TMI Blog2022 (4) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... e thereunder with an intent to evade payment of duty - If in a given case, ex-facie, the ingredients for invoking the extended period of limitation are not attracted based on the very averments in the show cause notice, the notice would be ex-facie barred by limitation - It is now well settled that the question of limitation is a question of jurisdiction. In STATE OF PUNJAB VERSUS BHATINDA DISTRICT CO-OP. MILK P. UNION LTD. [ 2007 (10) TMI 300 - SUPREME COURT] the Supreme Court held that the question of limitation being a jurisdictional question, a writ petition challenging the validity of a notice of revision of an order of assessment of sales tax, on the ground of the same being barred by limitation, would be maintainable, notwithstanding availability of an alternative statutory remedy. Thus, in the case on hand, the facts are not in dispute. A pure question of law is to be decided based on the very averments made by the Respondent in the show cause notice. Therefore, the present writ application could be said to be maintainable. Jurisdiction of the Central Excise authorities to question the legality and validity of the scheme approved by the High Court - HELD THAT:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ingredients of Section 11A(4) are applicable to the present case. The Revenue received the duty on the very same dispatches covered under the Annexure A to the show cause notice at the time of initial clearance by the predecessor. Whether it be predecessor or successor, the excise duty liability is identified to both. There is no difference in the excise duty or interest in the present matter. There is no claim by anybody (including in particular by the predecessor) for any refund of duties already paid by the predecessor). Hence, the duty paid by predecessor ought to have been adjusted against the central excise duty, if any, payable by the writ applicant. Declining to do so, would lead to double taxation of the same transaction clearly impermissible. Demand of Excise Duty of ₹ 96,20,02,091/- - goods cleared availing the benefit of exemption vide Sl. No. 336 of Notification No.12/2012-CE dated 17th March 2012. as detailed in Annexure B to the show cause notice - HELD THAT:- During the Financial year 2013 2014 also, the predecessor i.e., the Larsen Toubro supplied goods against the very same ICB contracts by availing exemption and cleared the goods without pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the issues raised in both the captioned writ applications are the same and the challenge is also to the selfsame show cause notice, those were taken up for hearing analogously and are being disposed of by this common judgement and order. 2 For the sake of convenience, the Special Civil Application No.11208 of 2019 is treated as the lead matter. 3 By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs: (a) writ of mandamus or certiorari or writ in the nature of mandamus or certiorari or any other appropriate writ, order or direction calling for records of impugned Show Cause Notice F. NO.XIV/233/2018 dated 31.12.2018 issued by the respondent No.2 and quashing and setting aside the same. (b) Writ of mandamus or writ in the nature of prohibition restraining the respondents from proceeding further. (c) pending the hearing and final disposal of the above petition, the respondents be directed by an interim order and injunction of this Hon Court not to proceed further in the show cause notice. (d) for ad-interim relief in terms of prayer (c) above. (e) for costs of the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to file monthly return in the Form ER-1 by around 10th of the next month. The ER-1 return would indicate the goods cleared during the month, duty payable, exemption availed, serial number of excise invoices issued during the month etc. The factory also duly filed these monthly ER-1 returns regularly. Thus, the factory duly complied with all the formalities like issuing of invoice for each removal, monthly duty payment and filing of the monthly returns in the Form ER-1 return periodically. 10 The Central Government, in larger public interest, granted an exemption from the payment of excise duty. The exemption was based on the nature of the goods and status of the customer. Sl. No. 336 of exemption Notification 12/2012 CE dated 17.3.2012 conferred complete exemption for certain supplies effected under the International Competitive Bidding. In terms of this exemption notification, some of the clearances of the goods manufactured by the factory were exempted from the central excise duty. The factory duly followed the procedure prescribed in the exemption notification. The factory entered into certain contracts for supply under the International Competitive Bidding. Due intimation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a legal entity registered with the central excise department for this factory, duly effected the dispatches on the strength of the excise invoices issued by it. The invoices duly contained the description of goods, value, rate of duty, time and date of removal, quantity, duty payable, classification, name of customer and all other particulars. 17 Further, pending the filing of the scheme with the High Court and pending approval of the same, the excise duty had to be paid by around 5th of the following month and the ER-1 return had to be filed before the 10th of the following month. The duty liability was so discharged, and the ER-1 returns, so filed by the legal entity Larsen Toubro Ltd. qua the central excise registration held by it for this factory. 18 The writ applicant (i.e. the successor entity) vide the application dated 1st April 2014 formally applied to the jurisdictional central excise authority for the new central excise registration in its own name as a new legal entity. Along with the said application dated 1st April 2014, the writ applicant also submitted copy of the Order dated 20th December 2013 passed by the Bombay High Court sanctioning the scheme. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook into account all the transactions carried out by the Hydrocarbon Division as a part of the Larsen Toubro Ltd. for the financial year 2013 2014. 25 The Income tax return for the FY 2013-2014 was to be filed much after the closure of the FY 2013- 2014. The Income tax return filed by the Larsen Toubro Ltd. for the financial year 2013-14 did not include the affairs of the Hydrocarbon Division. Those were duly incorporated in the income tax returns filed by the writ applicant for the financial year 2013-2014. 26 The Central excise audit of the factory popularly called as the EA 2000 Audit was undertaken for the Financial Years 2012-13 and 2013 2014 (upto February 2014) by the officers of the central excise department. During the course of audit, the departmental officers verified all the records maintained by the Hydrocarbon Division of the Larsen Toubro Ltd. The Audit report dated 31st March 2014 raised diverse discrepancies perceived by the audit. None of those observations relate to the present demand or controversy. In other words, the audit did not raise any objection whatsoever (that payment of excise duty and following the procedure of central excise law by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s may be broadly classified under the following heads: (i) The absence of pre-show cause notice consultation in accordance with the CBEC master circular No.1053/2/2017-CX dated 10th March 2017 is fatal to the impugned show cause notice. (ii) The extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 is not applicable in the present case. The entire demand towards excise duty being beyond the normal period of limitation is barred by limitation and therefore, without jurisdiction. (iii) The discharge of central excise duty by the Larsen and Toubro Limited is full, correct and in absolute compliance of the provisions of the Central Excise laws. The scheme of merger having been approved by the Bombay High Court, the payment of tax raising of invoice and filing of return by the Larsen and Toubro Limited and not by the writ applicant herein is in absolute compliance of the Central Excise laws. There is no procedural breach in this regard by the Larsen and Toubro Limited and/or the writ applicant. (iv) The excise duty has been discharged by the Larsen and Toubro Limited i.e. the transferor / demerged entity. Even if it is considered as discharge of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kapoor AIR 1966 SC 1148 7 Trustee of Late Sir R. J. Vakil vs. CIT 1958 136 ITR 517 (Bom) 8 CIT vs. Ramanand Sachdeva 1982 136 ITR 440 (Delhi) 9 Modipon Ltd vs. Dy. CIT 1995 54 ITD 433 (Delhi) Once Court sanctions the scheme of amalgamation, it has statutory force and becomes binding on the statutory authorities. 10 J. K. (Bombay) Private Ltd. vs. New Kaiser-I-Hind SPG. WVG. Co. Ltd AIR 1970 SC 1041 11 Pentamedia Graphics Ltd Ors vs. ITO 2010 (1) TMI 753 Madras High Court Once the scheme is sanctioned, it cannot be questioned in the collateral proceeding 12 Sadanand Varde and others vs. State of Maharashtra (2001) 247 ITR 609 (Bom) 13 Electrocast Sales India Ltd vs. DCIT, CC-XXI (2018) 170 ITD 507 (Kol) Pre-show cause notice consultation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be done by the adjudicating authority with the assessee concerned. This is an important step towards trade facilitation and promoting voluntary compliance and to reduce the necessity of issuing show cause notice. 36 Relying on the aforesaid, Mr. Vyas would submit that pre-consultation with the noticee before issuance of the show cause notice is not mandatory, more particularly, when the impugned show cause notice is for preventive / related to an offence. Mr. Vyas would submit that the impugned show cause notice originated from the intelligence gathered from the Additional Director General, Directorate General of Goods and Service Tax Intelligence, ADG, DGGI. 37 Mr. Vyas would submit that the contention canvassed on behalf of the writ applicant that the extended period of limitation is not invokable in the case on hand is without any merit. He would submit that the writ applicant could be said to have contravened the various provisions relating to the registration of invoices, furnishing of returns, and payment of applicable central excise duty. 38 Mr. Vyas would submit that the stance of the writ applicant No.1 herein that the applicable central excise duty was pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancials of M/s. LTHE. 7. On examination of the operative portion of the order dated 20.12.2013 of the Hon ble High Court of Bombay (RUD-I I), it appears that the proposed scheme of arrangement was endorsed by the Hon'ble High Court only because it appeared fair and reasonable and was not violate of any provision of law and not contrary to the public policy and also not because none of the parties concerned had come forward to oppose the scheme. However, in the instant case, the parries concerned were the holding company (Transferor) and their subsidiary company (Transferee), both being related persons. Therefore, the question of not opposing or contesting the scheme does not seem to arise. Further, Hon'ble Court was made to believe that the scheme was not in contravention of any of the provisions of the Laws. However, as stated supra in the entire notice, it can be seen that how the said scheme of arrangement had contravened various provisions of the Central Excise Act, 1944 and the Rules made thereunder. 8. Whereas, it appears that M/s LTHE have not paid central excise duty liability of ₹ 19,61,06,399/- deliberately on clearance of their finished goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11A C of the Central Excise Act, 1944 and thereby LTHE has also rendered themselves liable for penal action under Section I IAC (1) (a) of the Central Excise Act, 1944. M/s. LTHE have violated the provision of Rule 27 of Central Excise Rules, by not taking registration, raising proper invoices, non payment of central excise duty, non filing of ER-I returns and thereby violating the provisions of Rule 8,9,11 and 12 of Central Excise Rules 2002. 44 The details enumerated in the Annexure A to the show cause notice is as follows: (a) The unnumbered column 2 of the Annexure-A refers to the invoice no. (b) The unnumbered column 3 of the Annexure-A refers to the invoice date. (c) The unnumbered column 7 of the Annexure-A refers to the amount. (d) The unnumbered column 8 of the Annexure-A refers to the excise duty. (e) The unnumbered column 9 of the Annexure-A refers to the cess. (f) The unnumbered column 10 shows the total excise duty. All the above details referred to in the Annexure A, are as per the statutory invoice issued by the predecessor entity viz. Larsen Toubro Ltd. in terms of the Rule 11 of the Central Excise Rules, 2002. The details given in Annex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be done. 49 The appointed date is the date with effect from which the Scheme shall upon sanction of the same by the High Court, be deemed to be operative. 50 Since, the business has to continue, pending the approval of scheme, the provisions of the scheme take care of these aspects also. It is significant to note that the actual application for demerger will be on a date subsequent to the latest available balance sheet. Usually, by the time the scheme itself is lodged, the business would have been carried on by the old entity even for the period after the appointed date but pending the filing/grant of scheme. 51 The effective date denotes the date on which the demerger is completed in all respects after having gone through the formalities involved, and a copy of the High Court's order sanctioning the scheme is filed with the Registrar of Companies. With that, the process of demerger is completed, and the corresponding division of the transferor - company stands demerged. 52 The appointed Date is of no significance under the law till the final demerger order is received from the Court and filed with the ROC to give effect to the scheme, therefore, until the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable to say that the scheme of amalgamation takes effect on and from the date of the order sanctioning the scheme. We are, therefore, of the opinion that the notices issued by the Income-tax Officer (impugned in the writ petition) were not warranted in law. The business carried on by the transferor company (subsidiary company) should be deemed to have been carried on for and on behalf of the transferee company. This is the necessary and the logical consequence of the court sanctioning the scheme of amalgamation as presented to it. The order of the court sanctioning the scheme, the filing of the certified copies of the orders of the court before the Registrar of Companies, the allotment of shares, etc., may have all taken place subsequent to the date of amalgamation/ transfer, yet the date of amalgamation in the circumstances of this case would be January 1, 1982. This is also the ratio of the decision of the Privy Council in Raghubar Dayal v. Bank of Upper India Ltd., AIR 1919 PC 9. 54 The scheme in the present case was filed under the Companies Act, 1956. Section 394 thereof did not refer to the appointed date/effective date etc. the corresponding provision of Compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Company in relation to the Transferred Undertaking and to carry out or perform all such formalities or compliances referred to above on the part of the Transferor Company to be carried out or performed. 4.3 LIABILITIES (a) All debts, liabilities, contingent liabilities, duties and obligations of every kind, nature and description of the Transferred Undertaking shall also, under the provisions of Section391 to 394 and all other applicable provisions, if any, of the Act, without any further Act or deed, be transferred to or be deemed to be transferred to the Transferee Company, so as to become from the Appointed Date the debts, liabilities, contingent liabilities, duties and obligations of the Transferee Company and it shall not be necessary to obtain the consent of any third party or other person who is a party to any contract or arrangement by virtue of which such debts, liabilities, contingent liabilities, duties and obligations have arisen in order to give effect to the provisions of this sub-clause. (b) Where any of the loans raised and used, liabilities and obligations incurred, duties and obligations of the Transferor Company as on the Appointed Date dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities relating to the Transferred Undertaking for and on account of and in trust for the Transferee Company. 10.2. All profits accruing to the Transferor Company or losses, arising or incurred by the Transferor Company in relation to the Transferred Undertaking for the period commencing from the Appointed Date to the Effective Date shall, for all purposes, be treated as the profits or losses, as the case may be, of the Transferee Company. 10.3. Any income or profit accruing or arising to the Transferor Company in relation to the Transferred Undertaking and all costs, charges, expenses, losses or taxes (including but not limited to advance tax, tax deducted at source, service tax, VAT, other indirect taxes, etc.), arising or incurred by the Transferor Company in relation to the Transferred Undertaking for any period commencing on or after the Appointed Date shall for all purposes be treated as income, profits, charges, expenses, losses or taxes, as the case may be, of the Transferee Company. 10.4 All compliances with respect to advance tax, withholding taxes or tax deduction at source, service tax, VAT, other indirect taxes, etc. to be done or done by the Tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners states that this apprehension is not warranted as so far as 15 contracts are concerned, the transferee company has given Parent Company Guarantee. The learned counsel for the petitioner further submits that if there are any other contracts which would be transferred to the transferee company and similar guarantees will be given. This statement is accepted by the learned counsel for the ONGC. 11. From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. None of the parties concerned has come forward to oppose the Scheme. 12. Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No. 651 of 2013 and 652 of 2013 filed by the Petitioner Companies are made absolute in terms of prayer clause (a) of the Petition. 13 The Petitioner Companies to lodge a copy of this order and the Scheme duly authenticated by the Company Registrar, High Court (0.S), Bombay, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable, if any, on the same within 60 days from die date of receipt of this order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition challenging the validity of a notice of revision of an order of assessment of sales tax, on the ground of the same being barred by limitation, would be maintainable, notwithstanding availability of an alternative statutory remedy. Relevant portion of the decision is extracted hereunder: 23. Question of limitation being a jurisdictional question, the writ petition was maintainable. 24. We are, however, not oblivious of the fact that ordinarily the writ court would not entertain the writ application questioning validity of a notice only, particularly, when the writ petitioner would have an effective remedy under the Act itself. This case, however, poses a different question. The Revisional Authority, being a creature of the statute, while exercising its revisional jurisdiction, would not be able to determine as to what would be the reasonable period for exercising the revisional jurisdiction in terms of Section 21(1) of the Act. The High Court, furthermore in its judgment, has referred to some binding precedents which have been operating in the field. The High Court, therefore, cannot be said to have committed any jurisdictional error in passing the impugned judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent and M/s Birla Corporation Ltd. and taking into consideration all the averments, which were made in the show cause notice, on the basis of admitted facts, it has come to a conclusion that even when the allegations in the show cause notice are accepted, the said contract does not amount to providing any 'Cargo Handling Service' as defined under Entry 23 of Section 65 of the Act. Therefore, we are of the opinion that the High Court did not commit any mistake or illegality in entertaining the writ petition when no disputed questions of fact were involved and the legal issue was to be decided on the basis of the facts, as admitted by the parties, which were so specifically recorded by the High Court itself . [emphasis supplied] 66 In Ahmedabad Manufacturing and Calico Printing Co. Ltd. v. S. G. Mehta, Income- tax Officer - [1963] 48 ITR (SC) 154 , it is held that It must be remembered that if the Income-tax Act prescribes a period during which the tax due in any particular assessment year may be assessed, then on the expiry of that period the department cannot make an assessment . Where no period is prescribed that assessment can be completed at any t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is based on no new material which would even prima facie suggest that the product can be treated to be marketable. Permitting the Department to proceed with such show cause notice proceedings would be wholly futile, would cause prejudice to the petitioners and would amount to abuse of the process of law. In that sense of the matter, issuance of second show cause notice on same set of facts on which the first show cause notice had been terminated, would also be without jurisdiction. 40. In the present case, facts are different. The petitioners have approached at a stage where show cause notice has been issued. Such show cause notice, we have held, is lacking inherent jurisdiction. Question of driving the petitioners to avail of alternative remedy, therefore, would not arise. 41. With respect to invocation of extended period of limitation, we find no substance whatsoever in the stand of the Department. The petitioners have been manufacturing the drug in question since years, utilizing intermediate chemical by way of captive consumption. Such process is known to the Department since decades. Contention of the petitioners is that such intermediate chemical is not a marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice on the ground that it was issued beyond limitation and was therefore without jurisdiction. 9. That brings us to the applicability of the extended limitation under proviso to Section 11A of the Act. In Collector of Central Excise v. Chemphar Drugs Liniments 1989 (40) E.L.T. 276 (S.C.) in Para 8 the law has been laid down in clear terms as follows :- In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section (1) of Section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, beyond the period of six months. Whether in a particular set of facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or contravention of any of the provisions of the Act or rules made thereunder, with intent to evade payment of duty. It is also clear that a mere mechanically repetition of the language of the provision in the show cause notice would not confer jurisdiction on the Collector of Central Excise to issue a show cause notice under Section 11A of the Act beyond period of six months taking advantage of the proviso to the Section. 12. Examining the impugned show cause notice in the light of the aforesaid position of law, we find that beyond the allegation that the notice suppressed true and correct description of flavoured soya milk beverages in the classification list submitted during the period of notice i.e. 1987-88 and list No. 2/87-88 and No. 3/87-88, there is no other material to show that there was any fraud played upon the Department. In the show cause notice it has been stated that on information dated 16-5-1988 the Collector came to know that instead of soya milk as declared vide their letter dated 5-5-1987 the noticee are engaged in manufacture and clearance of beverages of soya milk waste product without obtaining a valid central excise licence and payment or duty of exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of show cause notice are undisputed, thus pure question of limitation in law i.e. reasonable period within which a show cause notice may be issued, being question of jurisdiction is involved. As per respondent no period has been prescribed under Rule 16 of the Drawback Rules, 1995 so no limitation period can be read into said Rule. Hon ble Supreme Court in umpteen numbers of cases as cited by both sides has enunciated that in the absence of period prescribed, every action should be initiated within reasonable period which would depend on facts and circumstances of each case. The authorities appointed under Customs Act, 1962 cannot decide that what is reasonable period of limitation and it is only Courts which can decide said question. Para 24 of judgment of Hon ble Supreme Court in the case of Bhatinda District Co- Op. Milk (supra) directly deals with this question which is reproduced as under : 24. We are, however, not oblivious of the fact that ordinarily the writ Court would not entertain the writ application questioning validity of a notice only, particularly, when the writ petitioner would have an effective remedy under the Act itself. This case, however, poses a diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opriate to entertain present writ petition under Article 226 of the Constitution of India and accordingly proceed to answer other questions. 72 Thus, in the case on hand, the facts are not in dispute. A pure question of law is to be decided based on the very averments made by the Respondent in the show cause notice. Therefore, in our view the present writ application could be said to be maintainable. 73 In so far as the demand of excise duty of ₹ 19,61,06,399/- as detailed in Annexure A to the show cause notice is concerned, the excise invoice has been duly issued by the predecessor entity. On such clearances, the applicable excise duty liability was discharged by the Larsen Toubro Ltd. This is also evident from the ER-1 return filed by the predecessor. These facts are duly noted and accepted in para 3.8, 3.9, 4.3, 4.5 and 6 resply of the impugned show cause notice. In other words, the demand is raised on the very same dispatches on which same amount of excise duty has been duly discharged by the predecessor. The demand of excise duty from the successor entity is exactly of the same amount as already paid by predecessor. Hence, the present case is a clear case of do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns have been used, namely, appointed date and effective date. 'Appointed Date' is the date from which the scheme of amalgamation is operative ie., 1-7-1982. 'Effective Date' is the date on which all the formalities referred to above are completed. The effective date has not to be confused with the appointed date. Whereas the scheme of amalgamation would not be effective until all the formalities referred to in clause 20 of the scheme were completed but after the completion of the formalities the scheme would be effective from 1-7-1982. 13. As in the case of transfer of immovable property, sale deed is not effective till it is registered in accordance with the Registration Act. Once the document is registered, the transfer relates back to the date of execution. On the same analogy the scheme of amalgamation would not be effective until and unless all the formalities required under law for amalgamation of the two companies are completed. However, once the formalities are completed, the amalgamation is effective from the appointed date as indicated in the scheme of amalgamation and approved by the High Court. In this case, it is not disputed that by March 1986 al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice is that every scheme of demerger retrospectively effective from the appointed day would always be and without exception contrary to the provisions of Central Excise Act, 1944 and the rules made thereunder. This involves a very important question about the interpretation of the Companies Act, more particularly relating to the schemes of demerger. This may not be a problem peculiar to the central excise law alone. This dispute can equally arise under the GST laws also, which is the current indirect tax law in force in the country. The legal position needs to be settled by the High Court. The issue has general application across the country as this is applicable to every scheme of demerger. 78 The relevant portion of order dated 20th December 2013 of High Court approving the scheme reads as under:- 11. From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. None of the parties concerned has come forward to oppose the Scheme. 12. Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No. 651 of 2013 and 652 of 2013 filed by the Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic interest litigation, cannot challenge the amalgamation scheme which has been sanctioned and validly carried out in accordance with the provisions of the Companies Act. We are of the view that the amalgamation, which has become final and binding, cannot be permitted to be challenged by the petitioners, without locus standi, in a collateral proceeding in the present writ petition. An amalgamation order can only be challenged under the Companies Act by an appeal under section 391(7) by any one of the parties, but no such appeal was ever filed. From 1993 onwards, no one (except the writ petitioners by the present writ petition) has complained that the amalgamation order was vitiated for any reason whatsoever. It is also of interest to note that the appropriate authority under Chapter XX-C of the Income-tax Act (i.e., the fifth respondent) had also sought clarifications from the ninth respondent which were forwarded by the letters dated June 2, 1994, June 9, 1994 and June 14, 1994, written by K. K. Ramani and Co., chartered accountants, on behalf of the ninth respondent. The appropriate authority had also called the ninth respondent for a hearing which was held some time i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner 2019- TIOL-1027-HC-DEL-ST 12. It will be immediately noticed that there are two exceptions carved out for the Respondent to engage in a pre-SCN consultation. The first is that the SCN is preventive and the second is that it is related to an offence in terms of the Finance Act, 1994. 13. In the present case, as is evident from the impugned SCN, the alleged non-payment of service tax pertains to period between 2012- 2013 to 2016-2017. Consequently, there is no preventive aspect involved in the SCN and this is not even disputed by learned counsel for the Respondent. However, what is urged before the Court by the Respondent is that since the SCN was preceded by a search that was conducted in the business premises of the Petitioner, and the Petitioner also rendered itself liable for penal action for suppression of facts and contravention of various statutory provisions with intent to evade payment of due service tax and other incidental levies, the SCN partakes of the character of an offence related SCN and therefore falls within the exceptions carved out under para 5.0 of the Master Circular. 14. The above submission runs contrary to the very obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. The fourth respondent is directed to afford an opportunity of personal hearing to the authorized representative(s) of the petitioner, consider the reply given by the petitioner dated 16-12-2016 to the Audit Slip and after affording full and effective opportunity, consider the case and then proceed in accordance with law. No costs. Consequently, connected miscellaneous petition is closed. 86 The above judgement of the Delhi High Court in Amadeus (Supra) also negatives the stance taken in the reply affidavit dated 5th March 2021 of the respondents, wherein, it has been urged by the Respondent that the offence/preventive cases are outside the purview of the procedure relating to the pre-show cause consultation. 87 It would be appropriate at this stage to reproduce the relevant provisions of Sub-sections (1) and (4) of Section 11A of the Excise Act and they are as follows: 11A. Recovery of duties not levied or not paid or short-levied or shortpaid or erroneously refunded.- (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of Rule 4 and 8 of Central Excise Rules, 2002, in as much as they failed to discharge their duty liability correctly and in appropriate manner on clearances of their excisable goods and removed the excisable goods in contravention of the provisions of Central Excise Rules, 2002 and condition of Notification No.12/2012-CE dated 17.03.2012. 10.2. Further, they have also contravened the provisions contained in Rule 11 of Central Excise rules, 2002 in as much as they failed to make proper invoices showing the amounts of central excise duty and Rule 12 of Central Excise rules, 2002 in as much as they failed to file monthly returns within prescribed time. They contravened the provisions of Central Excise Act, 1944 and rules made thereunder by recourse to suppression of facts and willful mis-statement with an intent to evade the central excise duty amounting to ₹ 115,81,08,490/- totally as per Annexure A B so evaded is therefore required to be recovered from them under section 11 (A)(4) of the central excise act, 1944 along with interest under Section 11 AA of the Central Excise Act, 1944. 90 The primary ground of the show cause notice is that as per the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transferee Company as if they were originally obtained by the Transferee Company 95 The clause 4.5(a), clause 10.4 and clause 12 resply of the scheme approved by the Bombay High Court are reproduced below: 4.5(a) Any statutory licenses, permissions or approvals or consents held by the Transferor Company required to cany out operations of the Transferred Undertaking shall stand vested in or transferred to the Transferee Company without any further act or deed, and shall be appropriately mutated by the statutory authorities concerned therewith in favor of the Transferee Company and the benefit of all statutory and regulatory permissions, environmental approvals and consents, registration or other licenses, and consents shall vest in and become available to the Transferee Company as if they were originally obtained by the Transferee Company. In so far as the various Incentives, subsidies, rehabilitation schemes, special status and other benefits or privileges enjoyed, granted by any Governmental Authority or by any other person, or availed of by the Transferor Company relating to the Transferred Undertaking, are concerned, the same shall vest with and be available (of the Tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word wilful preceding the words mis-statement or suppression of facts which means with intent to evade duty. The next set of words contravention of any of the provisions of this Act or Rules are again qualified by the immediately following words with intent to evade payment of duty . It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Mis-statement or suppression of fact must be wilful. 99 In Tamil Nadu Housing Board Vs. Collector 1994 (74) ELT 9 (SC), the Supreme Court held as under: A bare reading of the proviso indicates that it is in nature of an exception to the principal clause. Therefore, its exercise is hedged on one hand with existence of such situations as have been visualised by the proviso by using such strong expression as fraud, collusion etc. and on the other hand it should have been with intention to evade payment of duty. Both must concur to enable the Excise Officer to proceed under this provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of clearances of exempted goods falling under the Tariff Item 68. But according to Revenue it was necessary to do so. Accordingly the extended period of limitation of five years as provided in Section 11A was invoked by the Department. The assessee produced the Classification List duly approved by the Excise Authorities and Survey Registrar showing visit of the excise officer to the factory hence the Department had full knowledge of fact about the manufacture of all the goods. The value of clearance of the exempted goods was not indicated under the belief that it was not required to be indicated. The case for wilful mis-statement, suppression of facts or contravention of any provisions of the Act, was not found to be sustainable and the period of limitation available to the Department under Section 11A of the Central Excises and Salt Act was only six months and not five years. From 1989 (43) E.L.T. 195 (S.C.) (Padmini Products v. Collector of Central Excise), we find again that the Supreme Court held that for invoking the extended period of five years the duty should not had been paid, short-levied or short-paid or erroneously refunded because of either any fraud, collusion or w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny suppression or misstatement of facts or collusion or violation of the provisions of Central Excise Act as contemplated under the proviso to Section 11A of the said Act. In view of this, the period of limitation would clearly be only six months prior to the service of the show cause notice. The demand for excise duty against the appellant on the said composite units under Item No. 68 of the Excise Tariff, to the extent that it exceeds the period of six months prior to the service of the show came notice must, therefore, be struck down . 103 Thus, it is clear that for applying Section 11A of the Act i.e. for applying the proviso to extend the limitation to five years it is necessary for the Excise Authorities to establish that the duty of excise had not been levied or paid or short-levied or short-paid by reason of either fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or Rules made thereunder, with intent to evade payment of duty. It is also clear that a mere mechanical repetition of the language of the provision in the show cause notice would not confer jurisdiction on the Collector of Central Excise to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel, appearing on behalf of the appellant, and Mr. Mukul Gupta, learned senior counsel appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of non-payment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or wilful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso. (emphasis supplied) 107 The Supreme Court in Continental Foundation Joint Venture vs. Commissioner of Central Excise, Chandigarh [[2007 (216) ELT 177 (SC)] also observed in connection with section 11A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e event is the manufacture of goods. In one sense, tax is not even on the goods but on the taxable event if manufacture. 111 In the case of Re: The Bill To Amend Section 20 Of The ... vs Unknown (1964) 3 SCR 787 : (AIR 1963 SC 1760), arising under the Sea Customs Act, 1878, the Supreme Court, inter alia, observed as under: 23. This will show that the taxable event in the case of duties of excise is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. We may in this connection contrast Sales Tax which is also imposed with reference to goods sold, where the taxable event is the act of sale. Therefore, though both excise duty and Sales Tax are levied with reference to goods, the two are very different imposts; in one case the imposition is on the act of manufacture or production while in the other it is on the act of sale. In neither case therefore can it be said that the excise duty or Sales Tax is a tax directly on the goods for in that event they will really become the same tax. It would thus appear that duties of excise partake of the nature of indirect taxes as known to standard works on economics and are to be distinguished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited to taxes on property and only income of a State. In other words, the immunity granted in favour of States has to be restricted to taxes levied directly on property and income. Therefore, even though import and export duty or duties of excise have reference to goods and commodities, they are not taxes on property directly and are not within their exemption in Article 289(1). 112 The demand of ₹ 19,61,06,399/- as detailed in the Annexure A to show cause notice is proposed in respect of the goods cleared during the period December 2013 to March 2014. Indisputably, in respect of these clearances, the predecessor Larsen Toubro Ltd. effected dispatches, issued excise invoices containing description of goods, value, rate of duty, time and date of removal, quantity, duty payable, classification and all other particulars. All applicable excise duty liability was discharged by the Larsen Toubro Ltd. ER-1 return has also been filed by predecessor. These facts are duly noted and accepted in the following paras of show cause notice: 3.8 He further stated that though LTHE had neither registered under central excise law nor filed mandatory ER-1 returns for the year 2013- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of invoices, furnishing of returns and payment of applicable central excise duty, M/s. LTHE have consistently responded that the applicable central excise duty had been paid by M/s LT-HCIC prior/ post approval by Bombay High court. M/s. LTHE have obtained registration on 07.04.2014 but M/s. HC1C had raised invoices, manufactured goods and cleared the goods on payment of duty and filed ER-I but the consideration was received in the financials of M/s. LTHE. [emphasis supplied] 113 The Revenue received the duty on the very same dispatches covered under the Annexure A to the show cause notice at the time of initial clearance by the predecessor. Whether it be predecessor or successor, the excise duty liability is identified to both. There is no difference in the excise duty or interest in the present matter. There is no claim by anybody (including in particular by the predecessor) for any refund of duties already paid by the predecessor).Hence, the duty paid by predecessor ought to have been adjusted against the central excise duty, if any, payable by the writ applicant. Declining to do so, would lead to double taxation of the same transaction clearly impermissible. DEM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is apparent from both the invoices that the writ applicant supplied goods against the ICB post 1st April 2014 without payment of the excise duty. The department has not raised any central excise demand in respect of the goods supplied against ICB by the Petitioner post 1st April 2014. 119 During the Financial year 2013 2014 also, the predecessor i.e., the Larsen Toubro supplied goods against the very same ICB contracts by availing exemption and cleared the goods without payment of the central excise duty. This is evident from the Excise Invoice No. 1000003536 dated 4th March 2014 (Annexure-4 of Rejoinder affidavit) issued by the predecessor against the Contract Note No.300068 dated 31st December 2012. This invoice is part of the Annexure B to the present show cause notice. However, the department has now raised the present demand in respect of the goods supplied against the very same ICB contracts during the F. Y. 2013 2014. 120 The above would indicate that the sole basis to demand the excise duty of ₹ 96,20,02,091/- is that the writ applicant should have issued the invoice instead of the predecessor i.e., Larsen Toubro Ltd.. 121 The above objection is totally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per this Scheme and the continuance of the Proceedings by or against the Transferee Company shall not affect any transaction of proceedings already completed by the Transferor Company for any period commencing on or after the Appointed Date to the extent that the Transferee Company accepts and adopts all acts, deeds and things done and executed by and/or on behalf of the Transferor Company as acts, deeds and things done and executed by and on behalf of the Transferee Company. 122 The present impugned notice is raising excise duty demand on the very same goods on which the duty has already been paid by the L T (albeit at nil rate availing the exemption) and accepted by the department. This also is a clear case of double taxation in the sense that same goods are being subject to excise duty against two person which is impermissible. 123 In view of the above, despite the appointed date being 1st April 2013, the supplies already affected by the predecessor L T Ltd. before 1st April 2013, to 16th January 2014 remain unaffected. 124 Para 4.5(a) of the scheme as approved by the Bombay High Court is reproduced below: 4.5. LICENSES AND PERMISSIONS (a) Any statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the notification leaves no discretion to the Deputy Commissioner to refuse the permission if the conditions are satisfied. The words are that he will grant . There is no dispute that appellant had satisfied these conditions. Yet the permission was withheld - not for any valid and substantial reason but owing to certain extraneous things concern- ing some inter-departmental issues. Appellant had nothing to do with those issues. Appellant is now told we are sorry. We should have given you the permission. But now that the period is over, nothing can be done . The answer to this is in the words of Lord Denning: Now I know that a public authority can not be estopped from doing its public duty, but I do think it can be estopped from relying on a technicality and this is a technicality (See Wells v. Minister of Housing and Local Government, [1967] 1 WLR 1000 at 1007). Francis Bennion in his Statutory Interpretation , 1984 edition, says at page 683: Unnecessary technicality: Modern courts seek to cut down technicalities attendant upon a statutory procedure where these cannot be shown to be necessary to the fulfilment of the purposes of the legislation. 127 Our fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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