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2023 (6) TMI 1250 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI
Locus Standi of shareholder of the Corporate Debtor to challenge the Resolution Plan - Seeking for forensic audit of the Books of Accounts of the Corporate Debtor, and not to approve the Resolution Plan till the disposal of the Application - CIRP proceedings (proceedings in rem) - HELD THAT:- In an Insolvency process, when an insolvency of Debtor is imminent, the fiduciary duty of the Directors and Managers, who are Agents of the Shareholders, shifts to the Creditors to preserve the value of the Enterprise for maximising the returns for Creditors. The Legislature in its wisdom, has curtailed the Rights of the Shareholders based on the established Principles of Creditors in the control framework. The Court provides the shareholders right to file a Claim only in the Liquidation Process as stakeholders and the advances of stakeholders as stated in Regulation 2(k) includes shareholders only because unlike CIRP, in Liquidation, distribution to stakeholders is in accordance with the waterfall mechanism. Shareholders are excluded from representation, participation or voting in the CoC and are represented in the CoC only through the Directors and can speak only through the Directors.
This Tribunal, is of the considered view that once the CIRP is triggered, the Management of the affairs of the Corporate Debtor lies with the Interim Resolution Professional and the shareholders do not have a Right to file any claim in the CIRP but can only do so in the Liquidation Process. It is seen from the provisions of the Code that the Shareholders are excluded from representation, participation or voting in the CoC and are represented in the CoC only through the Directors - The CIRP proceedings are proceedings in rem, to the extent that once a Petition filed by a Financial Creditor/ Operational Creditor against the Corporate Debtor is admitted, it becomes a collective Creditors Proceedings and all Creditors, pool their Security Interest, in a common manner and the same is distributed as provided for, under Section 30(4) of the Code, subsequent to the approval of the plan by the CoC. The Provisions of the Code does not provide for the shareholders to seek representation, participation, or otherwise and to agitate their views only through the Directors.
Keeping in view, the scope and intent of the Legislature, and that the I & B Code, 2016 is a distinct shift from Debtor in Possession to Creditor in Control Insolvency System, where the Shareholders have a limited role and are only confined to co-operate with the Resolution Professional as specified under Section 19 of the Code, are entitled to receive the Liquidation value of its equity, if any, in accordance with Section 53 of the Code, it is concluded that a Shareholder has no locus standi to challenge the Resolution Plan.
The Learned Counsel for the Appellant has strenuously argued that had the Transaction Audit been carried out, the Resolution Plan would not have been approved. It is not in dispute that the Appellant is one of the largest shareholders of the Corporate Debtor and not having raised these issues earlier, at the later stage, contends that other shareholders and Directors have indulged in Fraudulent Transactions - there are force in the Contention of the Learned Senior Counsel Mr. E. Om Prakash, that these issues were never raised earlier, no action was taken and that there are other remedies in Law for any of these grievances.
The discretion of the Tribunals, is circumscribed by Section 31 limited to scrutiny of the Resolution Plan, if it is in violation of Section 30 of the I&B Code, 2016.
The Hon’ble Apex Court, in the matter of EBIX SINGAPORE PRIVATE LIMITED VERSUS COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED & ANR., KUNDAN CARE PRODUCTS LIMITED VERSUS MR AMIT GUPTA AND ORS. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED & ORS. [2021 (9) TMI 672 - SUPREME COURT] has clearly laid down that subsequent to the approval of the Resolution Plan of the CoC and before the approval by the Adjudicating Authority, no modifications / alterations can be called for as IBC is a time bound process.
This Tribunal finds no infirmity in the Order of the Learned Adjudicating Authority in the Approval of the Plan or in the rejection of application - appeal dismissed.
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2023 (6) TMI 1249 - BOMBAY HIGH COURT
Principles of natural justice - proper application of mind by adjudicating authority or not - Levy of service tax - Business Auxiliary Service - Retention of Freight - service charges, for services provided by the petitioner to its client for transportation of goods by the airlines - HELD THAT:- It appears to be quite peculiar that initially the adjudication of the show cause notices was taken up by respondent no. 3, however, in view of the order passed by respondent no. 5, the same was transferred/assigned to respondent No. 2, as the incumbent who was earlier holding the post of respondent no. 3-Commissioner of CGST, during the pendency of adjudication of the show cause notices, was promoted to the post of Principal Commissioner. It also appears that the additional written submissions, which were quite material on law and facts, were in fact placed on record by the petitioner inadvertently before respondent no. 3, hence, the same could not be taken into consideration by respondent No. 2 when he passed the impugned orders. Thus certainly on such premise, there was a prejudice which was suffered by the petitioner in non-consideration of such submissions. Any breach of the principles of natural justice would be required to be attributed as an incurable defect qua the impugned order.
It would be appropriate in the facts and circumstances of the present case that respondent No. 2 takes a holistic view of the matter considering the decision of the tribunal in EMU Lines Pvt. Ltd. vs. Commissioner of CGST and Central Excise, Belapur [2023 (6) TMI 64 - CESTAT MUMBAI], which considers a prior decision of the tribunal in Greenwich Meridian Logistics (I) Pvt. Ltd. [2016 (4) TMI 547 - CESTAT MUMBAI]. On a perusal of the impugned order, it appears that such decision has not been considered.
Respondent No. 2 needs to hear the petitioner afresh on the show cause notices, and after taking into consideration the facts of the case - the impugned order dated 29 May, 2019 passed by respondent No. 2 is required to be quashed and set aside relegating the petitioner to the jurisdictional Commissioner as may be intimated by the respondents to the petitioner at least two weeks in advance, for an appropriate order to be passed in accordance with law - Petition allowed.
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2023 (6) TMI 1248 - GAUHATI HIGH COURT
Maintainability of petition - availability of alternative and efficacious remedy - Validity of the demand -cum- show cause notice - service tax on service component of contractual receipts, which are otherwise exempt from the incidence of service tax - HELD THAT:- It would be relevant to refer to the decision of the Supreme Court of India in the case of The State of Maharashtra & Ors. v. Greatship (India) Ltd., [2022 (9) TMI 896 - SUPREME COURT], wherein it has been observed and held that No valid reasons have been shown by the assessee to by-pass the statutory remedy of appeal. This Court has consistently taken the view that when there is an alternate remedy available, judicial prudence demands that the court refrains from exercising its jurisdiction under constitutional provisions.
Therefore, in the light of the observations made by the Supreme Court of India in the herein before referred case of Greatship (India) Ltd., the existence of an alternative relief would dissuade the Court from entertaining the writ petition.
The Court is of the considered opinion that as the writ petition does not disclose any documents by which prima facie satisfaction can be recorded that all receipts for which TDS was deducted which is reflected in Form 26AS are entitled for exemption, hence, the decisions cited by the petitioner cannot be applied under the facts unique to this case - The direction to relegate a tax payer to avail statutory remedy, which is more efficacious is the principle of self-restrain adopted by the Constitutional Courts. Therefore, as alternative and efficacious remedy is available to the petitioner, this Court is not inclined to entertain this writ petition and therefore, this writ petition challenging the legality of the impugned order-in- original stands dismissed at the motion stage without issuance of notice upon the respondents.
It is provided that if the petitioner is advised to seek alternative and efficacious remedy by filing a statutory appeal, the period spent from 21.03.2022 till the date of delivery of order i.e. 22.06.2023, would be entitled to be excluded from computation of limitation.
Petition dismissed.
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2023 (6) TMI 1247 - CESTAT KOLKATA
Demand of Service Tax confirmed on account of difference in ST 3 return vs ITR filed by the Appellant - case of appellant is that NO DUE CERITIFCATE DATED 16.12.2016 received from the service tax department for the alleged financial year 2015-16 - Invocation of extended period of limitation - HELD THAT:- The appellant’s business was scrutinised by the service tax department for FY 2015-16 for which a NO DUE certificate was already issued to the appellant by the same service tax department based on ITR filings on 2016. Thus, issuance of present SCN by the department in 2021 based on the same ITR findings cannot be sustained as the department was already in knowledge of the activities of the Appellant and had also given a no due certificate to the appellant.
For issuance of SCN involving extended period of limitation, suppression has to be brought on record which has not been done in this case by the revenue. Though the appellant had not appeared in the adjudication proceedings, yet the certificate issued by the department in 2016 clearly establishes that the records were already scrutinised by the revenue in 2016 itself and hence department cannot invoke extended period of limitation to confirm the demand for the same year.
The impugned order dated 16.02.2022 set aside on grounds of limitation itself and the appeal stands allowed.
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2023 (6) TMI 1246 - CESTAT KOLKATA
Business auxiliary services - place of provision of services - import of service or not - export orders procured from foreign agents - technical inspection and certification services provided at the discharge Port by non-resident service provider - reverse charge mechanism - extended period of limitation - HELD THAT:- It is well settled that the burden of proving malafide i.e. an intent to evade is upon the revenue as held by the decision of the Hon’ble Supreme Court in the case of Uniworth Textiles Ltd. reported in [2013 (1) TMI 616 - SUPREME COURT] - In the instant case, the Appellant had specifically averred before the adjudicating as well as the first appellate authority that they acted upon a legal opinion dated 20 March 2008 wherein they were advised about the non-taxability of the said services, which aspect has neither been dealt with nor controverted by the revenue. Therefore, the plea of bonafide belief appears to be available to the Appellant in light of the decision of this Tribunal in Delhi International Airport case [2019 (2) TMI 869 - CESTAT NEW DELHI].
Moreover, it is also not in dispute that both these services (i.e., business auxiliary services and technical inspection certification services) were used for export and therefore, exempted vide Notification No. 41/2007- ST dated 6 October 2007 albeit by way of refund. Therefore, there is considerable force in the contention of the Appellant that the situation would have been revenue neutral and under such circumstances, no intention to evade can be attributed on the part of the Appellant - the demand beyond the normal period cannot sustain and deserves to be set aside.
Even on merits, it is found that technical inspection and certification services were rendered at the discharge Port outside India and therefore could not be said to have been imported under Rule 3(ii) of the Taxation of Services (provided from outside India and received in India) Rules, 2006 being covered by Section 65 (105) (zzi) of the Finance Act, 1994 and there was no scope to invoke Rule 3(iii) of the said Rules.
The entire demand with respect to Foreign Commission Agent for the period October 2007 to March 2011 is hit by limitation and the demand under Technical Inspection and Certification for the period October 2007 to March 2012 is not sustainable on merits and limitation - Appeal allowed.
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2023 (6) TMI 1245 - CESTAT CHENNAI
Levy of service tax - alleged consulting engineers services on the Royalty payments made to the foreign company by the appellant - reverse charge mechanism - HELD THAT:- The demand of Service Tax prior to 18.04.2006 is not sustainable as the charging Section 66A of the Finance Act, 1994 for levy of Service Tax on the services provided to the foreign service provider on reverse charge basis was enacted only with effect from 18.04.2006.
In view of the ratio laid down in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [2008 (12) TMI 41 - BOMBAY HIGH COURT], which has been upheld by the Hon’ble Supreme Court in UNION OF INDIA VERSUS INDIAN NATIONAL SHIPOWNERS ASSOCIATION [2009 (12) TMI 850 - SC ORDER], the appellant cannot be fastened with Service Tax liability for the Royalty payments made under consulting engineer service prior to 18.04.2006.
The second proviso to sub-rule (1) to the Rule 6 clearly provides that notwithstanding the time of receipt of payment towards value of service, no Service Tax shall be payable for the part or whole of the value of services which is attributable to services provided during the period when such services were not taxable. As such, the impugned order holding that the taxable event is not the provision of the service but the date on which the value of taxable service is paid, is not legally maintainable. Hence, the demand of tax confirmed in this regard is not sustainable.
The appellant was issued with a Show Cause Notice C.No.IV/16/172/2003-STC dated 14.10.2003 for the period from 1997 to 2001 demanding appropriate Service Tax on Royalty paid which was dropped vide Order-in-Appeal No. 109/2004 dated 08.09.2004, indicating that the Department was well aware of the activities of the appellant such as payment of Royalties to foreign collaborators under consulting engineer service.
The demand of Service Tax on the appellant for the normal period is confirmed - penalties imposed are also set aside - appeal allowed in part.
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2023 (6) TMI 1244 - CESTAT AHMEDABAD
Refund of excess service tax paid - HELD THAT:- As regard the appellant’s submission that the amount of Rs. 39, 46,367/- is not payable for various reasons has not been considered by the lower authority. Therefore, this matter needs to be remanded back to the Adjudicating Authority for re- quantification of the demand after considering the submission of the appellant. The Adjudicating Authority also needs to look into the aspect of larger period of demand and imposition of penalty under Section 78 of Finance Act, 1994.
Appeal allowed by way of remand.
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2023 (6) TMI 1243 - CESTAT NEW DELHI
Extended period of limitation - SCN issued after more than five years - levy of service tax on the differential value on the basis of gross receipts - HELD THAT:- The appellant have submitted calculation of service tax liability, both at the assessment stage and before the Commissioner (Appeals). Both the Court below without finding any error in the said calculation have arbitrarily rejected the same and have made their own calculation, resulting into confirmation of demand and imposition of penalty. It is found that such rejection of calculation of service tax and the ST3 Return filed by the appellant is bad in law, without finding any fault or error in the same. The ST-3 Returns submitted by an assessee is binding on the Department, unless the Department finds material faults or errors in the same. Further, issue of show cause notice on the apparent difference in the gross turnover as per balance sheet or ST-3 Return, as compared with Form 26 AS have been deprecated by this Tribunal in several matters. Form 26 AS is not the prescribed document in the scheme of Service Tax Assessment and the same cannot be adopted blindly without any attempt to reconcile the difference.
On perusal of the calculation submitted by the appellant of their tax liability, there are no error found in the same. Further, the appellant against the tax liability of Rs.72,724/-, have already paid an amount of Rs.76,908/-. Thus, have paid higher amount than the tax liability. Thus, the whole exercise is unwarranted and mis-conceived on the part of the Department.
The show cause notice is hit by limitation as the same has been issued after more than five years - Appeal allowed.
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2023 (6) TMI 1242 - CESTAT KOLKATA
Recovery of dis-allowed CENVAT Credit - contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default - HELD THAT:- Hon’ble Gujarat High Court in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA & 2 [2014 (12) TMI 585 - GUJARAT HIGH COURT] has declared the words “without utilizing Cenvat Credit” under Rule 8(3A) as ultra vires which means that the assessee can discharge duty by utilizing Cenvat Credit which is what exactly has been done in the instant case by the Appellant.
The said judgment has been followed by the Hon’ble Calcutta High Court in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA & OTHERS [2017 (8) TMI 1515 - CALCUTTA HIGH COURT] which is not stayed by the Hon’ble Supreme Court. The Hon’ble Calcutta High Court in the said case, has declared the provisions of Rule 8(3A) ibid as invalid and further has held that the Revenue cannot take a different stand and parity has to be extended to the assessee.
The demand in the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence the demand cannot be sustained and the Appeal, thus, succeed on this count.
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2023 (6) TMI 1241 - CESTAT KOLKATA
Clandestine Removal - Kamdhenu brand of the iron and steel products - evasion of service tax on royalty received from various franchisees - admissible evidences - HELD THAT:- In the present case the departments case doesn’t have any merits as the report itself being in dispute, no reliance can be made on the same to confirm the demand on the Respondent herein - no attempt has been made by the revenue to counter the findings of the adjudicating authority and thus the view taken by the Ld. Adjudicating authority cannot be accepted.
Further, the deficient quantity of 20.798 MT of MS Ingot cannot be considered as concrete Circumstantial evidence in regard to allegation of huge evasion of Central Excise duty by resorting to clandestine manufacture and sale of 35948.0799 MT of MS Bars & Rods by the Respondent. It is a settled proposition that demand cannot be raised on assumptions and presumptions in cases of clandestine removal.
There are no infirmities in the impunged order and hence the same is sustained - appeal dismissed.
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2023 (6) TMI 1240 - CESTAT AHMEDABAD
Method of Valuation - Lead Acid Battery falling under sub heading 85071000 of the Central Excise Tariff Act, 1985 - to be valued under Section 4 of the Central Excise Act, 1944 or Section 4A of the Central Excise Act, 1944? - suppression of facts - extended period of limitation - HELD THAT:- The entire defence of the appellant is on the basis of the affidavit which was filed belatedly that the Lead Acid Batteries cleared by the appellant which is used for automobiles were correctly valued under Section 4A on the ground that they had supplied the uncharged batteries and the charging was carried out at the dealers’ place which activity amounts to manufacture. Therefore, any goods cleared which is subjected to further manufacture should be valued under Section 4 and not 4 A - It is found that other than affidavit there is no documentary evidence produced by the appellant to establish the claim of the appellant that the battery was cleared uncharged and at the dealers’ place the batteries were charged before selling to the customers.
From the finding of the Adjudicating Authority it is clear that except affidavit there is no other evidence to show that the battery cleared by the appellant was uncharged Lead Battery. Therefore, there is no difference in the nature of the clearance made to individual customer wherein the valuation was admittedly done by the appellant under Section 4 A and the nature of clearance made to the dealers. Therefore, the clearance made to dealers is also to be valued under Section 4 A of Central Excise Act, 1944.
Extended period of limitation - Suppression of facts - HELD THAT:- The appellant have not disclosed that whether the battery was cleared charged or uncharged. Moreover, the affidavit was also filed belatedly, this fact was not declared during statement of the director recorded at the time of investigation - the appellant have suppressed the vital fact from the department about the nature of clearance. In this fact, the extended period was rightly invoked in the present appeal.
There are no infirmity in the impugned order - appeal dismissed.
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2023 (6) TMI 1239 - CESTAT KOLKATA
Refund of Cenvat credit - Sugar cess - rejection on the only ground that the matter is pending and has not attained finality - HELD THAT:- The appellant has produced records, to show that the appeal filed by the revenue against the Tribunal’s order dated 07.08.2019 is pending before the Hon’ble High Court at Calcutta in CEXA 9/2020 and there has been no orders passed by the Hon’ble High Court granting stay of operation of the said order of the Tribunal.
The revenue department has not been able to produce any document to show that the order has been stayed by any higher authority. Under this factual background, both the lower authorities were not correct in rejecting the refund claim of the appellant on the ground of pendency of proceedings when no stay has been given by any higher court in the earlier order regarding eligibility of Cenvat credit.
It is further noted that the Ld. Commissioner (Appeals) had also passed orders on various other grounds which was never alleged while issuance of the show cause notice and thus the appellate order to that extent goes beyond the allegations raised in the SCN and cannot be sustained on this ground also.
Appeal allowed.
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2023 (6) TMI 1238 - CESTAT KOLKATA
Imposition of penalty under Rule 26(2) of the Central Excise Rules, 2002 - Appellant has paid duty of equivalent amount to the government and also filed its ER 1 return timely disclosing all transactions - HELD THAT:- The said rule would be applicable in case wherein ineligible Cenvat credit has been passed to recipients in cases without supply of goods and such related transactions - The present case is a case wherein there is no allegation by the department that the appellant has issued invoices without supply of goods. Infact all the transactions have been recorded in ER 1 returns and disclosed by the appellant to the department. Hence, it cannot be understood as to how the penalty under Rule 26(2) of the CER, 2002 can be imposed in such bonafide cases.
Further, neither the SCN nor the OIO has brought out any evidence of connivance between the appellant and TIL in the stated transactions.
The entire demand of penalty set aside - appeal allowed.
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2023 (6) TMI 1237 - BOMBAY HIGH COURT
Rejection of rectification of assessment order - admission of Appeal without any pre-deposit - case of petitioner is that impugned orders are passed without giving opportunity of hearing insofar as, disallowance of input tax credit qua all the parties is concerned - violation of principles of natural justice - HELD THAT:- The Petitioner has approached this Court under Article 226 of the Constitution of India, in order to bypass the mandatory provision under the MVAT Act, 2002 which required pre-deposit of 10% of the tax for entertaining the appeal. In the facts of the present case, this approach of the Petitioner cannot be accepted moreso because against order rejecting the rectification, it had filed an appeal because according to the Petitioner against such rejection of rectification order no pre-deposit is required to be made. [This clearly shows that the present petition is filed to bypass the mandatory pre-deposit provision in entertaining the appeal].
The issue raised in the assessment order interalia qua circular trading requires factual determination which this Court cannot go into in exercise of its jurisdiction under Article 226 of the Constitution of India. It is also important to observe that by various show cause notices, the Petitioner was called upon to file all the evidences in support of its return of income and furthermore order sheet annexed to the Petition records that the Petitioner’s accountant refused to sign the proceedings sheet in relation to the circular transaction query raised by Respondent No. 2. Therefore, prima facie, the contention of the Petitioner that opportunity of hearing was not given may not be correct.
The decision of the Supreme Court in the case of State of Tripura Vs. Manoranjan Chakraborty & Ors. [2000 (11) TMI 1079 - SUPREME COURT] relied upon by the Petitioner does not assist the case of the present Petitioner in the facts of the present case. The decision of the Supreme Court was in connection where there is a high ended assessment and gross injustice done. Therefore, the decision of the Supreme Court is not applicable to the facts of the present case.
The issue raised in the present petition qua opportunity of hearing would require examination of the factual matrix in the complexion of the proceedings as they stand, which can be effectively adjudicated more appropriately by the Appellate Authority - the Petitioner relegated to avail the alternative remedy of an appeal - petition disposed off.
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2023 (6) TMI 1236 - BOMBAY HIGH COURT
Calling for the records pertaining to the Petitioner’s case and after going into the validity and legality thereof to quash and set aside the impugned Order - direction to Respondents themselves, their officers and subordinates to withdraw and/or cancel the impugned Order dated 11.12.2018 passed by the Respondent No. 2; and to refrain from taking any steps or proceedings in pursuance of and/or in furtherance of and/or in implementation of impugned Order dated 11.12.2018 passed by the Respondent No. 2 - benefits of the exemption granted vide Notification No. DNH/CST/4-1/99/4 dated 31.12.1999 and Notification No. ADM/LAW/CSR/2/84 dated 04.01.1984 without the production of C Forms.
HELD THAT:- The petitioner has drawn our attention to the judgment and order dated 30 August, 2012 passed by a co-ordinate bench of this PRISM CEMENT LTD & AKSHAY RAHEJA VERSUS STATE OF MAHARASHTRA, FINANCE DEPARTMENT & OTHS. MUMBAI [2013 (7) TMI 668 - BOMBAY HIGH COURT] to the order passed on Voltas Ltd. and Anr. Vs. Commissioner of Sales Tax, Dadra & Nagar Haveli, Silvassa and Ors.) dated 03 September, 2012, as also to another order of even date in case of Universal Comfort Products Pvt. Ltd. & Anr. Vs. Commissioner of Sales Tax, Dadra & Nagar Haveli, Silvassa & Ors. to contend that the issue as arising in the present petitions is squarely covered by the decision in Prism Cement Ltd. & Anr. Vs. State of Maharashtra and Ors. as also in cases of Voltas Ltd. and Anr. Vs. Commissioner of Sales Tax, Dadra & Nagar Haveli, Silvassa and Ors. and Universal Comfort Products Pvt. Ltd. & Anr. Vs. Commissioner of Sales Tax, Dadra & Nagar Haveli, Silvassa & Ors.
The orders passed by the Division Bench in Voltas Ltd. and Anr. Vs. Commissioner of Sales Tax, Dadra & Nagar Haveli, Silvassa and Ors. by which the Division Bench disposed of the said case following the decision in case of Prism Cement Ltd. & Anr. Vs. State of Maharashtra and Ors held that the petitioners have challenged the validity of the Circulars at Exhibits S, U, V & W to the petition. Counsel for the parties state that this Court in the case of Prism Cements Ltd. V/s. State of Maharashtra & Ors. has quashed similar circulars issued by the Commissioner of Sales Tax, State of Maharashtra.
Petition allowed.
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2023 (6) TMI 1235 - GUJARAT HIGH COURT
Sale of High Speed Diesel (for short ‘HSD’) to various private industries of three States viz. Gujarat, Maharastra and Madhya Pradesh at concessional rates of sales tax without complying with the mandatory requisite permission from the Ministry of Petroleum & Natural Gas - diversion thereof has caused huge revenue loss to the Government and wrongful gain to the concerned - whether C.B.I. had any case to even lodge a prosecution?
HELD THAT:- Admittedly CVC too had not found any case against the accused to grant sanction.
The compilation and circulation by OCC on 08.07.1991, of the Guidelines for Release of Petroleum Products and Lubricants to Direct Consumers have not been denied, which suggests that the same was in force and all oil companies were following the guidelines since 1991. The charge-sheet has been filed for period between 1997-2000. The guidelines of OCC dated 08.07.1991 had not found any change. Mr. Shastri had referred in his Fax message of no change in the guidelines for allocation of HSD to processors. According to him, HSD allocation to the processors is approved by the MoP&NG based on the certification and recommendation of the TEC of the Oil Companies. The guidelines referred and relied upon does not reflect any certification and recommendation of the TEC to the oil companies, and, when a clarification was sought by P. Sudarsnam by a letter dated 23.08.1999, Mr. Shastri states before the C.B.I. that there was no change in the allocation policy and requested P.Sudarsnam of IOC not to make HSD supplies to the processors without the Ministry’s allocation / Linkage, and, since clarification was sought by the E.D., IOC from OCC, reply was sent by OCC, which stated by Mr. Shastri, according to the existing guidelines available, the directions were to be followed by the oil companies necessarily, and according to him the clarification was in accordance with the existing guidelines of the Ministry, and, in the present case, to his clarification on behalf of OCC, Ministry did not issue any such amendment, which implies, concurrence of the MoP&NG on the particular issue, upon which the Oil Companies were required to act accordingly.
It is required to be noted that TEC was dissolved with effect from 01.04.2002; the non-requirement of the TEC had been noted in the letter dated 27.03.2002.
The C.B.I. while filing the F.I.R. has failed to take a clarification from the authorized person of the Ministry as to why the Circular dated 02.01.1981 was only addressed to IOCL for the utilization of HSD from Koyali Refinery and not for any other oil companies. While the guidelines of the OCC does not refer to the requirement of TEC recommendation for uplifting HSD from any other oil companies. All the letters/circulars referred earlier hereinabove with the communication starting from 1988-1996 require TEC evaluation only for supplying LSHF-HSD/High Flash-HSD, LDO and Crude Sludge to processors for the manufacture of petroleum specialities - All the companies were clear on the fact that in the year 1991, the MoP&NG had issued the instruction vide letter/circular dated 2/6.1.1981 for instituting a procedure for utilization of HSD from Koyali Refinery and not from any other refineries, and the Ministry had addressed by Circular dated 17.03.1988 to all the oil companies regarding the constitution of TEC on supply of feed-stock for the production of petroleum specialities, by making a reference to the Ministry’s letter dated 02.01.1981, for reconstitution of the TEC; it was clarified that it would initially look into the supply of LSHF-HSD, LDO and Crude Sludge for the manufacture of petroleum specialities. There was no reference with regard to the supply of regular HSD.
There was no reason for the C.B.I. to file charge-sheet against any of the accused. None of the communications of the Ministry, except of 02.01.1981, for the utilization of HSD from Koyali Refinery, required any TEC recommendation for lifting of HSD from any other companies. The C.B.I. failed to take into account that the Ministry had never called for any clarification from any other company during the period between 1997 – 2000 in connection with the alleged facts noted in the F.I.R., the officers, who were working in the company, would go by the understanding of the Circulars.
The learned Special Judge observed that as per the record, four oil companies are of Gujarat, Maharashtra and Madhya Pradesh and there is no evidence to show that the officers of the oil companies had gathered, or met sales tax officers or staff or purchasers with an intention to commit the alleged offence - For the offence under the P.C. Act, the learned Special Judge found that there is no prima facie evidence to show that the applicants had accepted any gratification from any person as a motive or reward, and the applicants accused had followed all the instructions issued by the MoP & NG and acted in discharge of the duties; no sanction has been brought on record by the C.B.I., while sanction has been refused against the officers of the oil companies and against refusal C.B.I. had written to Central Vigilance Committee, but the said committee to confirm the order of non-issuance of sanction against the officers of the oil companies and therefore, no summons were issued against those accused persons.
The Petroleum Rules, 2002 came into force on 13.03.2002. A technical body being Oil Industry Safety Directorates Standards (OISD) had been formed for assisting the safety council constituted under the MoP&NG. The rules deals with restrictions of delivery and dispatch of petroleum in all classes A, B and C, the requirement of the licence for the import of petroleum, and the dispute with regard to the HSD would have to be resolved by the Board, which is governed by the Petroleum and Natural Gas Regulatory Board Act, 2006. The legal provision of the Petroleum Act and rules thereunder become relevant in this case, since chargesheet came to be filed on 25.03.2009.
This Court finds that the Special Judge has not committed any error in discharging the accused. No sanction has been granted for prosecuting the officers of the oil companies. The assessment made by the Special Judge discharging the accused is consistent with the record - the orders passed by the learned Special Judge discharging the accused – respondents herein are just and correct, the findings are in accordance to the documents on record, the accused are rightly discharged, as there are no sufficient grounds for proceedings against them.
All the present revision applications fail merits and are dismissed as rejected.
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2023 (6) TMI 1234 - MADRAS HIGH COURT
Condonation of delay of 10 days in filing appeal - Validity of assessment order - time limitation for filing of appeal - HELD THAT:- In the present case, the appeals have, admittedly, been filed within 10 days after the statutory period of 120 days. In such circumstances, there is nothing untoward in the return of the appeals under Rc 344/2023/A1 dated 26.04.2023 from the office of the Deputy Commissioner (ST), GST-Appeal, Chennai -II citing delay beyond the condonable period.
Thus, an explanation has been given to the effect that the petitioner was unaware of the orders having been issued as it had been sent to the Consultant's email id and also to the effect that the sole proprietor was unwell at the relevant point in time.
The challenge to the orders of assessment rejected - the request for condonation of delay of 10 days is allowed - petition disposed off.
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2023 (6) TMI 1233 - GAUHATI HIGH COURT
Reimbursement of the GST from the recipient of goods i.e. Indian Railways - differential amount of price variation on steel - whether the Petitioner would be entitled to claim refund of the input tax credit availed on the purchase of steel which was used to pay the output tax while affecting the outward supply of steel to the Railway Authorities? - HELD THAT:- The GST legislation came into existence within the purview of a modern economy as a destination based tax. The idea which permeates GST legislation globally is to impose a multi-stage tax under which each point in supply chain is potentially taxed. As a result, the suppliers are entitled to avail credit of the tax paid at an anterior stage. In other words, GST fulfils the description of a tax which is based on value addition. The value addition is intended to achieve fiscal neutrality and to obviate a cascading effect of taxation which traditional tax regimes were liable to perpetuate. Therefore, the purpose of the tax on value addition is not dependent on the distribution or manufacturing model. The tax which is paid at an anterior stage of the supply chain is adjusted. The object therefore is to achieve both neutrality and equivalence by the grant of seamless credit of the duties paid at an anterior stage of the supply chain.
It is seen from a perusal of Section 16(1) that every registered person, shall subject to such conditions and restrictions as may be prescribed and in the manner specified in Section 49 be entitled to take credit of the input tax charged on any supply of goods or service or both to him which are used or intended to be used in the course of furtherance of his business and the said amount will be credited in the electronic ledger of such person - Taxes on goods and services are identifiable but upon credit to the electronic ledger, they form a common pool for utilization. Section 16(1) indicates the manner in which input tax credit can be utilized is spelt out in Section 49.
Whether the Petitioner would be entitled to the refund of the Input Tax Credit availed upon purchasing of steel which was used for the purpose of payment of the Output Tax in effecting the outward supply of steel to the Railways? - HELD THAT:- This question has arisen in view of the specific and categorical submission of the learned counsel for the Respondents inasmuch as, it was submitted that as the Petitioner is getting the benefit of the Input Tax Credit, the question of reimbursement of Input Tax Credit availed do not arise. It was submitted that the Petitioner would get double benefit, inasmuch as on one hand the Petitioner would get the benefit of Input Tax Credit and on the other hand would get the benefit of GST neutralization and as such hit by Section 171 of the CGST Act, 2017.
In the previous segments of the instant judgment, this Court categorically observed the object and the frame work behind the Input Tax Credit. The GST legislation as observed earlier is a destination based tax meaning thereby GST is a consumption based tax and would effectively tax the consumer of such goods or services or both at the destination thereof or as the case may be at the point of consumption. The supply of steel by the Petitioner to the Railways makes the Railways the end user and therefore the Railways are required to bear the brunt of the final tax amount upon the supply of steel - It is relevant to note that the input tax credit is credited to the Petitioner’s electronic credit ledger as the Petitioner had paid from its resources the input tax. Merely because the Petitioner uses the input tax credit which is credited to his electronic credit ledger for payment of the output tax, which is a permissible mode of payment as per Section 49, it would be completely contrary to the frame work of the GST Act to accept the contention of the Railways that the Petitioner would not be entitled to the reimbursement of the Input Tax Credit which the Petitioner used for payment of the Output Tax Credit.
This Court is therefore of the opinion that the Petitioner herein would be entitled to his PVC claim in terms with the contract and GST paid by the Petitioner from its electronic credit ledger has to be taken into consideration while computing the PVC Claims of the Petitioner. The Petitioner would be well advised therefore to take steps in terms with the JPO dated 29/1/2021 for making its PVC claims, if not already done and the Respondent Railways shall pay the PVC claims on the basis of the contract. It is yet again reiterated that on the ground that the Petitioner had paid the output tax through its electronic credit ledger by using its input tax credit, the same shall not be a ground to deny the entitlement of the Petitioner to the reimbursement of the GST. The said exercise of the PVC Bills of the Petitioner be completed within one month from the date a certified copy of this judgment is served upon the Respondent No. 7.
Petition disposed off.
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2023 (6) TMI 1232 - MADRAS HIGH COURT
Cancellation of GST registration of petitioner - undue delay in submission of reply to SCN - non-speaking order - principles of violation of natural justice - HELD THAT:- This Court is really not required to look into this question since, quite apart from the fact that the basis of show-cause notice is well known to the petitioner as may be seen from reply dated 29.05.2023, the petitioner has admittedly not appeared before officer on 22.05.2023 despite receipt of the notice well in time. Thus, the petitioner has not cooperated in the proceedings leading to suspension of registration. This is a critical aspect of the matter which militates against the petitioner's prayer for intervention under Article 226 of the Constitution of India.
The petitioner appears to be suggesting that the very fact of filing of a reply should be construed as an act of grace on its part and that the reply ought to have been taken note of by the assessing authority, and that this fact deserves intervention by the Court, since the order was passed subsequent to receipt of the order - In the present case, the petitioner has neither appeared for personal hearing nor has filed reply within the timeline as stipulated by the officer. The mere fact that the reply has been filed at the will and pleasure of the petitioner, beyond the period granted by this officer would not entitle the petitioner to the relief sought.
Petition dismissed.
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2023 (6) TMI 1231 - CALCUTTA HIGH COURT
Levy of 200% penalty - only mistake committed by the appellants is on not renewing the e-Way Bill which expired on 18.03.2022 - HELD THAT:- The appellants should have done since the goods were sold in transit. Therefore, there is a violation had committed by the appellants but the violation is not as grave enough to call for imposition of penalty at the rate of 200%. Since on the date when the vehicle was intercepted the goods were covered by a valid e- Way Bill which satisfies the requirement under Section 129 of the Act. However, that the mistake committed by the appellants in not renewing the earlier e-Way Bill which expired on 18.03.2022 the appellants should be put on terms.
The appeal as well as the writ petition are allowed and the order of penalty passed by the adjudicating authority as affirmed by the appellate authority are set aside and modified with the direction to the appellants to pay a penalty of Rs.50,000/- which will include both CGST and WBGST instead of 200% penalty as imposed by the authorities.
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