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TMI Blog2023 (2) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... n WP.12291 of 2019) : Mr.R.Sankara Narayanan (for R1), Additional Solicitor General For Mrs.HemaMuralikrishnan, Senior Standing Counsel For the Respondents (In WP.3354 of 2020) : Mr.RajnishPathiyil (for R1) Senior Central Government Standing Counsel For the Respondents (In both WPs) : Mr.V.Sundareswaran (for R2) Senior Panel Counsel COMMON ORDER A common order is passed in these Writ Petitions, since the legal issue upon which a determination is sought are one and the same in all the matters. The facts in W.P.Nos.3354, 5098 of 2020 and 29286 of 2022 are similar as they relate to liability to Service tax under the Finance Act 1994 ('in short Act') for transfer of copyright in musical work by music composers and the exemption they seek in terms of Exemption Notification 25/2012 dated 20.06.2012. The facts in W.P.No.12291 of 2019 vary substantially and are detailed in the paragraphs to follow. 2. The petitioner in W.P.No.12291 of 2019 is engaged in conducting professional and Executive Diploma courses in Hotel Management. It was in receipt of a show cause notice dated 30.08.2018 issued by the Director General of GST Intelligence (DGGI/R2) proposing to levy service tax for the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in itself, invalid in law, the power assumed by the DGGI falls foul of statutory mandate. 8. The delegation of the power of adjudication by one authority to another is not a situation that has been saved under Section 174 of the CGST Act, that provides for repeal and savings. Chapter-V of Finance Act, 1994 has been omitted through Section 173 of the CGST Act. With this omission Chapter-V stands obliterated from the statute book. Any acts of delegation under the omitted enactment cannot be saved by virtue of the savings clause. 9. An exemption is engrafted under Section 6 of the General Clauses Act. Accordingly, the unconditional omission of a statute without saving clause will result in a situation where all transactions under that Act must grind to a halt commensurate with such omission coming into effect. Thus, with the omission of Chapter-V of Finance Act, 1994, all and any situations contemplated under the erstwhile chapter must stand obliterated. 10. The petitioner relies on the following judgments in support of the submissions above: (i) M/s.Rayala Corporation (P) Ltd. v. Director of Enforcement [1969 (2) SCC 412] (ii) Kolhapur Canesugar Works Ltd. v. Union of India [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncil for Vocational Training or State Council for Vocational Training was fatal to its case. 15. In fact, such affiliation is not necessary and ought not to have weighed with the respondents as, according to the petitioner, it is contrary to the law laid down in the case of Commissioner of Service Tax, Delhi v. Ashu Exports Pvt. Ltd. [2014 (34) S.T.R. 161 (Del.)] and Wigan and Leigh College (India) Limited V. Joint Commissioner, ST Hyderabad (2007 (8) STR 475 (Tri.Bang.) as well as SRM Institute of Hotel Management V. Commissioner of Central Excise (ST), Trichy (2014 (35) STR 843 (Tri.Chennai)). 16. On limitation, the petitioner would submit that the respondents were well aware of the activities of the petitioner even from the year 2014 onwards. Hence, the delay on the part of the respondents in issuing the show cause notice is fatal to their cause as the petitioner had never concealed any particulars or material in regard to the transactions that would justify the invocation of the longer period of limitation. Reliance is placed on the decision in Commissioner of Customs v. Magus Metals P. Ltd. [2017 (355) E.L.T. 323 (S.C.)]. 17. The petitioner finally contended that there were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) cinematograph films; and (c) sound recording. . . . . 23. The petitioner reiterates that he is the sole and absolute owner of the copyright that subsists in the musical works composed by him. Being the holder of such copyright, he assigns them to the film producer under agreements that he executes with them, in terms of which the producer could exploit that copyright. 24. On the assumption of jurisdiction, petitioner adopts the arguments advanced in the case of Amrita International (supra) placing emphasis on the judgements in Canon India Pvt. Ltd., Shri Ishar Alloy Steels Ltd., Kerala State Electricity Board., Sayed Ali and Sri Balaji Rice Company cited by that petitioner as well. 25. The petitioner in W.P.No.29286 of 2022 is also a composer of music and background score for films, and challenges an order-in-original dated 30.08.2022. Prior thereto, he had received a show cause notice dated 24.10.2018 relating to the period 2013-14 to 2016-17 and calling for various particulars in respect of the aforesaid period. Upon receipt of the documents, the DGGI framed the issues for consideration under the following broad heads: a) Consideration received in terms of Contract of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners whose cases are dealt with under this order and I hence do not reproduce the same in the interests of brevity. 28. In W.P.No.5098 of 2020, the petitioner, also a composer of music and background score for films, challenges a show cause notice dated 09.04.2019 issued for the period 01.10.2013 to 30.06.2017 invoking extended period of limitation on the ground that the petitioner had suppressed various receipts and had not remitted tax in regard to the same. As in W.P.Nos.3354 of 2020 and 29286 of 2022, reliance is placed on mega Notification 25/2012 dated 20.06.2012, specifically clause (15) thereof. In addition, learned counsel would rely on the Service Tax Education Guide in support of the submissions made. 29. The decisions of this Court in M.Suganthi V. Assistant Commissioner of Central Excise, Pollachi (2011 (23) STR 7 (Mad) and the Allahabad High Court in Nav Sahitya Prakash and ors. V. Anand Kumar and ors. (AIR 1981 All 200) are relied upon. No reply has been filed by the petitioner to the show cause notice, and he has, confident in the present challenge, filed the present Writ Petition straightaway. On the question of law, the petitioner adopts the submissions advanced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgments, the Hon'ble Supreme Court has held that where statutory provisions were saved, such savings would be extended to allied rules and regulations as well. Thus, the argument of the petitioner that the rules, having not been specifically saved, the impugned proceedings are vitiated, is not tenable in law. 36. R1, the Commissioner of GST and Central Excise in W.P.No.3354 of 2020, relies upon the judgements in Laxmi Narayan Sahu and Ors. v. Union of India and Ors. [WP(C)2059, 1868/2018 and 7729/2017 dated 12.10.2018], JSK Marketing Ltd. v. Union of India [2021 (46) G.S.T.L. 369 (Bom.)] and Union of India v. JSK Marketing Ltd. [2022 (56) G.S.T.L. J10 (S.C.)] 37. Respondents in W.P.No.12291 of 2019 also rely on the decision of the Kerala High Court in Sheen Golden Jewels (I) P. Ltd. v. State Tax Officer (IB), SgstDeptt., Thiruvananthapuram [(2019) 23 GSTL 4], Karnataka High Court in Prosper Jewel Arcade LLP v. Deputy Commissioner Commercial Taxes and Others [(2018) SCC Online Kar 3887] and Delhi High Court in Vianaar Homes Private Limited v. Assistant Commissioner, Central Goods & Services Tax and Others [(2020) 43 GSTL 479] and R2 in WP.No.3354 of 2020), in addition, relies u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .P.No.29286 of 2022) and show cause notice dated 09.04.2019 (W.P.No.5098 of 2020) touch upon the liability or otherwise to tax, it is only the appellate authority in statutory appeal who should look into the same and not the High Court. 43. In Raza Textiles Ltd. V. Income Tax Officer, Rampur ((1973) 1 SCC 633) three Judges of the Hon'ble Supreme Court opined that the maintainability of a Writ Petition would depend on whether the error committed by a quasijudicial authority would amount to a decision on a jurisdictional fact. Thus, even if the error in question concerned one of fact, the question that would arise is as to whether such fact constituted a jurisdictional fact, and if the answer were in the affirmative, such error would be open to examination in a Writ of Certiorari. 44. The petitioners rely upon the decisions in TVS Srichakra Ltd. v. Commissioner of CGST &C.Ex., Madurai [2018 (15) G.S.T.L. 182 (Mad.)] and Industrial Mineral Company (IMC) v. Commissioner of Customs, Tuticorin [2018 (18) G.S.T.L. 396 (Mad.) in support of the position that the existence of a statutory remedy is no bar to the Court entertaining a writ petition on a pure question of law. 45. The grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreements. Interpretation of contractual clauses is not a matter that should concern this Court. Incidentally and moreover, the proceedings in the cases of the three music composers span the periods 2013-2017, specifically, 18.05.2013 to 28.04.2017 in W.P.No.29286 of 2022, and thus the length of the period would also entail a study of voluminous documentation that cannot be undertaken in these proceedings. 51. Though it is the persistent attempt of the petitioners to state that the liability to service tax can well be decided without reference to facts, agreements or contracts, in my considered view, that would be an utter over-simplification of the matter and even assuming so, such a determination would be purely academic. In the case of the petitioner in W.P.No.5098 of 2020, the challenge is to a show cause notice to which the petitioner has not even replied. The proceedings are, in my considered view, far too premature to be considered by this Court as even primary facts are to be established on the anvil of which the legal premise would thereafter be applied. 52. In the case of Amirta International as well, a spirited defence has been put up to the eligibility of that p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Sahitya Mudranalaya Pvt. Ltd. v. Additional Director General [2021 (46) G.S.T.L. 245 (Guj.)], Additional Director General of GST Intelligence v. Sahitya Mudranalaya Pvt. Ltd. [2021 (48) G.S.T.L. J62 (S.C.)]. 58. In this case too, I am of the view that the merits of the matter must be decided by the statutory authorities, though bearing in mind the decisions rendered by the High Courts and CESTAT on this account, as an examination of facts is inevitable on the rival positions as noticed above. All writ petitions, to the extent to the legal issue raised, are held to be maintainable. The challenge on the merits is left open to be agitated in appeal, subject to the decision taken in the following paragraphs on the question of assumption of jurisdiction. 59. The submissions of the respondents are dealt with in common as regards the legal issue involved. Barring W.P.No.5098 of 2020 where the challenge is to a show cause notice and wherein the Joint Director, DGGI is arrayed as sole respondent, in the other three Writ Petitions, the authorities of GST Department as well as DGGI are arrayed as respondents. 60. Counters have been filed by all respondents, barring W.P.No.29286 of 2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yala Corpn. were held to be obiter on this aspect. 66. The issue was raked up by the assessee yet again in the case of Shree Bhagawati Steel Rolling Mills (supra), and after hearing the counsel in detail, the submissions of the petitioner were rejected. Thus this issue is no longer res integra and the arguments of the petitioner on this score are rejected. 67. Under the erstwhile Service tax regime, the assumption of jurisdiction for the purposes of issuing show cause notices and passing orders, came to be dealt with by way of the following Notifications. Under Notification No.22/2014 dated 16.09.2014, the Board has appointed officers of the Directorate General of Central Excise Intelligence and Directorate General of Service Tax, as Central Excise officers, investing them with all powers under Chapter V of Finance Act, 1994 and the rules made there under throughout the territory of India. The Notification reads thus: GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF EXCISE AND CUSTOMS NEW DELHI NOTIFICATION NO.22/2014-ST., Dated: September 16, 2014 "In exercise of the powers conferred by clause (b) of section 2 of the Central Excise Act, 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force on 15th October, 2014. [F.No.137/29/2014-Service Tax] (HimaniBhayana) Under Secretary to the Government of India" 68. In terms of Notification No.2/2015-ST dated 10.02.2015, the Board had specified that the Principal Director General of Central Excise Intelligence shall have jurisdiction over the Principal Commissioners of Service Tax or the Commissioners of Central Excise as the case may be for the purpose of assigning Show Cause Notices issued by the Directorate General of Central Excise Intelligence, for adjudication, by such Principal Commissioner of Service Tax or the Principal Commissioners of Central Excise or the Commissioners of Service Tax or Commissioners of Central Excise, in the following terms: GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF EXCISE AND CUSTOMS NEW DELHI NOTIFICATION NO.2/2015-ST, Dated: February 10, 2015 "In exercise of the powers conferred by rule 3 of the Service Tax Rules, 1994, read with notification No. 6/2009- Service Tax dated the 30th January, 2009, published vide G.S.R. 60 (E) dated the 30th January, 2009 and notification No. 22/2014-Service Tax dated the 16th September, 2014, published vide G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the Central Government hereby directs that the powers exercisable by the Central Board of Excise and Customs under rule 3 of the Central Excise Rules, 2002 and rule 3 of the Service Tax Rules, 1994, may be exercised by- (a) the Principal Chief Commissioner of Central Excise and Service Tax; or (b) the Chief Commissioner of Central Excise and Service Tax, for the purpose of assignment of adjudication of notices to show cause issued under the provisions of the Central Excise Act, 1944 (1 of 1944) or the Finance Act 1994 (32 of 1994), to the Central Excise Officers subordinate to them. 2. This notification shall come into force on a date to be notified by the Central Government in the Official Gazette. 70. The case of the petitioners is that the aforesaid Notifications under which the officials of the DGGI have assumed jurisdiction have not been expressly saved under Section 174(2) of the CGST Act and hence the impugned orders/notice are non-est in law. Section 173 of the CGST Act 2017 omitted the Chapter V of Finance Act 1994, and Section 174 thereof provides for repeals and saving in the following terms. "Repeal and Saving: 174. (1) Save as otherwise provided in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-sections (1) and (2) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with regard to the effect of repeal." 71. Sections 6 of the General Clauses Act, 1897 which is also made applicable to the saving of the erstwhile provisions, states that where this Act, or any Act of Parliament or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not- (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) after any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Golden Jewels (I) P. Ltd. and Prosper Jewel Arcade LLP, the Kerala and Karnataka High Courts held adverse to those petitioners rejecting their arguments that with the shift to the GST regime, all levies under the erstwhile service law regime had lapsed. The conclusion arrived at was that Section 174 of the respective State GST enactments saved all the rights, obligations or liabilities acquired, accrued or incurred under the repealed enactments which included Service Tax Act as well. 76. To be noted that neither of the aforesaid decisions had dealt with the specific question/issue raised in these matters as to whether the Notifications issued under the Service tax regime, survived the transition to the GST regime. In any event, though a lukewarm ground has been raised to this effect, it is admittedly not the case of the petitioners before me that the levy of service tax in itself erroneous post 01.07.2017, but only that the assumption of jurisdiction by the DGGI in issuing show cause notices, is. Had the notices been issued by the correct officer, the petitioner are unanimous in stating that the present challenge would be a non-starter. 77. In Vianaar Homes Private Limited, a Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, which had been relied upon by the revenue in support of the saving of Rule 5 of the Service Tax Rules, would be inapplicable. 83. In Canon India, the issue that arose was whether an officer of the Directorate of Revenue Intelligence (DRI) had the authority in law to issue a show cause notice under Section 28(4) of the Customs Act, 1962 when the goods were initially cleared for import by a Deputy Commissioner of Customs who was of the opinion that the said goods were exempted from duty. It was held that the officer of the DRI would not be a proper officer to review the original order of exemption granted by the Deputy Commissioner as the enactment did not provide for identically placed officers of different Departments exercising the powers of re-assessment or review in regard to each other's orders. 84. That apart, they also held that the Additional Director General of the DRI who had issued the recovery notice was not the proper officer, by a combined reading of the definitions of 'proper officer' under Sections 2(34), 6 and 28 of the Customs Act. The ratio of this judgment, although rendered in a different context, may well support the revenue rather than the petitioners. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals and savings clause did not save the service tax rules. In repelling this argument, the Bench has taken note of Section 24 of the GC Act, which provides for the continuance of subordinate legislation. 91. To be noted that Section 174(3) only refers to Section 6 of the GC Act and not 24. However, I am of the considered view that in interpreting the effect of repeal and savings clauses, one will adopt a view that ensures smooth continuity rather than one that disrupts the flow of the levy itself. In doing so, the Court must consider if the new enactment specifically militates against such the continuance. 92. The case of Brihan Maharashtra Sugar Syndicate Ltd. V. Janardan Ramchandra Kulkarni and others (AIR 1960 SC 794) supports this proposition. That matter related to an application filed by shareholders who were respondents in the matter accusing them of oppression under the Companies Act, 1913. 93. The application was filed before the District Judge, Poona, who was vested with the jurisdiction to deal with such application under a Notification issued by the Government of Bombay under Section 3(1) of the erstwhile 1913 Act. Pending consideration of that application, 1913 Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pension, gratuity and other benefits as he would have held under that corporation if its undertaking had not vested in the company and shall continue to do so an officer or others employee, as the case may be, of the company or until the expiry of a period of six months from the appointed day if such officer or other employee opts not to be the officer or other employee of the company, within such period. (2) Where an officer or other employee of a corporation opts under sub-section (1) not to be in the employment or service of the company in which the undertaking of that corporation has vested. such officer or other employee shall be deemed to have resigned. (3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or in any other law for the time being in force, the transfer of the services of any officer or other employee of a corporation to a company shall not entitle such officer or other employee to any compensation under this Act or under any other law for the time being in force and no such claim shall be entertained by any court, tribunal or other authority. (4) The officers and other employees who have retired before the appointed day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by the respondents, as a measure, and in the interests of, administrative feasibility. This is a legitimate explanation and the aforesaid procedure has withstood the test of time. 99. In answering the legal issue therefore, and interpreting the provisions of Section 174 of the CGST act, this Court will be guided by the consistency in procedure adopted/followed by the authorities and for this reason I examine the procedure followed in adjudication, including issuance of show cause notices, post the introduction of GST. 100. Section 3 of the CGST Act deals with officers under the Act and states that Government shall, by Notification, appoint various classes of officers for the purpose of this Act. The categories are (a) Principal Chief Commissioners of Central Tax or Principal Directors General of Central Tax, (b) Chief Commissioners of Central Tax or Directors General of Central Tax, (c) Principal Commissioners of Central Tax or Principal Additional Directors General of Central Tax, (d) Commissioners of Central Tax or Additional Directors General of Central Tax, (e) Additional Commissioners of Central Tax or Additional Directors of Central Tax, (f) Joint Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of adjudication. Cases of similar nature may also be assigned to such an officer. 8. In case show cause notices have been issued on similar issues to a noticee(s) and made answerable to different levels of adjudicating authorities within a Commissionerate, such show cause notices should be adjudicated by the adjudicating authority competent to decide the case involving the highest amount of central tax and/or integrated tax (including cess). (Emphasis supplied) 102. The above Circular has been amended in F.No.CBIC-20016/2/2022- GST/Circular No 169/01/2022-GST to read thus: Circular No.169/01/2022-GST F. No. CBIC-20016/2/2022-GST Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes & Customs, GST Policy Wing ***** New Delhi, dated the 12th March, 2022 ...................... Vide Notification No. 02/2022-Central Tax dated 11th March, 2022, para 3A has been inserted in the Notification No. 2/2017-Central Tax dated 19th June, 2017, to empower Additional Commissioners of Central Tax/ Joint Commissioners of Central Tax of some of the specified Central Tax Commissionerates, with All India Jurisdiction for the purpose of ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned in column 3 of the said table corresponding to the said Central Tax Zone. Such show cause notice(s) may, accordingly, be made answerable by the officers of DGGI to the concerned Additional/ Joint Commissioners of Central Tax. ................. 7.2 In respect of a show cause notice issued by the Central Tax officers of Audit Commissionerate, where the principal place of business of noticees fall under the jurisdiction of multiple Central Tax Commissionerates, a proposal for appointment of common adjudicating authority may be sent to the Board. 7.3 In respect of show cause notices issued by the officers of DGGI prior to issuance of Notification No. 02/2022-Central Tax dated 11th March, 2022, involving cases mentioned in para 7.1 above and where no adjudication order has been issued till date, the same may be made answerable to the Additional/Joint Commissioners of Central Tax, having All India jurisdiction, in accordance with the criteria mentioned in para 7.1 above, by issuing corrigendum to such show cause notices." (Emphasis supplied) 103. Thus, the duality in the adjudicatory process continues. Quoting Bennion on Statutory Interpretation, 2nd Edn., at pp.494 and 49 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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