TMI Blog2021 (3) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... type, sometimes the delay at the end of the ARA may frustrate the investigation which may not be in the interest of the Revenue. The impugned order passed by the Commissioner need not be interfered with, only on the ground that he should have waited for the ruling of the ARA. Thus, in the peculiar facts and circumstances of the case, no relief to be granted to the writ-applicants and relegate them to pursue the appeal preferred by them, before the Tribunal - application disposed off. - R/SPECIAL CIVIL APPLICATION NO. 3457 of 2020 With CIVIL APPLICATION (FOR QUASHING OF ORDER/STAY) NO. 1 of 2020 - - - Dated:- 27-1-2021 - HONOURABLE MR. JUSTICE J.B.PARDIWALA AND HONOURABLE MR. JUSTICE ILESH J. VORA MR TUSHAR HEMANI, SR.ADVOCATE WITH MR AVINASH PODDAR FOR THE PETITIONER MR DEVANG VYAS, ADDL. SOLICITOR GENERAL OF INDIA FOR THE UNION OF INDIA MR DHAVAL D VYAS AND MR NIRZAR S DESAI FOR THE RESPONDENT ORDER PER: HONOURABLE MR. JUSTICE J.B.PARDIWALA 1. By this writ-application under Article 226 of the Constitution of India, the writ-applicant has prayed for the following reliefs : ...that this Hon'ble Court be pleased to issue a writ of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s SDB Diamond Bourse, Surat, under Section 77(1) of the Finance Act, 1994 as amended for failure to obtain Service Tax Registration; (v) I impose a penalty of ₹ 10,000/- (Rupees Ten Thousand only) on M/s SDB Diamond Bourse, Surat, under Section 77(1) of the Finance Act, 1994 as amended for failure to file ST-3 returns during 2014-15. (vi) I impose a penalty of ₹ 1,00,000/- (Rupees One Lakh only) on Shri Mathurbhai Madhabhai Savani, Director of M/s SDB Diamond Bourse, Surat, under Section 78A of the Finance Act, 1994 as amended; (vii) I impose a penalty of ₹ 1,00,000/- (Rupees One Lakh only) on Shri Manubhai Davariya, Director of M/s SDB Diamond Bourse, Surat, under Section 78A of the Finance Act, 1994 as amended; (viii) I impose a penalty of ₹ 1,00,000/- (Rupees One Lakh only) on Shri Govindbhai Laljibhai Dholakia, Director of M/s SDB Diamond Bourse, Surat, under Section 78A of the Finance Act, 1994 as amended; (ix) I impose a penalty of ₹ 1,00,000/- (Rupees One Lakh only) on Shri Asitbhai Vasantlal Mehta, Director of M/s SDB Diamond Bourse, Surat, under Section 78A of the Finance Act, 1994 as amended; (x) I impose a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety Eight Thousand and Fifty Six only) from the company i.e. M/s. SDB Diamond Bourse, Surat under proviso to sub-section (1) of Section 73 of the Finance Act, 1994. 3. By the impugned order, the Commissioner has also confirmed the order for recovery of interest at the applicable rate on the delayed payment of the Service Tax as may be found payable by the company. It appears that penalty of the like amount has also been imposed in the impugned order. 4. It is not in dispute that the applicants do have a remedy of preferring a statutory appeal before the CESTAT. However, Mr.Hemani, the learned Senior Counsel would like to convince this Court that he may not be relegated to exhaust the alternative remedy of preferring an appeal and he has a very good case on merits. 5. Mr.Hemani further pointed out that as the proceedings were pending before this Court, his client has not thought fit to prefer an appeal before the CESTAT and even otherwise, the period of limitation is to expire in this very week. 6. We could not take up this matter for hearing today as Mr.Devang Vyas, the learned Assistant Solicitor General of India, who would be appearing for the Union is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as regards the evasion of tax, the HQ Anti Evasion Branch of Surat-I Commissionerate initiated investigation. In the course of the investigation by the authorities, a search was conducted under Section 82 of the Finance Act, 1994, on 6th April 2016, and a panchnama was drawn observing as under : ...After searching each and every corner of tables, drawers and computers, the office recover some records/documents, segregated the record/documents fond during the search and put them in a file place the said file having page no.1 to 21, containing Balance Sheets/Account of M/s.SDB Diamond Bourse, Surat for the period 2014-15 List of Prospective Buyers of Surat and Mumbai, from whom Initial Booking Amounts @ ₹ 600/- per Sq.ft. have been received. Article of Association of M/s.SDB Diamond Bourse etc. under seizure on reasonable belief that the same are relevant and useful for the purpose of further investigation under provisions of the Finance Act, 1994 and rules made thereunder. This panchnama commenced at 11:30 hrs. on 6.4.2016 and concludes at 17:40 hrs. on the same day... 8. It appears that after the search and seizure under Section 82, the writ-applicants pref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsible for the delay. 14. In support of the aforesaid submission, Mr.Hemani seeks to rely on a decision of the Supreme Court in the case of National Co-operative Development Corporation vs. Commission of Income Tax, reported in (2020) 119 taxmann.com 137 (SC), wherein the Supreme Court has observed from paragraphs 11 to 20 as under : 11. In our opinion, a vibrant system of Advance Ruling can go a long way in reducing taxation litigation. This is not only true of these kinds of disputes but even disputes between the taxation department and private persons, who are more than willing to comply with the law of the land but find some ambiguity. Instead of first filing a return and then facing consequences from the Department because of a different perception which the Department may have, an Advance Ruling System can facilitate not only such a resolution, but also avoid the tiers of litigation which such cases go through as in the present case. In fact, before further discussing this Advance Ruling System, we can unhesitatingly say that, at least, for CPSEs and Government authorities, there would be no question of taking this matter further once an Advance Ruling is delivered, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volume of cases. Interestingly, the primary reason for this is the large number of vacancies and delayed appointments of Members to the AAR (ibid,). In view of the time taken, the very purpose of AAR is defeated, resulting in the mechanism being used infrequently as is evident from the ever-increasing tax related litigation. 14. We may notice a significant development in Section 245N of the IT Act. It was through Notification No.11456 dated 3.8.2000 that public sector companies were added to the definition of applicant , and in 2014, it was made applicable to a resident who had undertaken one or more transactions of the value of ₹ 100 crore or more. 15. Insofar as a resident is concerned, the limit is so high that it cannot provide any solace to any individual, and we do believe that it is time to reconsider and reduce the ceiling limit, more so in terms of the recent announcement stated to be in furtherance of a tax friendly faceless regime. 16. We may refer to the international scenario where there has been an incremental shift towards mature tax regimes adopting advance ruling mechanisms. The increase in global trade puts the rulings system at the centre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volved. A council for Advance Tax Ruling based on the Swedish model and the New Zealand system may be a possible way forward. 15. In such circumstances referred to above, Mr.Hemani prays that the impugned order passed by the Commissioner be quashed and set-aside and the AAR may be directed to pass an appropriate order at the earliest in accordance with law. 16. On the other hand, this writ-application has been vehemently opposed by Mr.Devang Vyas, the learned Additional Solicitor General of India appearing for the respondents. 17. Mr.Vyas has a preliminary objection as regards the maintainability of the present writ-application. He would submit that initially the writ-applicants came at the stage of show-cause notice and the said show-cause notice has now culminated into a final order, which is appealable under Section 86 of the Finance Act, 1994, read with Section 35B of the Central Excise Act, 1944, before the Customs, Excise and Services Tax Appellate Tribunal. 18. Mr.Vyas would submit that the writ-applicants have already preferred the appeal and should therefore now pursue the appeal before the Tribunal. 19. Mr.Vyas would submit that the scheme of the advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and manner and accompanied by such fee as may be prescribed, stating the question on which the advance ruling is sought. (2) The question on which the advance ruling is sought under this Act, shall be in respect of, (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. 25. Section 98 provides for the procedure on receipt of the application. Section 98 reads as under : (1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Act, the Appellate Authority for Advance Ruling constituted under the provisions of a State Goods and Services Tax Act or a Union Territory Goods and Services Tax Act shall be deemed to be the Appellate Authority in respect of that State or Union territory. 27. Section 96D(2) referred to above assumes importance. We once again quote the same : 96D. Procedure on receipt of application.- (1) xxxx xxxx (2) The Authority may, after examining the application and the records called for, by order, either allow or reject the application : Provided that the Authority shall not allow the application where the question raised in the application is, (a) already pending in the applicant's case before any Central Excise Officer, the Appellate Tribunal or any Court; (b) the same as in a matter already decided by the Appellate Tribunal or any Court. 28. Mr.Vyas is right to a certain extent that the issues raised by the writ-applicants before the ARA have been gone into by the Commissioner in the Order in Original. In other words, the Authority, in its order dated 16th July 2020, has adjudicated upon both the issues. In such circumstances, for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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