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2023-TIOL-147-SC-GST
State of Telangana Vs Tirumala Constructions
GST - The present appeals arise from separate SLPs filed in this matter - One batch of appeals pertains to the State of Telangana - The relevant VAT Act of the state of Telangana was amended following the introduction of GST vide the Constitution 101st Amendment Act of 2016 - Vide an Ordinance, the VAT Act of Telangana was amended 13 days before the time permittd by the 101st Amendment Act - The Amendment came into force on 16.09.2016 - The ordinance sought to extend the period of limitation, and permitted to re-open assessments - This ordinance, continued till the State Legislature enacted it - The Governor then assented to the law, and it came into force on 02.12.2017 - Many traders approached the High Court of Telangana to challenge the amendment to the VAT Act - The High Court accepted the challenge and struck down the amended Act - Other reasons included that the ordinance, could not have been confirmed, as the state was denuded of legislative competence after 01.07.2017.
Held - Section 19 of the Constitution (101st Amendment) Act, 2016 and Article 246A enacted in exercise of constituent power, formed part of the transitional arrangement for the limited duration of its operation, and had the effect of continuing the operation of inconsistent laws for the period(s) specified by it and, by virtue of its operation, allowed state legislatures and Parliament to amend or repeal such existing laws - Since other provisions of the said Amendment Act, had the effect of deleting heads of legislation, from List I and List II (of the Seventh Schedule to the Constitution of India), both Section 19 and Article 246A reflected the constituent expression that existing laws would continue and could be amended - The source or fields of legislation, to the extent they were deleted from the two lists, for a brief while, were contained in Section 19 - As a result, there were no limitations on the power to amend - The above finding is in view of the vacuum created by the coming into force of the 101st Amendment, which resulted in deletion of the heads of legislation in the two lists aforesaid - The amendments in question, made to the Telangana VAT Act, and the Gujarat VAT Act, after 01.07.2017 were correctly held void, for want of legislative competence, by the two High Courts (Telangana and Gujarat High Court) - The judgment of the Bombay High Court is, for the above reasons, held to be in error; it is set aside; the amendment to the Maharashtra Act, to the extent it required pre-deposit is held void - The appeals (and any other special leave petitions) filed by the States of Telangana and Gujarat are hereby dismissed in the above terms; the appeals of the assessees against the judgment of the Bombay High Court (i.e., Civil Appeal No. 2730-2733/2023 & SLP (C) No. 7776/2023), succeed and are allowed: SC
+ For Telangana appeals - It is unnecessary to recount the well documented path that led to the amendment of Article 368 and the subsequent amendments or the fate they met with. What needs to be underlined is that unlike ordinary legislation, which is traced to the power of Parliament or any other legislative body, the amendment power is distinct inasmuch as it is expressly a constituent power. In Kesavananda Bharati v State of Kerala 1973 Supp 1 SCR 1 case, the largest bench formed, this court ever sat in (13 Judges) declared that the power under Article 368 though constituent and though seemingly unbounded and does not expressly constrict, yet has impliedly limited by the "essential features" or "basic structure" doctrine;
+ An ordinary law such as an Act of Parliament, is a product of a legislative exercise. The source of that power is traced to the Constitution in some specific provisions or through fields of legislation enumerated in one or the other lists. Constitutional law on the other hand is that it arises out of the Constitution and creates different organs of the State, defines their power and imposes limitations on the functioning of the Executive and legislative wings through the fundamental rights and other limitations. An ordinary law can be made or changed by the same body, the legislating body in exercising legislative power. Since constitutional amendments relates to the fundamental law of the land which is a source of authority for other laws, it can be achieved only through fulfilling the special procedure;
+ In the opinion of this Court, the mere circumstance that Section 19 does not get added to the Constitution, would not make any difference. If one looks closely at Articles 243 ZF which this Court interpreted in Bondu Ramaswamy (supra) and Article 243 ZT which was interpreted in Vipulbhai (supra) the effects of those provisions are the same as Section 19. Although those provisions continued to be part of the Constitution, they have no meaning and were merely historical. The reason is that they were operative, for a limited duration – like Section 19. However, the fact remains that those provisions as well as Section 19 were enacted in exercise of the constituent power. Section 19 is not, in this court's opinion comparable to a mere Parliamentary enactment. There cannot be any gain in saying that Section 19 is not a mere legislative device. It was adopted as part of the 101st Constitutional Amendment Act. Undoubtedly, it was not inserted into the Constitution. Whatever reasons impelled Parliament to keep it outside the body of the Constitution, the fact remains that it was introduced as part of the same Amendment Act which entirely revamped the Constitution;
+ It cannot be in dispute that Section 20 existed for a period of two years and enabled the President to issue orders for the removal of difficulties experienced in the course of implementing the amendments to the Constitution. If indeed those parts of the amendments were not enacted in the exercise of constituent power but mere legislative power, there would be no legitimacy of the power conferred upon the President under Section 20. On an overall interpretation of the provisions of the Amendment, it is held that Sections 19 and 20 constitute incidental and transitory provisions which have limited life, so to speak. Whether they became part of the Constitution or not is really academic. What really matters is the effect of those provisions;
GST - In a batch of appeals arising from the judgment of the Bombay High Court, the parties were aggrieved by the fact that the Maharashtra VAT Amendment Act, which was initially made on 15.04.2017, was read down by a Division Bench judgment, of the Bombay High Court - That position was sought to be reversed, through an amendment which was brought into force, on 15.04.2017 and later in an effort to reverse the effect of a judgment, given retrospective effect. The writ petitions filed by such aggrieved parties, were dismissed.
GST - In the third batch of cases pertaining to Gujarat, Section 84A was introduced in the Gujarat Value Added Tax Act, 2003 by the Gujarat Value Added Tax (Amendment) Act, 2018, gazetted on 06.04.2018 but with retrospective effect from 1.4.2006 - It provided that if for a particular issue in "some other proceedings" a lower forum, gave a decision which is prejudicial to the interest of the revenue and an appeal against such decision is pending before the higher forum then the period spent in such litigation will be excluded while computing period of limitation for revision - By giving such provision retrospective effect the State legislature thus sought to enable reopening of assessments which had already attained finality. The Gujarat High Court struck down the amendment on the ground of lack of legislative competence, on the part of the legislature, after 01.07.2017, and also that it was manifestly arbitrary;
Held - For Maharashtra appeals - In the opinion of this court, there is no quarrel with the proposition that a legislative body is competent to enact a curative legislation with retrospective effect. Yet, the same vice that attaches itself to the Gujarat amendment, i.e. lack of competence on the date the amendment was enacted i.e. in this case, 09.07.2019, the Maharashtra legislature ceased to have any authority over the subject matter, because the original entry 54 had undergone a substantial change, and the power to change the VAT Act, ceased, on 01.07.2017, when the GST regime came into effect - Therefore, for the same reasons, as in the other cases, the amendments to the Maharashtra VAT Act cannot survive.
- Appeals partly allowed: SUPREME COURT OF INDIA
2023-TIOL-944-CESTAT-MUM
Siddheshwar SSK Ltd Vs CCE
CX - The present appeal was filed against an O-i-O passed in respect of the relevant period and which sought to raise tax demand of about Rs 57.50 Lakhs under Section 11A of the Central Excise Act 1944 along with interest under Section 11AB of the Act along with imposition of penalty under Section 11AC of the Act - In this regard, recourse was taken to two separate options provided under Rule 6 of the CCR 2004 - The credit directed to be reversed arose from attribution of the impugned 'taxable services' in production of 'rectified spirit' and of 'kraft paper' along with manufacture of 'sugar', 'molasses' and 'denatured spirit' that are cleared on payment of duty - As far as 'kraft paper' is concerned, clearances were governed by notification no. 4/2006-CE dated 1st March 2006 (at serial no. 90) foregoing levy of duty on clearances to the extent of 3500 MT per annum - As 'rectified spirit' was not excisable, the Show Cause Notice had proposed that credit proportional to production be reversed and for reversal pertinent to 'kraft paper', being excisable but exempt, be computed 10%/5% as prescribed in rule 6 of CENVAT Credit Rules, 2004.
Held - Rule 6(1) of CENVAT Credit Rules, 2004 make it abundantly clear that proportionate credit availed on services used in common is to be reversed - The Appellant has not done so and this, combined with absence of reporting of production of 'rectified spirit', brings the full force of the decision of the Supreme Court in re RR Paints Pvt Ltd to discard the plea of limitation as bar to recovery - However, as held in re Tata Technologies Ltd , reversal of proportionate credit suffices for compliance with rule 6 of CENVAT Credit Rules, 2004 - Moreover the Tribunal in Mercedes Benz India (P) Ltd v. Commissioner of Central Excise, Pune-I held that the Assessee was free to choose as to which option under Rule 6 of CCR 2004 was sought to be exercised - There is no reason to sustain the penalty imposed under section 11AC of Central Excise Act, 1944 as there is no allegation of evasion of duty otherwise payable on account of non-availability of sufficient credit on clearance of dutiable goods - Accordingly, the impugned order is modified to limit recovery by any method then available under rule 6 of CENVAT Credit Rules, 2004 to be exercised by the Appellant herein within 30 days of receipt of this order and to the extent of tax attributable to 'input service' used in manufacture of 'rectified spirit' during the relevant period: CESTAT
- Appeal dismissed: MUMBAI CESTAT
2023-TIOL-943-CESTAT-ALL
CC Vs S K Enterprises
Cus - In the relevant period, officers of the Customs Preventive Department intercepted a truck, which was loaded with 282 bags of red betel nuts - The truck driver produced an invoice and papers of the Trade Tax Department of Uttar Pradesh - The Department sought opinion from three different firms, as to the origin of the betel nuts - All three firms concurred that the betel nuts were of foreign origin - The driver of the truck gave statement, mentioning that he was asked to take the truck to a location near the India-Bangladesh border, where the owner of the transport company met the driver; that the truck was taken to a secluded spot and where a person on a motorcycle brought 15 bags of Betel nuts; that after several rounds completed by the motorcycle, the total number of bags reached 282; these were then loaded onto the truck and the two persons gave the driver a bill of the betel nuts and a bilti of the transport company - A sample of the Areca Nuts were sent to the Arecanut Research and Development Foundation at Mangalore, which confirmed the Areca Nuts as being of Indonesian origin - It appeared to the Department that the consignment was smuggled into India in contravention of Notification No 63/94-Cus (NT) dated 21.11.1994 issued under Section 11 and Section 7(1)(c) of the Act - Hence the same were held liable for confiscation under Section 111 of the Customs Act 1962 - Show Cause Notice was issued and on adjudication, the betel nuts were confiscation under Section 111(b) and Section 111(d) of the Customs Act - Penalty under Section 112(b) of the Act were imposed - On appeal, the Commissioner (Appeals) observed there to be no evidence that the betel nuts had been improperly imported into India and hence held that the confiscation of the goods as well as imposition of penalty were unjustified.
Held - The Commissioner (Appeals) primarily touched upon the aspect that the Betel Nuts were not notified under Section 123 of the Customs Act and that the onus of proving their smuggled nature was on the Revenue - This was held to be as such by the Tribunal in Baboo Banik v/s Commissioner of Customs, Lucknow - Moreover, the Tribunal in Bijoy Kumar Lohia v/s CC Patna held that the local trade opinion could not substitute for legal evidence - Besides, the reliance placed by the Adjudicating Authority in the opinion of the Arecanut Research & Development Foundation was not proper, inasmuch as the Arecanut Research & Development Foundation itself once stated it to not be possible to determine the place of origion of betel nuts through test in laboratory - As such the Tribunal agrees with the Appellate Authority that the said report can only be treated as an opinion and not as scientific test report regarding the country of origin - Moreover, even if the nuts are of foreign origin, they can be confiscated only if established that they were illegally smuggled into India - In this regard, the Revenue produced no evidence to establish that the Betel Nuts in question were smuggled into India - Also, the Assessee submitted a survey report released by the Ministry of Agriculture, stating that there was substantial cultivation of Arecanut in West Bengal, Assam and the North East states - Therefore, in light of the aforementioned, the Tribunal concurred with the AppellATE Authority's findings that confiscation of the nuts was unwarranted and unjustified: CESTAT
- Appeal allowed: ALLAHABAD CESTAT
2023-TIOL-942-CESTAT-KOL
Advertising Corporation of India Pvt Ltd Vs CST
ST - Assessee is advertising agency and providing service in relation to advertisement for print media and paying service tax on 15% of total amount of commission received by them - The revenue is of the view that assessee is availing 85% exemption on value of taxable service from payment of service tax without any authority of law during impugned period and also not incorporated the entire value of taxable service in their ST-3 return as detected from their profit and loss accounts, resulting in non-payment of service tax - Said issue has been decided by Tribunal in case of Drishty Communication Private Limited 2023-TIOL-27-CESTAT-AHM - In terms of Notfn 1/96-ST, assessee is not liable to be included the amount paid for space and time in getting advertisement published in print media - Therefore, said amount is not includible in value of taxable service provided by assessee - Further, on discount received by appellant, no service tax is payable as same has not been received in consideration of providing taxable service by appellant - It was further found that advertisers themselves have paid service tax on behalf of appellant, therefore, if same is demanded from assessee, it would be double taxation on the service and said issue has been settled by Tribunal in case of Ms.Katrina R. Turcotte 2012-TIOL-1780-CESTAT-MUM - As in case in hand, the service tax has been paid by advertisers on behalf of assessee, therefore, same is treated as paid by assessee - Accordingly, no demand is sustainable against assessee - Assessee has provided certain service to Government agencies and claim that same is exempt from service tax, it is found that the said service has not been exempted from payment of service tax as observed by Tribunal in case of Prithvi Associates 2005-TIOL-946-CESTAT-MUM - Therefore, on the services provided by assessee to the Government, the assessee is liable to pay service tax: CESTAT
- Assessee's appeal partly allowed: KOLKATA CESTAT |
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