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2023-TIOL-122-SC-ST
CST Vs Phoenix International Freight Services Pvt Ltd
ST - Surplus income earned as freight forwarder - Appellant books space and makes payment to the shipping line in advance and later sells the same to their customers at a profit - in respect of surplus income earned as freight forwarder in trading and selling of space, appellant is not rendering any service either to the shipping line or to its customers, more so, under business auxiliary service - demand set aside by CESTAT.
ST - Airline incentive income - Inasmuch as the appellant is encouraging the various clients for booking the space in a specific airline, such services fall under the category of promotion and marketing of airline services - appellant not seriously contesting the demand, hence upheld - appeal ST/217/2012 demand is hit by limitation and is confirmed for the normal period - demand in appeal ST/235/2012 is well within the limitation period, hence tax liability upheld by CESTAT.
ST - Income earned as charge collection fees - appellant does not contest tax liability, hence upheld - in appeal ST/217/2012, demand confirmed for normal period as SCN is hit by limitation - appeal ST/235/2012 entire demand upheld by CESTAT.
Penalty - Since issue involved is of interpretation, penalties are not warranted, hence are set aside by CESTAT.
Held - Notice be issued to the parties concerned: SC
- Notice issued: SUPREME COURT OF INDIA
2023-TIOL-121-SC-ST
CCE Vs Surindra Engineering Company
ST - If laying of cables cannot be a taxable service, adopting the same logic, the laying of pipeline also cannot be construed as a taxable service - Demand of Rs.7.62 crores set aside by CESTAT - CBEC Circular dated 24/05/2010 makes it absolutely clear that unless the activity undertaken results in the emergence of an "erected, installed and commissioned plant, machinery, equipment or structure", the activity will not come under the category of erection, commissioning and installation service - Pipelines cannot be construed as a plant, machinery or equipment or structure.
Held - Notice be issued to the parties concerned: SC
- Notice issued: SUPREME COURT OF INDIA
2023-TIOL-958-HC-AHM-GST
Sohilbhai Sddiqbhai Aadmani Vs Supdt. CGST
GST - The petitioner is engaged in the business of trading of ferrous, non-ferrous metal, machineries and has been registered as per the provisions of Section 22 of the CGST Act and holds registration thereunder - In the relevant period, a search operation was carried out at the business place of the petitioner, no illegality was found by the Revenue - However, summons under Section 70 of the said Act, came to be issued asking the petitioner to remain present on 29.07.2022 - The petitioner submitted all the necessary documents - The Books of Accounts and other documents were returned by the Revenue authority to the petitioner - The petitioner claimed that the SCN proposing to cancel its registration, was cryptically worded and unclear - The Revenue had also proceeded to pass an order without considering the petitioner's request for a personal hearing and in which the petitioner's registration came to be cancelled - When the petitioner requested to be provided with the relevant evidence, the Revenue proceeded to issue the SCN - Moreover, the order omitted to determine the amount which was payable by the petitioner - Further, it was claimed that the order specified no reasons for cancellation of registration u/s 29(2)(e) of the CGST Act - The petitioner claimed to have filed an application for revocation of cancellation of registration u/s 30 of the Act and Rule 23 of the CGST Rules.
Held - The SCN in question is without any basis and there is no reason assigned for arriving at the conclusion of cancellation of registration - The Revenue authority apparently omitted to consider the reply furnished by the petitioner - Moreover, it is seen that the order cancelling the petitioner's registration came to be passed on the same day on which the petitioner furnished reply to SCN - No personal hearing was given to the petitioner, despite the petitioner requesting for the same - In the present case, it is clear that while issuing SCN for cancellation of registration, the requisite documents were not supplied and the notice itself is cryptic - Also since no reasons were furnished for cancelling the registration, the order passed by the Revenue for cancellation of registration is not tenable - Hence the SCN as well as the order are quashed and set aside - The Revenue authority concerned is directed to restore the registration of the petitioner: HC
- Writ petition allowed: GUJARAT HIGH COURT
2023-TIOL-957-HC-MUM-CX
Coventry Estates Pvt Ltd Vs Joint CCGST & CE
CX - The petitioner was engaged in construction of residential complex - For this work, the petitioner entered into a contract with one M/s Sunny Vista Pvt Ltd for construction of 10 towers and other works in a township called "Hiranandani Palace Gardens" in a Special Economic Zone - On 31.03.2009, the petitioner addressed a letter to M/s Sunny Vista specifying thay as per agreement, Rs 20 crores was to be paid by M/s Sunny Vista as a refundable deposit - Such refund was to be made in 3 years time - Such deposit of Rs 20 crores was made - On 21.10.2009, the petitioner filed its Service Tax Return in Form ST-3 for the period October, 2008 to March, 2009 declaring the deposit of Rs 20 crores under exempt category, being the services provided to the SEZ being exempt - Later, summons were issued to the petitioner and called on the petitioner to furnish bakance sheet, receipt ledger, contracts, invoiuces, and details of the amount received from Sunny Vista - Later, the documents sought for were furnished - Thereafter, Statements of one Shri Kamlesh Desai were recorded by the Superintendent (Anti Evasion) under Section 14 of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - The Superintendent (Anti Evasion) sought further information, which was provided by the petitioner - Later, further details were sought for by the Superintendent (Anti Evasion) & the same were also furnished by the petitioner - Subsequently, SCN was issued to the petitioner alleging that the petitioner had failed to discharge service tax liability w.r.t. services provided by it - In the SCN, it was alleged that the service provided under the head Business Auxiliary Services was taxable u/s 65(19) of the Finance Act 1994 w.e.f. 01.07.2003 and that the petitioner contravened the provisions of Sections 65, 66, 67 & 68 of the Finance Act 1994 r/w Rules 4,6, & 7 of the Service Tax Rules 1994 - It was alleged that the petitioner failed to correctly declare the value of taxable services provided by it, as was required u/s 67 of the Finance Act - It was also alleged that the provisions of Section 65 of the Finance Act had been contravened - Duty demand was raised along with Education Cess, Secondary and Higher Education Cess - Moreover, the advance tax paid by the petitioner was proposed to be appropriated - Penalty was proposed as well - The petitioner filed reply to SCN - After about two years from date of issuance of SCN, a company M/s S&H Services Pvt Ltd was merged with the petitioner under scheme of amalgamation & the merger was approved by the Court - After passage of about 10 years from the date of issuance of SCN, a notice of personal hearing was received - The petitioner sought for adjournment - The petitioner also wrote to the Adjudicating Authority, claiming that the SCN warranted being droppd on grounds of inordinate delay - Nevertheless, the petitioner was urged to be present for the hearing - In response thereto, the petitioner urged that the SCN warranted being dropped due to grounds of inordinate delay in adjudicating the SCN - Another letter to this end was written by the petitioner - The Revenue issued another letter informing the petitioner of hearing of SCN - Hence the present petition was filed.
Held - An inordinate delay is seriously prejudical to the assessee and the law itself would manifest to weed out any uncertainty on adjudication of a show cause notice, and that too keeping the same pending for such a long period itself is not what is conducive - Hence the present petition merits being allowed, considering that there is no justification for the SCN: HC
+ In these circumstances, there would be three questions which would arise for consideration. Firstly, would it be reasonable for a authority acting under Section 73 of the Finance Act, 1994 and more particularly considering the provisions of sub-section (4B) thereof, to keep the show cause notice in a cold storage for such a long period, and/or in other words, to keep hanging the sword of the show cause notice on the assessee. The second question would be whether the justification as furnished by the department is acceptable or a reasonable justification for the adjudicating officer not taking forward the show cause notice and more particularly when a reply to the same was submitted by the petitioner on 24 January, 2013 rendering all cooperation in the adjudication of the show cause notice on the part of the assessee. Thirdly, whether the law would permit adjudication of such a belated adjudication of the show cause notice;
+ Considering the plain consequences, Section 73(4B)(a) and (b) would bring about, it would be an obligation on the Central Excise Officer to determine the amount of service tax due under sub-section (2), within six months from the date of notice or within a period of one year from the date of notice, where it is possible to do so, in respect of cases falling under the proviso to sub-section (1) or the proviso to sub-section (4A). Thus, the statute itself prescribes for such period within which the service tax would be required to be determined. Sub-section (1) of Section 73 would also be relevant when it restricts the liability to service tax, to the period of five years under the situations falling below the proviso to sub-section (4) in cases of fraud, collusion, wilful mis-statement, suppression of facts, contravention of any of the provisions of Chapter V of the Finance Act, 1994; (Para 15)
+ We are thus of the opinion that there has to be a holistic approach and reading of the provisions of Section 73, when it concerns the obligation and repository of the power to be exercised by the concerned officer to recover service tax, in adjudicating any show cause notice, issued against an assessee considering the raison d'etre of the provision. It is hence expected that the approach and expectation from the officer adjudicating the show cause notice would be to strictly adhere to the timelines prescribed by provisions of the Act, as there is a definite purpose and intention of the legislature to prescribe such time limits, either under Section 73(4B) of six months and one year respectively or of five years under Section 73(1); (Para 16)
+ In our opinion, in the facts of the present case, such requirement and obligation the law would mandate is completely overlooked by the officer responsible for adjudicating the show cause notice. We are not shown any provision, which in any manner would permit any authority to condone such inordinate delay on the part of the adjudicating officer to adjudicate show cause notice. There can be none, as the legislature has clearly intended to avoid uncertainty, which otherwise can emerge. Thus, what would become applicable are the settled principles of law as laid down in catena of judgments, that the period within which such adjudication should happen is as mandated by law and in any case it needs to be done within a reasonable period from the issance of the show cause notice. Further, whether such period is a reasonable period would depend upon the facts and circumstances of each case; (para 17)
+ It is well said that time and tide wait for none. It cannot be overlooked that the pendency of show cause notice not only weighs against the legal rights and interest of the assessee, but also, in a given situation, it may adversely affect the interest of the revenue, if prompt adjudication of the show cause notice is not undertaken, the reason being a lapse of time and certainly a long lapse of time is likely to cause irreversible changes frustrating the whole adjudication; (Para 19)
- Writ petition allowed: BOMBAY HIGH COURT
2023-TIOL-956-HC-MUM-CUS
Elite Aromas Vs UoI
Cus - The present petitions were filed by petitioners claiming that the proceedings in these cases would be covered by the decision of the Supreme Court in Canon India Pvt Ltd Vs Commissioner of Customs.
Held - The first order was passed on the proceedings of Idea Cellular Ltd. Vs. The Union of India , whereby this Court has noted that there is a Review Petition arising out of the decision of the Supreme Court in M/s Canon India Private Limited , which is pending before the Supreme Court - Also subsequent the amendment which was brought about by Finance Act 2022, is also challenged before the Supreme Court in the proceedings of Writ Petitions which too are pending - It appears that the issues are not different from what the Court considered in the case of Idea Cellular Ltd., Viral Kanubhai Mehta and in the case of Irfan Hajiosman Nursumar. We accordingly pass similar orders on the present proceedings - By way of ad-interim relief, we stay the impugned order: HC
- Writ petitions allowed: BOMBAY HIGH COURT
2023-TIOL-955-HC-MUM-CX
Rimi Profiles Vs CCGST & CE
CX - The Appellant is stated to be a Company, engaged in gas cutting, i.e., profile cutting of the M.S. Plates - According to the Appellant its tempo, carrying such materials, was intercepted on 14th August, 1995 - Statements of the Appellant's representative were recorded by taking recourse to the summons proceedings - Thereafter on 12th February, 1996 an SCN was issued by the Commissioner proposing to recover duty of Rs.31,78,879/- along with interest and penalty on the entire clearances of the Appellant which also included traded goods - By Order-in-Original dated 28th September, 2001, the Commissioner confirmed the demand covered under the said SCN and also imposed penalty, based on his findings that profile cut plates were classifiable under Chapter 73 and amounted to manufacture and demand was not barred by limitation - Therefore, the present appeal came to be filed to challenge the order passed by the CESTAT - The Appellant claimed to have been under a bona fide belief that the activity of profile cutting of plates was not tantamount to manufacture and so the Appellant had been clearing goods without payment of tax on profile-cut plates, traded angles, challans, plates etc - Hence it was also canvassed that the SCN was issued beyond limitation.
Held - The appeal is admitted only on one question of law whether demand is barred by limitation - There is no disputes between the parties that the Show Cause Notice was issued on 12th February 1996, demanding duty along with interest and penalty - In the present proceedings, the SCN was issued for a period from February, 1991 to July, 1995, which is admittedly issued beyond a period of 6 months - At the relevant time the unamended Section 11A(1) mentioned a period of 6 months within which a notice could be served - Therefore, the SCN can be sustained only if the department is able to show that there is suppression on the part of the Appellant - However, no material is available on record that the appellant indulged in suppression so as to attract any of the requirements as contended in the proviso to Section 11A of the Central Excise Act to apply the extended period of limitation - As the issue stands settled vide an order of the Supreme Court, the orders in question merit being set aside: HC
- Appeal allowed: BOMBAY HIGH COURT
2023-TIOL-954-HC-AHM-SERVICE
Kamalbhai Narshibhai Chavda Vs Rakesh Mishra
Service Matter - The petitioner had challenged said order passed by the CAT, whereby the CAT dropped the contempt petition and discharged the notice to the alleged contemnor - The issue at hand pertains to the appointment of the petitioner on compassionate grounds, to the post of Seaman/Sepoy in the Customs Department, on account of the death of his parent who passed away in harness - The petitioner claims to not have been considered for the appointment on compassionate grounds, despite there being a vacancy available - On approaching the CAT, an order was passed to consider the petitioner's case for appointment on compassionate grounds, within three months' time - As the petitioner received no response, he filed contempt proceedings against the Revenue.
Held - An order had been passed in in OA No. 445 of 2013 wherein it had been stated that the applicant for appointment on compassionate grounds could not be considered for want of vacancy within the available compassionate appointment quota - It was also stated that the Revenue would consider the petitioner's case in the next meeting in terms of the OM dated 26.07.2012 issued by the DoPT - Hence it is not open for the petitioner now to reopen the issue of non consideration in a meeting of 2013 which the Tribunal had considered and the petitioner had accepted. In assailing the order of dropping of contempt proceedings it is not open for the petitioner to reagitate an issue which the Tribunal had otherwise closed: HC
- Petition dismissed: GUJARAT HIGH COURT
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