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2023-TIOL-129-SC-CUS
Industrial Development Bank of India Vs Supdt. of CE & C
Cus - Appeal by Industrial Development Bank of India For takes exception to the judgment dated 26th August 2008 of the Andhra Pradesh High Court in M/s. Sri Vishnupriya Industries Ltd. (in liqn.) and Others, whereby it has been held that notwithstanding the winding up order dated 1st December 2003 in the case of M/s. Sri Vishnupriya Industries Limited and the provisions of Section 529A and 530 of the Companies Act, 1956, the customs authorities have the first right to sell the imported goods under the Customs Act, 1962 and adjust the sale proceeds towards payment of customs duty.
Held: Section 530 of the Companies Act deals with preferential payments that are a level below the overriding preferential payments under Section 529A of the Companies Act. Clause (a) to Section 530(1) of the Companies Act confers preferential status to all revenue taxes, cesses, and rates 'due' to the Central or the State government or to a local authority on the 'relevant date' as defined in clause (c) to sub-section (8) to Section 530 of the Companies Act, which have become 'due and payable' within the twelve months next before the relevant date - The taxes, cesses and rates due to the Central and State governments or local authorities under Section 530 of the Companies Act cannot be given priority over the payments/debts mentioned in Section 529A of the Companies Act - It is, therefore, beyond debate that the provisions of Section 529A of the Companies Act prevail over Section 530 of the Companies Act -In the context of the present case, the debt had become 'due' in terms of the two adjudication orders dated 15th September 2000 and 10th October 2000 and 'payable' immediately - Thus, the customs duty became 'due and payable' prior to twelve months next to the 'relevant date'; the 'relevant date' being the date of winding up of the Company on 1st December 2003 - The amount 'due and payable' in terms of the two adjudication orders dated 15th September 2000 and 10th October 2000 would, therefore, not fall in the category of preferential payments under clause (a) to Section 530(1) of the Companies Act -The provisions [Sections 61, 72 and 142] in the Customs Act do not, in any manner, negate or override the statutory preference in terms of Section 529A of the Companies Act, which treats the secured creditors and the workmen's dues as defined and payable in terms of Section 529(3)(b) of the Companies Act as overriding preferential creditors; and the government dues limited to debts 'due and payable' in the twelve months next before the relevant date, which are to be treated as preferential payments under Section 530 of the Companies Act, but are ranked below overriding preferential payments and have to be paid after the payment has been made in terms of Section 529 and 529A of the Companies Act - Therefore, the prior secured creditors are entitled to enforce their charge, notwithstanding the government dues payable under the Customs Act -Provision of Section 142A of the Customs Act, insofar as it protects the rights of overriding preferential creditors governed and covered by Section 529A of the Companies Act, is clarificatory and declaratory in nature, and does not lay down a new dictum or confer any new right as far as the present case is concerned - However, the enactment of section 142A of the Customs Act does confer or create a first charge on the dues 'payable' under the Customs Act, notwithstanding provisions under any Central Act, but not in cases covered under Section 529A of the Companies Act, RDDBFI Act, SARFAESI Act and the IBC - Section 142A of the Customs Act, post its enactment, would dilute the impact of Section 530 of the Companies Act, which had restricted preferential treatment to government taxes 'due and payable' limited to twelve months prior to the 'relevant date', without preferential right for taxes that had become 'due and payable' in the earlier period -Decision of the division bench of the Calcutta High Court in Dytron (India) Ltd. ( 1998 SCC OnLine Cal 674 ) does not lay down the correct law and is, accordingly, overruled - Present appeal is allowed and the impugned judgment dated 26th August 2008 in Original Side Appeal No. 1 of 2005 is set aside - Company Application No. 906 of 2004 filed by the Official Liquidator in Company Petition No. 168 of 2002 will be treated as allowed - The sale proceeds deposited in this Court and converted into fixed deposit receipts, along with the interest accrued thereon, will be paid to the Official Liquidator to be distributed in accordance with the provisions of Sections 529A and 530 of the Companies Act: Supreme Court [para 11, 23, 24, 25, 26, 28]
- Appeal/Application allowed: SUPREME COURT OF INDIA
2023-TIOL-128-SC-ST-LB
CCGST & CE Vs Flemingo Travel Retail Ltd
ST - CESTAT came to the conclusion that the duty free shops situated at international airports constitute a global market competing in a tax exempt environment and the levy of service tax was bereft of lawful authority - In its judgment dated 10 April 2023 [ 2023-TIOL-75-SC-ST ], this Court affirmed the judgment of the CESTAT noting that against a judgment of the High Court of Judicature at Bombay dated 28 November 2018 in Al Cuisine Pvt Ltd v Union of India Writ Petition No. 8034 of 2018 [ 2018-TIOL-2916-HC-MUM-GST ] , a Special Leave Petition (SLP (C) 33011 of 2018) was dismissed by an order dated 14 December 2018 – Revenue seeks a review of the said judgment dated 10 April 2023.
Held: After recording the view which was taken by the CESTAT, this Court adverted to the decision of the High Court of Judicature at Bombay in Sandeep Patil ( 2019-TIOL-2348-HC-MUM-GST ) and that of the Kerala High Court in CIAL Duty Free and Retail Services Ltd ( 2020-TIOL-1622-HC-KERALA-GST ) - None of the submissions of the Union of India have been recorded or considered - The judgment only adverts to the submissions of the respondents - Whether [the submission of the Counsel for Revenue that the decisions of the High Court of Judicature at Bombay and the Kerala High Court pertain to goods and not to the levy of service tax on the renting of immovable property] this would make any difference to ultimate outcome is debatable, and would, therefore, require substantial consideration - At this stage, absent such a consideration in the judgment under review and since the issue which is raised would have large consequential ramifications, Bench is of the considered view that the review should be allowed - Review is allowed by recalling the judgment dated 10 April 2023 - Civil Appeal No 2753 of 2023 shall stand restored to the file of the Court - Appeal having been restored to the file for final disposal, Bench directs that no coercive steps shall be taken for the recovery of the dues, pending the disposal of the appeal: Supreme Court [para 12, 13, 14, 16, 19]
- Review petition allowed: SUPREME COURT OF INDIA
2023-TIOL-774-CESTAT-BANG
CCT & GST Vs Merittrac Services Pvt Ltd
ST - Respondent is engaged in the business of evaluating skills, abilities and knowledge for specific skills in the organization through use of scientifically developed assessment tools; that as part of services to educational institutions, conducted examinations by themselves or assisted university/ college in conducting the same; they assisted universities like Manipal University and Sikkim Manipal University in conducting their examination wherein the respondent would identify, select, organize venue, provide university representatives and associate university representative, manage examination delivery, training of university representatives, identification of exam centers and conduct surprise audit, etc.; they have also conducted skills assessments for individuals either through university for non- recruitment but feedback purposes - Respondent claimed that the services rendered by them are educational and not commercial and accordingly availed benefit under Notification No.14/2004-ST for the period April 2012 to June 2012 and for the period from 01.7.2012 to 31.3.2013 under‘Auxiliary Education Service' by claiming benefit of Notification No. 25/2012-ST - Revenue case is that the services rendered during the said period April 2012 to June 2012would fall under the category of ‘Management or Business Consultant Service" as the said services do not relate to ‘education' - Demand of Service Tax to the tune of Rs.1,71,59,066/- and Rs.6,80,28,465/- was demanded and on adjudication the Commissioner dropped the demand - Aggrieved, Revenue is in appeal to the extent of the demand of Rs. 1,71,59,066/- dropped for the period 01.4.2012 to 30.6.2012.
Held: The short question involved in the present case is - Whether the services rendered by the respondent to Manipal University(MU) and Sikkim Manipal University(SMU) as per agreement dated 08.7.2008 in conducting examinations for selection of candidates for admission to various courses and other evaluating examinations fall under the scope of "Management or Business consultant service" and the respondent is not eligible to the benefit of exemption Notification No.14/2004 ST dt. 10.9.2004 - Tribunal in the Respondent's own case [ 2019-TIOL-723-CESTAT-BANG ] for the earlier period i.e. from December 2007 to March 2012 interpreting the same agreements held that the allegation of the department that the services rendered by the respondent fall under the category of ‘Management or Business consultant' service cannot be sustained as the services rendered by the respondent to the Universities do not fit into the definition of Management or Business consultant service - Bench finds no reason not to follow the said precedent - The respondent's role is to execute the conduct of exams by providing necessary manpower, expertise, infrastructure etc. as stipulated in the said agreement - The said service thus cannot be construed as rendering any management or business consultancy/advice to the universities by the Appellant without its involvement in the execution of the conduct of the examination - Impugned order is upheld and the appeal filed by the Revenue being devoid of merit, is accordingly rejected: CESTAT [para 6, 10, 11]
- Appeal rejected: BANGALORE CESTAT |
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