SUPREME COURT OF INDIA
State of Orissa
M/S B. Engineers & Builders Ltd. & Ors.
Civil Appeal No. 2516 of 2020
[A. M. Khanwilkar, Indira Banerjee And Dinesh Maheshwari, JJ]
Date of Decision: June 5, 2020
Sales Tax – Reimbursement of – Works contract – Contract inclusive of taxes paid on material procured by Contractor for use in contract – Contract also includes the clause that any Central or State sales tax and other taxes on completed items of works as may be levied and paid by the contractor shall be reimbursed by the employer – Circulars dated 07.11.2001 and 19.06.2002 issued for not reimbursing the tax on completed contract – On writ, High Court quashed the circulars directing reimbursement of tax paid by contractor on assessment – On appeal to Supreme Court
Held: The levy of sales tax in relation to a works contract is on “taxable turnover” and not on the entire turnover. It follows necessarily that the claim for reimbursement could only be made of the amount of sales tax that had been levied; and had been paid by the contractor. Hence, the suggestion as if the expression “completed item of work” refers to the end-product of a works contract is without any substance.
It remains trite that the terms of contract bind the parties thereto and unless there be any case of ambiguity or violation of law, ordinarily, the terms of contract, revealing the intent of parties, are required to be given effect to. It is, therefore, crystal clear that even when the contract provided that the rates quoted by the contractor shall be deemed to be inclusive of sales and other taxes and royalties on the materials, it was agreed to between the parties that sales tax and other taxes under completed items of work, as paid by the contractor were to be reimbursed.
On a plain reading of the aforesaid relevant terms of the contract, it is clear that while the contractor cannot claim any payment towards the taxes/duties/royalties etc. on the goods/materials purchased by it for performance of the contract but that does not disentitle the contractor from claiming reimbursement of the sales tax levied upon it by the employer, of course after proof of payment/assessment. It is also pertinent to mention that the respondent No. 1 only claimed reimbursement of the sales tax paid by it on the turnover of the works contract and not of any tax or duty or royalty paid by it on the material procured for the purpose of execution of the works contract.
Further on a reading of Circular dated 04.11.1986, it is evident that the State Government was fully conscious of its obligation towards reimbursement under the existing terms of contracts. The Circular dated 27.01.2000, and converse decision against the obligation of reimbursement, as stated in the Circular dated 07.11.2001, had only been of unwarranted attempts to wriggle out of the contractual obligations with rather perverse construction of the plain terms of the existing contracts. Appeal dismissed.
HIGH COURT OF MADRAS
Commissioner of Customs
[C. Saravanan, J]
W.P. No. 5233 of 2016
Date of Decision: May 19, 2020
Customs Act , 1962 – Cross examination –under valuation of goods – Statements of few persons recorded u/s 108 of Customs Act during investigation by officers regarding undervaluation of goods imported – Show cause notice issued based on differential duty appropriation – Cross examination denied to petitioner – Writ filed – nothing on record to show that statement was taken under threat – show cause notice indicative of admission regarding undervaluation of goods and cash payment to evade custom duty – Held respondent officer to take a call if the statements were made the sole basis of demand or the statements were used to corroborate the independent evidence – in latter case cross examination to be allowed by summoning but not in former case.
In the present case the petitioner had imported Plaster of Paris and allied goods between June 2010 and December 2013. The respondent made out a case of under valuation of the said goods by invoking Sec. 14 of the Customs Act r/w Rule 9 and Rule 4 of the Customs Valuation Rules, 2007. During the course of investigation, the statements were recorded from the two petitioners and two other employees of the two Custom House Agent of the petitioner in 2013 – 2014. The petitioner deposited a sum of Rs.45 lakhs in the course of investigation as differential tax for which a show cause notice was issued to appropriate the same towards the differential duty proposed in the said show cause notice. In year 2015 the petitioner requested for cross examination of the persons making statements which was denied vide communication dated 19.1.2016 on the grounds that the statement recorded from these persons were true and correct and that no reasons were furnished for cross examination and hence request could not be exceeded.
A writ is filed against the impugned communication dated 19.1.2016 requesting for cross examination of the persons whose statements were recorded under Section 108 of the Custom Act 1962 and the officers who recorded such statements.
HELD: The confirmation of demand solely based on statements recorded U/s 108 of the 1962 Act would require cross examination by the petitioner but if such statements are merely intended for corroboration of independent evidence, the cross examination need not be allowed. Therefore, it is for the first respondent to decide whether statements are to be solely relied for confirming the demand or relied for mere corroboration of evidence. If reliance is to be based on any statement of any person as a witness the respondent has to issue summons and produce it for cross examination. The respondent may inform the petitioner whether it proposes to confirm the demand solely based on statements of the persons and if it is so, produce them for cross examination.
Therefore, the writ petition is dismissed with the following observations:-
That the respondents shall complete the proceedings within a period of 9 months from the date of receipt of this order. The first respondent shall decide as to whether it proposes to solely rely on the statements recorded and shall produce such persons for cross examination in such case.
If reliance is placed on independent evidence gathered by the officers of the respondent, the respondent need not issue summons to the persons whose statements were recorded.
HIGH COURT OF GUJARAT
State of Gujarat
[J. B. Pardiwala and Ilesh J. Vora, JJ]
R/Special Civil Application No. 7046 of 2020
Date of Decision: May 11, 2020
Alternate Remedy – Release of goods – writ filed for declaring action of respondent in stopping goods and conveyance as illegal – Held : since final order regarding confiscation of goods stood already passed by appellate authority, writ not entertained – Petitioner relegated to prefer statutory remedy u/s 107 of GST Act 2017 – Permission for provisional release of goods upon furnishing security till pendency of appeal granted – writ disposed of.
In the present case a writ was filed by the petitioner for setting aside the action of the respondent to stop the goods and conveyance by declaring the action as unlawful and illegal. It sought an interim relief by having his goods released till final hearing of the court.
Observing that the final order regarding the confiscation of goods and the conveyance already stood passed by the Appellate Authority, the Court declined to entertain the writ petition and relegated the petitioner to prefer a statutory remedy u/s. 107 of the GST Act, 2017. Also, the petitioner could apply for provisional release of its goods upon furnishing of security or execution of a bond till the pendency of the appeal.
PUNJAB AND HARYANA HIGH COURT
Shri Vishnu Processors
Union of India Ors.
[Ajay Tewari and Avneesh Jhingan, JJ]
CWP No. 25129 of 2019
Date of Decision: March 20, 2020
Jurisdiction – Search of premises – Ineligible drawback and IGST – premises of petitioner searched by DRI in connection to a case of availing of ineligible drawback and IGST by procuring fake bills by two Ludhiana companies –link established between petitioner and Ludhiana exporters as Goods supplied by petitioner to those exporter companies – writ filed for quashing of memo contending that DRI officer has no jurisdiction to search its premises as he is not an exporter – Held: under section 105 of Custom Act 1962 Act search can be conducted if the authority deems there is a reason to find any document or thing related to such proceedings – objection regarding contents being added in panchnama by DRI officers on their own not entertained as basis to quash the memo – writ dismissed
In this case a writ is filed seeking quashing of Panchnama, memo dated 9.7.2019. The factory premises of the petitioner were searched by Director of Revenue Intelligence (DRI). The search was in connection with investigation going on for availing ineligible drawback and IGST by way of accumulating ITC by procuring fake purchase bills by two companies of Ludhiana to whom the petitioner had supplied materials. The petitioner contends that Panchnama be quashed as officials of DRI have no jurisdiction to conduct search at petitioner premises since he is not an exporter. However, if there was a doubt it was only the officials of GST Department who could have proceeded in the matter.
The Hon’ble Court has held that a perusal of Sec. 105 of the Custom Act 1962 is widely worded and search can be conducted if the Assistant or Deputy Commissioner of Custom if he has reasons to believe that there are any document or thing which would be useful or relevant to any proceedings under this Act or secreted at any place. The search is not restricted with importer or exporter. The petitioner being a supplier to the exporter of Ludhiana and an investigation that an ineligible drawback had been claimed establishes the relevance of search with proceedings under the Act.
The petitioner has also contested that the contents were added by the officials of DRI in Panchnama on their own. This aspect cannot be gone into at this stage and would not be a reason to quash the panchnama or declare the search illegal. The writ petitioner is dismissed.
HIGH COURT OF MADRAS
M. R. Motor Company
The Assistant Commissioner (CT)
[C. Saravanan, J]
W.P. No. 31044 of 2013
Date of Decision: May 19, 2020
Refund – Input tax credit – Claim for refund in 2011 for assessment years 2006 to 2010 – Denial of on grounds that said amount is regularly adjusted towards its outstanding tax liability due till July 2013 – no set off made – writ filed – Held : Excess ITC to be adjusted towards outstanding dues as per clause 17 of Section 19 of TNVAT Act, 2006 – Refund to be made after such adjustment – No Rule provides for carrying forward of ITC for adjustment of tax liability for subsequent period – Excess ITC can be utilized only for adjusting dues of previous year – Writ allowed with a direction to refund excess ITC at the beginning of each financial year.
The petitioner had filed for refund on 9/11/2011 of the accumulated ITC for the years 2006 to 2010 under the relevant sections of the TNVAT Act, 2006. The petitioner filed a representation in 2013 requesting for refund of the accumulated ITC. The respondents rejected its claim on the ground that the petitioner is still in business and adjusting the amount regularly towards its output tax liability due till month of July 2013. After the coming of the GST Act the petitioner transited the credit amount under TNGST Act and no set off has been made. A writ is filed for quashing the order disallowing the refund of ITC.
As per clause (17) of Section 19, if the ITC determined exceeds the tax liability of a particular year, the excess can be adjusted towards any outstanding tax due from the dealer. Sub Clause (18) of Section 19 provides for refund or carrying forward after such adjustment. The Rules provide for refund and there is no provision for carrying forward such ITC for adjustment of tax liability for the subsequent period. The opening balance of the ITC lying unutilised could be adjusted only towards any tax outstanding for the previous assessment year. After that the assessing officer is to mandatorily refund ITC to the dealer in view of Rules.
Merely because the petitioner was a going concern the petitioner is not disentitled to such refund of excess ITC which it accumulated over a period of time.
Allowing the writ petition, the order passed by the respondent is quashed with a direction to refund the amount lying unutilised after adjustment at the beginning of each financial year.
HIGH COURT OF MADHYA PRADESH
M/s Munesh Enterprises
State of M.P. and another
[Sheel Nagu & Rajeev Kumar Shrivastava, JJ]
Date of Decision: May 11, 2020
Cross examination – Information received by department regarding purchases by petitioner from X –- Reassessment order passed and demand raised thereto without opportunity to cross examine – Revision sought – matter remanded by Revisional authority for reassessment with a direction to grant opportunity of cross examination – prayer for cross examining X brushed aside again – matter taken up again for revision u/s 62 of MP GST Act– revision dismissed with an observation that 17 year old records possibly would not be available for cross examination – writ filed – Held impugned orders passed without assigning reasons that stand test of reasonableness – impugned order of revision set aside – matter to be taken for reassessment by granting an opportunity to cross examining the documents in question or any witness in the know of such documents – writ allowed
For the assessment year 1993-94 and 1994-95, the assessment was framed which was reopened on the basis of some information received from Krishi Upaj Mandi Samiti as regards purchases made by the petitioner. Without giving an opportunity of hearing the order was passed in 2001 and an additional demand was raised. The petitioner filed revision and the matter was remanded back for fresh assessment. The petitioner sought opportunity of cross examination qua the record received from Krishi Upaj Mandi Samiti which was the foundation of reassessment proceedings. However, the order in the year 2006 was finalized without the opportunity of cross examination.
An application u/s 39/62 of MP GST Act was filed. The proceedings u/s 62 were initiated but revision was dismissed with finding that since period of assessment 1994-95 was about 17 years and, possibility of availability of records is remote and therefore opportunity of cross examination is futile. Hence a writ is filed against this order.
The matter was remanded only for the purpose of cross examination of records of Krishi Upaj Mandi Samiti.
However, on receipt of remand, the authority brushed aside the prayer for cross examination by presuming that 17 years old records may not be available. Atleast the petitioner should have been allowed to summon the records. Consequently, the writ is allowed and the impugned order of revision is quashed. The respondents are directed to conduct reassessment proceedings by granting reasonable opportunity to the petitioner of cross examination. In case of failure to produce the documents, the petitioner may cross examine any witness in the know of the said documents.
HIGH COURT OF RAJASTHAN
Union of India
[Sanjeev Parkash Sharma, J]
Criminal Misc. Bail Application No.7605 /2019.
Date of Decision: June 02, 2020
Bail – Wrongful claim of ITC – Arrest for offence under Section 132 of CGST Act, 2017 – Application for bail accepted on grounds that no further documents required by applicant – No recovery or further investigation due – Accounts already seized – Recovery due under GST Act not criminal law – Span of 450 days already spent in jail – Nothing on record to show threat to witnesses- Bail granted with certain conditions to be followed – Submission of bail bond and one surety – Application accepted.
In this case an application for bail has been filed against the arrest for committing an offence under Section 132 of the CGST Act 2017. It has been alleged that the petitioner issued forged invoices giving benefit to companies who availed the benefit of ITC fraudulently.
The Hon’ble court has observed that the complaint has already been filed before CJM. No further documents are required to be produced. The petitioner is not required for further investigation and no recovery is required to be made against them and their account also has been seized. The recovery is due under GST Act, 2017 and does not form part of criminal case. The contention that the petitioners can effect or threaten the witnesses is not made out as there is no such statement on record where a witness has been threatened. It is also noticed that the alleged offence is compoundable. The petitioners are already in jail for 450 days and no further investigation or recovery is to be made. The Court is thus inclined to grant bail subject to certain conditions. The petitioners shall submit a bail bond of ₹ 1 Lakh alongwith one surety.
HIGH COURT OF GUJARAT
Colgate Palmolive India Ltd.
State of Gujarat
[Sonia Gokani & N. V. Anjaria, JJ]
Special Civil Application No. 7378 of 2020
Date of Decision: 11.06.2020
Mistake in documents – Detention of goods – Petitioner having two business units (factory and warehouse) in Ahmadabad – Single registration for both – order placed at Goa unit for goods i.e. Dental Cream flavour – Inadvertent mistake of address in e-way bill i.e warehouse address instead of factory address – Goods detained requested to be released – Hon’ble Court considered the issue of closure of business due to pandemic bearing in mind that goods in question were a necessary – Also noticed the fact of two units of petitioner being present in Gujarat – Request to release goods accepted subject to payment of entire tax and penalty amount of 10% – Petitioner to appear before authorities in accordance with the show cause notice issued.
The Petitioner has his principle place of business, a warehouse, at Vadodara and its manufacturing unit at Sananand, Ahmadabad. It has a single GST registration number for both factory and warehouse. The petitioner has placed an order to its unit at Goa for supply of Dental Cream flavour which is a basic raw material for manufacturing Dental Paste. The Goa Unit issued the e-way bill with all details as required but the address of the place of delivery in the e-way bill was inadvertently mentioned as Vadodara Warehouse Unit instead of Factory address. Therefore, the truck carrying goods from Goa was intercepted and the goods were detained due to the mismatch of place of delivery in invoice and e-way bill. Hence the petitioner has approached the Hon’ble High Court for release of its goods.
Considering the issue of closure of business in the pandemic for a long time and also bearing in mind the material which was being carried from Goa to Sananand was meant to prepare one of the necessaries and also noticing that there are two units within the state of Gujarat, the Hon’ble Court has exceeded to the request of release of goods detained subject to the deposit of entire amount of tax and 10% penalty amount. The Court has directed the petitioner to appear before the concerned authority in accordance with the show cause notice served U/s 129(3) on 16.6.2020.
HIGH COURT OF DELHI
Union of India and Ors.
[Navin Chawla, J]
Date of Decision: May 18, 2020
Duty Free Credit Entitlement Scheme – Third party exports – status holder – Application filed contending that out of the total exports, exports worth 714.66 crores were entitled for the benefit of the DFCE Scheme – application rejected relying upon the judgment of the Supreme Court and observing that in terms thereof, the petitioner is not eligible to any benefit under DFCE Scheme as claimed. On writ :
HELD THAT:- The Supreme Court in its judgment dated 27.10.2015 had inter alia considered that the petitioner has shown an exponential growth in its exports of 3816% against the National Growth of Export of merely 18%. This modus operandi was used by the exporters in inflating their exports to claim benefit of the DFCE. These misdeeds led to the issuance of the Notifications dated 21.04.2004 and 23.04.2004. In the counter affidavit, specific reference of the petitioner was made by the respondents.
The petitioner in fact, filed a Review Petition seeking review of the said judgment, which was also dismissed by the Supreme Court. In the Review Petition, the petitioner had categorically contended that the finding of the Supreme Court that held the petitioner as having resorted to paper transactions was not justified as the respondents had not placed any material on record against the petitioner to prove the same. The Review Petition was, however, dismissed by the Supreme Court. Through this petition, the petitioner cannot seek to agitate same issues to claim benefits of DFCE.
Moreover, merely because the respondents have granted some relief to M/s Adani Export Ltd. or have not made any recoveries from it, cannot entitle the petitioner, by itself, to claim benefit under the DFCE Scheme in spite of the clear and categorical judgment of the Supreme Court holding it to be not entitled for the same.
HIGH COURT OF KERELA
State of Kerela
[Amit Rawal, J]
WP No. 6857 of 2020
Date of decision: March 16, 2020
Reassessment – Escaped turnover – Assessment year 2004-05 – Fast track assessment notice served in view of escaped turnover on 20/11/2019 – Demand raised – Writ filed – Held nothing on record to show material forming opinion to undertake fast track assessment in respect of escaped turnover as required u/s 17D of the KGST Act, 1963- In absence of statutory period given in S.17D, assessment cannot be taken after 14 yrs – S. 19 regarding escaped turnover to be referred in such case – Therefore, assessment to be done within five years from the expiry of the year to which tax relates – As per amendment in S.17, assessment for year 2004-05 to be completed before March 31, 2011 – Writ allowed setting aside demand notice and assessment order
The petitioner filed returns for the year 2004-05 thereby paying tax and migrated to the GST regime in year 2017. A notice dated 20/11/2019 was served for reassessment of proceedings by fast track assessment u/s 17D of KGST Act, 1963 in view of escaped assessment. The assessment order was passed on 14/12/19 demanding interest and penalty. On filing of writ
It Is held that u/s 19 of the Act; the Assessing Authority may at any time within five years from the expiry of the year to which the tax relates, proceed to determine the best of its judgment in respect of escaped turnover.
As per amendment in section 17, the assessment relating to year upto and including 2004-05 running as on 31st march 2010 was to be completed on or before march 31st, 2011.
There is no material on record as per the provision of section 17D to form an opinion to undertake fast track assessment with respect to escaped turnover. In absence of statutory period in section 17D, the assessment for escaped turnover cannot be taken 14 yrs later. The reasonable period can be extended upto the period referred to in other provision regarding escaped assessment u/s 19. Hence the demand notice and assessment order are quashed and writ is allowed.