I. HIGH COURT
20. [2019 109 taxmann.com 265 (Bom.)] Raymond Ltd. vs. UOI Date of order: 6th August, 2019
Even if notices
can be kept in the call-book to avoid multiplicity of proceedings, yet the
principle of natural justice would require that before the notices are kept in
the call-book, or soon after, the petitioners are informed the status of the
show-cause notices so as to put the parties to notice that the said notices are
still pending. Giving notices for hearing after a gap of 17 years is to catch
the parties by surprise and prejudice a fair trial, as the documents relevant
to the show-cause notices may not be available with the petitioners for it is
reasonable for the assessee to presume that the notices have been abandoned
FACTS
The petitioner
challenged the action of the Central Excise Department seeking to revive six
show-cause notices issued between April, 2001 and January, 2004 under the
Central Excise Act, 1944 by issuing a notice for a personal hearing in respect
thereof in June and July of 2018. The petitioner submitted that issuing notices
to hear 14 to 17 years later is bad in law. Even in the absence of any time
limit in the law, show-cause notices must be disposed of within a reasonable
time. This revival of abandoned show-cause notices after so long causes
prejudice to the petitioner as the relevant documents pertaining to the
impugned notices were not available so as to appropriately meet the charge in
the impugned show-cause notices. The petitioner relied upon the decision in the
case of Bhagwandas S. Tolani vs. B.C. Aggarwal 1983 (12) ELT 44 (Bom.);
Premier Ltd. vs. Union of India 2017 (354) ELT 365 (Bom.); and
Sanghvi Reconditioners (P) Ltd. vs. Union of India [Writ Petition No. 2585 of
2017, dated 12th December, 2017].
The Department
represented that the Revenue had kept the show-cause notices issued to the
petitioner in the call-book in 2001 (although show-cause notices for the
subsequent period were issued) in terms of the CBEC Circular No. 162/73/95-CX
dated 14th December, 1995 and only after the Hon’ble Supreme Court
passed the final order in Revenue’s appeal in September, 2017 that the impugned
show-cause notices were removed from the call-book and the notices for personal
hearing were issued to the petitioners. It also submitted that at no time did
the Revenue inform the petitioner that the show-cause notices are being
dropped; therefore, it was obligatory on the part of the petitioner to keep the
papers and proceedings available till such time as the show-cause notices were
disposed of.
HELD
The Hon’ble
High Court observed that the Department gave no intimation to the assessee of
the fact that the impugned notices were kept in the call-book. It, therefore,
held that this delay in taking up the adjudication of the show-cause notices
(in the absence of any fault on the part of the party complaining) is a facet
of breach of the principles of natural justice. It further held that such a
practice impinges upon procedural fairness, in the absence of the party being
put to notice that the show-cause notices will be taken up for consideration
after some event and / or time when it is not heard in reasonable time. The
reasonable period may vary from case to case.
However, when
the notices are kept in abeyance (by keeping them in the call-book as in this
case), the Revenue should keep the parties informed about the same. This is the
transparent manner in which the State administration must function. The High
Court also quoted Circular No. 1053 of 2017 dated 10th March, 2017
wherein at paragraph 9.4 the CBEC has directed the officers of the Department
to formally communicate to the party that the notices which have been issued to
them are transferred to the call-book. In the absence of such procedure being
followed by the Department, it was reasonable for the petitioners to proceed on
the basis that the Department was not interested in prosecuting the show-cause
notices and had abandoned them. The High Court thus quashed the show-cause
notices.
21. [2019 110 taxmann.com 293 (Mad.)] Delphi TVS Technologies Ltd. vs. Assistant
Commissioner (ST) Date of order: 9th September, 2019
Where in response
to the notices received from the Department, the assessee requested for
additional time stating reasons for the same, passing final orders by simply
confirming the proposals made in the notice without first intimating to the
assessee as to whether his request for additional time is accepted or not, is
violation of the principle of natural justice
FACTS
The Department
originally issued notices of the proposal in February, 2019 to the assessee in
respect of four assessment years. The assessee, through letters in March, 2019,
requested the AO to give time up to April, 2019 for submission of reply by
stating that they need to collect more data to justify their stand; and that
they are occupied in preparing GSTR2A reconciliation against their input credit
taken in the monthly return. However, the AO, without giving time to the
assessee, proceeded to pass assessment orders in March, 2019 by stating that
the assessee failed to file their objection, though sufficient time was given.
The assessee challenged these orders before the High Court in a writ petition.
HELD
The Hon’ble
High Court observed that the assessee sought time to file their objection
through their letter dated March, 2019 and that such communication was also
received by the AO, as found in the impugned order itself. The Court,
therefore, held that in such circumstances the AO is not justified in
proceeding to pass assessment orders without informing the assessee as to
whether their request for time to submit their reply has been accepted or
rejected. The High Court further held that in both events, the AO is bound to
send a communication to the assessee and inform the result of the request made
by the assessee. In the absence of any such communication from the AO, there is
a possibility of drawing a reasonable presumption by the assessee that their
request has been accepted.
Therefore, the
act of the AO in not passing any order on the request of the petitioner seeking
time and proceeding to pass the orders of assessment straightway amounts to a
violation of the principles of natural justice. The High Court also observed
that the orders of assessment were passed simply by confirming the proposals in
the absence of any objection from the petitioner. Accordingly, the High Court
remanded the matter back to the AO to redo the assessment once again on merits
and in accordance with the law after inviting objection/s from the petitioner.
II. TRIBUNAL
22. [2020-TIOL-130-CESTAT-Kol.] M/s. Adhunik Fuels Pvt. Ltd. vs. CCE & ST Date of order: 17th December, 2019
Suppression
requires to be established. If not, section 78 not invokable
FACTS
During the EA 2000 audit, the Department observed that the assessee as
recipient did not pay service tax liable to be paid under the reverse charge
mechanism. On this being pointed out, the assessee paid service tax with
interest. However, a show-cause notice was issued wherein tax was adjudged and
penalty was confirmed and also upheld by the first appellate authority. The
appellant pleaded before the Hon. Tribunal that they did not contest the tax
adjudged and interest but that would not justify the element of suppression and
penalty u/s 78. Further, section 74 was not invoked in the show-cause notice
and therefore late fee imposed meant going beyond the show-cause notice.
HELD
Short payment
was detected based on records maintained by the assessee. However, suppression,
misstatement, etc. needs to be established for invoking section 78. In its
absence thereof, section 78 cannot be invoked to levy penalty; and since the
show-cause notice did invoke section 74, late fee for delayed filing of ST-3
returns was also not sustained. The appeal thus was fully allowed.
23. [2020-TIOL-67-CESTAT-Mum.] M/s. Visible Alpha Solution India Pvt. Ltd.
vs. CCGST Date of order: 4th December, 2019
Registration
not a prerequisite for granting refund claim. No contrary decision of any other
High Court to Karnataka High Court
FACTS
Two refund claims filed under Rule 5 of CENVAT Credit Rules, 2004 were
rejected on the ground that the appellant did not obtain registration. The
appellant pleaded that in terms of various decisions registration was not
required in terms of Karnataka High Court in the case of mPortal India
Wireless Solutions Pvt. Ltd. 2011-928-HC-Kar-ST.
HELD
Considering the matter no more res integra as per the decisions
of this Bench and other Benches and in terms of the Karnataka High Court’s
decision in the case of mPortal (Supra) and the fact of no
contrary decision being pronounced by any other High Court though Revenue
presented a few adverse decisions of the Coordinate Bench at Delhi, the issue
is settled in favour of the appellant. So far as the credit on general
insurance service for Mediclaim and water and recreation services is concerned,
they are covered by the ratio of the cases cited by the appellant (and)
are required for the business of the assessee. There is nothing on record that
proves their use for anything other than business purpose. Hence the credit is
eligible and consequently the refund.
24.
[2020-TIOL-16-CESTAT-Del.] Om Logistics Ltd. vs. Commissioner (Appeals) CGST Date of order: 5th
December, 2019
Service tax on
Keyman Insurance Policy eligible credit if the beneficiary is the company
FACTS
The assessee,
providing courier agency service and business auxiliary service, filed ST-3
returns and paid service tax regularly. Credit for expenses on Keyman Insurance
Policy taken for the Managing Director was availed. Revenue contended that this
policy was for personal use and not for business purpose and hence directed the
assessee to reverse the credit – and hence the dispute.
The assessee
submitted that in the case of their own appeal No. 52845 of 2018 (SM), it was
held as eligible credit. The Revenue supported the order and stated that the
assessee had produced only the premium receipt and not the policy and hence was
required to be remanded to the adjudicating authority for deciding afresh.
HELD
Considering the
Tribunal’s order in the earlier appeal, it was observed that the benefit under
the policy in question is payable to the policy holder, viz., the company and
there is no nominee required when the policy is in the name of the corporate.
In view thereof, the order was set aside.
25. [2020-TIOL-52-CESTAT-Chd.] Verma Brothers vs. CCE & ST Date of order: 20th November, 2019
Refund claimed
for an amount paid on exempted service not to be considered tax payment. Hence
not barred by limitation
FACTS
The appellant,
a construction service provider, paid service tax mistakenly on an exempt
service under entry 12(a) of Mega Exemption Notification No. 25/2012-ST dated
20th June, 2012. This exemption was withdrawn with effect from 1st
April, 2015 vide Notification No. 6/2015 dated 1st March, 2015.
Assuming that the said notification was applicable from 1st March,
2015 instead of 1st April, 2015, the appellant paid service tax for
the said period and later, on 7th November, 2016 as per the limit
prescribed under the Central Excise Act, lodged a refund claim.
Considering it
time-barred, the Department rejected it. The Revenue contended that the refund
is governed by section 11B of the Central Excise Act as per the decision of the
Apex Court in the case of Anam Electric Manufacturing Company 1997 (90)
ELT 260 (SC) relying on the decision of Mafatlal Industries vs.
Union of India 1997 (89) ELT 247 (SC), and therefore barred by
limitation.
HELD
Relying on the
decision in the case of Anam Electrical Manufacturing Co.
2002-TIOL-650-SC-CUS and based on this the view taken by the Delhi High
Court in National Institute of Public Finance and Policy 2018-TIOL-1746-HC-Del-ST,
the appellant was held as entitled to claim refund as in the case of Anam
Electric (Supra), the time prescribed is three years. In this case, the
assessee had filed the claim of refund within three years.
