say "with due respect, I do not agree to the ratio..." or "the decision is per incuriam as a binding judgment of the Supreme Court has not been considered…." and proceed to take a contrary view as done in the impugned order. Such an approach would result in conflicting opinions of Co-ordinate Benches, resulting in judicial chaos and is, thus, improper. This is something atrocious and unacceptable. [para 81]
DELAY IN TRIAL ON ACCOUNT OF FURTHER INVESTIGATION
++ It was vehemently submitted on behalf of the accused that further investigation if permitted after such a long lapse of time, would result in delay in trial. For years to come, the sword of Damocles should not be kept hanging on the neck of the accused persons. In such circumstances, it was argued that keeping in mind that this litigation is now almost more than a decade old, it will not be in fitness of things to put the accused persons to trial. [para83]
++ In the aforesaid context, the general rule of criminal justice is that "a crime never dies". The principle is reflected in the well-known maxim nullum tempus aut locus occurritregi (lapse of time is no bar to Crown in proceeding against offenders). It is settled law that the criminal offence is considered as a wrong against the State and the Society even though it has been committed against an individual. Normally, in serious offences, prosecution is launched by the State and a Court of law has no power to throw away prosecution solely on the ground of delay. Mere delay in approaching a Court of law would not by itself afford a ground for dismissing the case. Though it may be a relevant circumstance in reaching a final verdict. (See: Japani Sahoo v. Chandra Sekhar Mohanty reported in (2007) 7 SCC 394.) [para 84]
NON-COMPLIANCE OF THE SECOND PROVISO TO S. 17 OF THE 1988 ACT
++ Investigation, whether without the order of a police officer
++ The argument canvassed is that there is no such order of the police officer not below the rank of Superintendent of Police in the charge-sheet.This issue was not even raised before the High Court. Even otherwise, this is a question of fact and a matter of record. If it is the case of the accused that there is no such order on record, the same may be pointed out to the trial court in the course of the trial. It is for the trial court to verify the record, look into it and take an appropriate call on this issue in accordance with law. [para 88]
Conclusion:
Impugned orders passed by the High Court are hereby set aside - Appeals filed by the CBI succeed and are hereby allowed. [para 89, 90]
- Appeals allowed: SUPREME COURT OF INDIA
2023-TIOL-513-HC-MUM-CUS
Nafis Fakir Mohammed Laljee Vs UoI
Cus - Application filed for grant of bail who has been arrested for offence punishable under sections 8(c), 20(B) (II) ©, 28 & 29 of NDPS Act, 1985 - Prosecution has came with case that one export consignment of M/s. First Wealth Solutions with declared description as TAMOLX 225 tablet and declared quantity as 21 packages containing 10.5 lakhs tablets was intercepted under panchanama - So far as applicant is concerned, allegations against him are that he is a 'F card' holder in firm M/s. Jafferali Laljee & Son as owner of firm - It is responsibility of applicant to look after consignment which his firm is handling and it is his responsibility to supervise all the work doing through his firm and his signature on impugned shipping bill consignment - It is submitted that Customs House Agent cannot be blamed for irregularities, if at all, committed by Customs officials - Admittedly, applicant is Customs Agent and not the exporter - It is accused no.1 who exported the goods/contraband through Customs agent - As submitted on behalf of applicant, they cannot be expected to examine and ensure the nature of goods in consignment - Therefore, it cannot be presumed that he was aware of contents of consignment - There is no independent evidence on record placed by prosecution to show that applicant and accused no.1 hatched conspiracy with each other or that there was prior meeting of minds between applicant and accused no.1 for commission of present offence - There is no evidence on record regarding conspiracy and hence sec. 29 of NDPS Act is primafacie not applicable - Therefore, applicant cannot be connected with contraband recovered from or at the instance of accused no.1 and hence rigors u/sec. 37 of NDPS Act are not applicable to the case of applicant - Prosecution has not placed on record any evidence regarding conspiracy - Thus, prosecution failed to show nexus of applicant with contraband recovered from or at the instance of accused no.1 - Prosecution primafacie failed to show complicity of applicant in commission of present offence - Applicant has no criminal antecedents to his discredit and he undertakes to abide by any conditions imposed by the Court - Applicant is ready to cooperate investigating machinery - Hence, applicant is entitled to grant of bail subject to imposing stringent conditions - Applicant be released on executing P. R. Bond of Rs.1,00,000/- with one or more sureties in like amount: HC
- Application allowed: BOMBAY HIGH COURT |
