TaxTMI 
TaxTMI 
2022 (4) TMI 70
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....it 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 petition. (f) such other and further order or orders as may be deemed just and proper in the facts and circumstances of the present case." 4 The case put up by the writ applicant may be summarized as under: 5 The writ applicant No. 1 was formerly known as the L&T Technologies Limited. The name of the Company was changed from the L&T Technologies Limited to the L&T Hydrocarbon Engineering Ltd. on 21st May 2013. The writ applicant was, however, not carrying on any effective business activity either prior to or a....
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....ent, 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 of the same was given to the central excise department vide the writ applicants letter dated 10th May 2012. Along with this letter, the central excise department was given a copy of the certificate issued by the Director General of Hydrocarbons being the project authority. In respect of such clearances from the factory also, the excise invoice in the statutory form was issued declaring the rate of duty, as nil. These invoices duly showed that the clearances of these goods were exempt from duty. 11 The Larsen & To....
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....lowing 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. 19 The Jurisdictional Central Excise officer accepted the said application of the writ applicant and granted fresh central excise registration no. AABCL5967DEM001 on 7th April 2014. 20 After obtaining the formal fresh registration on 7th April 2014, all the dispatches were effected by the writ applicant by issuing statutory invoices in its own name. The monthly returns in the Form ER-1 were also duly filed in its own name by the writ applicant for the period after April 2014 onwards. 21 The Rule 1....
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....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 the Larsen & Toubro Ltd. during the FY 2013 - 2014 [upto February 2014]) was irregular or incorrect. The Audit at no point of time said that the compliance should have been by the L&T Hydrocarbon Ltd. i.e., the successor entity. 27 Two summons dated 15th November 2018 and 5th December 2018 resply were issued by the officers of the central excise department (at the behest of DGCEI, Madras) to the writ applicant requesting to provide documents and give statement. The statement of Vaidyanath Shastri, DGM....
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....efore, 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 excise duty by a wrong person, such duty so paid should be adjusted against the duty payable if any by the correct person. Asking the writ applicant herein to discharge the very same liability of payment of excise duty i.e. the very duty paid by the Larsen and Toubro Limited would amount to double taxation of the same transaction, and therefore, manifestly illegal. (v) The respondent No.2 has wrongly presumed that the writ applicant started carrying on its busines....
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....T, CC-XXI (2018) 170 ITD 507 (Kol) Pre-show cause notice consultation is mandatory. 14 Amadeus India Pvt. Ltd vs. Principal Commissioner 2019 (25) GSTL 486 (Del.) 15 Tube Investment of India Ltd. vs. UOI 2018 (16) GSTL 376 (Mad.) Writ Petition challenging the validity of a notice being barred by limitation, is maintainable. 16 State of Punjab vs. Bhatinda District Cooperative Milk P. Union Ltd. (2007) 11 SCC 363 32 In such circumstances referred to above, Shri Sridharan, the learned Senior Counsel prays that there being merit in his both the writ applications, those be allowed by quashing and setting aside the impugned show cause notices. • SUBMISSIONS CANVASSED ON BEHALF OF THE REVENUE: 33 Mr. Devang Vyas, the learned Additional Solicitor General of India assisted by Mr. Nikunt Raval, the learned Standing Counsel appearing for the respondents, on the other hand, has vehemently opposed the present writ application. 34 The principal submission canvassed by Mr. Vyas is that this writ application may not be entertained as it seeks to challenge the legality and validity of a show cause notice. Mr. Vyas would submit that ....
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....erit because although M/s. LT-HCIC had raised the invoices manufactured and cleared the goods on payment of duty and filed ER-1, yet the consideration was received in the financial of the writ applicant No.1 herein. Mr. Vyas also questioned the very approval of the scheme of arrangement by the Bombay High Court. He would submit that the Bombay High Court endorsed the scheme only keeping one thing in mind that the same was not opposed to the public policy. 39 Mr. Vyas further submitted that the impugned show cause notice has been issued on the ground that the writ applicants have contravened the provisions contained in Rule 11 of the Central Excise Rules, 2002 inasmuch as they failed to make proper invoices indicating the amounts to be paid towards the central excise duty and also Rule 12 of the Rules, 2002 inasmuch as they failed to file the monthly return within the prescribed time. 40 Mr. Vyas would submit that the writ applicant No.1 has not discharged its liability towards payment of the central excise of Rs. 115,81,08,490/- deliberately on clearance of their finished goods required to be recovered from it under the provisions of Section 11A(4) of the Central Excise Act, ....
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....overed from them under the provision of section 11(A)(4) of Central Excise Act, 1944 alongwith interest under section 11AA of Central Excise Act, 1944. 9. In view of foregoing paras, it also appears that M/s. LTHE is also liable to pay duty in relation to finished goods cleared under Notification No.12/2012-CE dated 17.03.2012 without fulfilling the conditions of the said notification and para 8.2 of chapter 8 of Foreign Trade policy 2009-2014. It appears that LTHE has not paid central excise duty amounting to Rs. 95,20,02,0911- as detailed in Annexure B to the show cause notice, which is required to be recovered from them under the provision of Section 11A.(4) of Central Excise Act, 1944 alongwith interest under section 11AA of Central Excise Act, 1944. 10. In view of the above, it appears that LTHE have contravened the provisions of Rule 9 of the Central Excise Rules, 2002 read with Section 6 of Central Excise Act, 1944 in as much as they have failed to apply for registration. 10.1. LTHE have also contravened the 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 appropr....
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....the same pattern. Thus, the demand raised in the impugned show cause notice is on the very same clearances/invoices already issued by the predecessor entity, in its name i.e. Larsen & Toubro Ltd. at the time of the removal from the goods of the factory. 45 The Demand raised is for the period from December 2013 and not from April, 2013. Obviously, this appears to be for a simple reason. Under Section 11A of the Act, the demand can be raised for a period of five years. Hence, the impugned show cause notice dated 31st December 2018 restricted the demand for the period from December 2013. 46 A bare perusal of the Paras 6 to 10 resply of the impugned show cause notice would indicate that the sole basis of the notice is that the central excise registration and issue of invoices should have been by the successor entity itself in its own name from 1st April 2013 onwards and the excise duty liability discharged accordingly. Effectively, according to the impugned notice, the compliance of the central excise law by the Larsen & Toubro Ltd. for the FY 2013-14 is irrelevant and nonconsequential. 47 The respondents have filed their affidavit-in-reply dated 5th March 2021 opposing the pr....
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....pleted, the liability of the transferor remains. The Transferor Company continues to pay the tax, file returns as if there is no proposal for demerger as the case may be. Therefore, the Court would also provide for the Effective Date. 53 The relevant portion of judgement of Supreme Court in Marshal and Co. Vs. ITO - [1997] 223 ITR 809 (SC) is reproduced below: "Every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation/transfer shall take place. The scheme concerned herein does so provide, viz., January 1, 1982. It is true that while sanctioning the scheme, it is open to the court to modify the said date and prescribe such date of amalgamation/transfer as it thinks appropriate in the facts and circumstances of the case. If the court so specifies a date, there is little doubt that such date would be the date of amalgamation/date of transfer. But where the court does not prescribe any specific date but merely sanctions the scheme presented to it---as has happened in this case---it should follow that the date of amalgamation/date of transfer is the date specified in the scheme as " the transfer date ". It cannot be otherwise. It ....
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....ate the same. • SALIENT PORTIONS OF SCHEME OF DEMERGER IN THE PRESENT CASE AS APPROVED BY THE BOMBAY HIGH COURT VIDE ORDER DATED 20 TH DECEMBER 2013 . 55 The present Scheme is not one where the exemption, concession or benefit under the provisions of Central Excise Act, 1944 otherwise not available becomes available to the transferor or transferee or vice versa. The tax position of the predecessor and successor (i.e. the writ applicant) has remained the same both pre and post demerger on every aspect whether substantive or procedural, including the value of dutiable goods, rate of duty, time of payment of tax, cash flow, etc. 56 The relevant clause of the Scheme of demerger as approved by the High Court of Bombay vide the order dated 20.12.2013 is extracted for ease of reference. 4.2 CONTRACTS (a) All contracts, deeds, bonds, agreements schemes, arrangements and other instruments of whatsoever nature in relation to the Transferred Undertaking to which the Transferor Company is a party or to the benefit of which the Transferor Company may be eligible, and which are subsisting or have effect immediately before the Effective Date, shall continue in....
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.... to the Transferee Company have been discharged by the Transferor Company after the Appointed Date and prior to the Effective Date, such discharge shall be deemed to have been for and on account of the Transferee Company, and (c) All loans raised and used and all liabilities and obligations incurred by the Transferor Company for the operations of the Transferred Undertaking after the Appointed Date and prior to the Effective Date, shall subject to the terms of the Scheme, be deemed to have been raised, used or incurred for and on behalf of the Transferee Company and to the extent they are outstanding on the Effective Date, shall also without any further act or deed be and stand transferred to and be deemed to be transferred to the Transferee company and shall become the debts, liabilities, duties and obligations of the Transferee Company which shall meet discharge and satisfy the same. 4.5. LICENSES AND PERMISSIONS (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 ac....
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....feror Company in relation to the Transferred Undertaking shall for all purposes be treated as compliances to be done or done by the Transferee Company. ..." 12. SAVING OF CONCLUDED TRANSACTIONS The transfer and vesting of the assets, liabilities and specific identified reserves of the Transferred Undertaking as 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. 20. COMPLIANCE WITH TAX LAWS 20.1 Upon coming into effect of the Scheme, the Transferee Company may, if it considers necessary or expedient, revise (with retrospective effect if applicable) its income tax returns, TDS returns, service tax returns, sales tax returns, and other tax returns, and claim refunds and/ or credits, etc. pertaining to the Transferred Undertakin....
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....eipt of this order. 14. Petitioner is directed to file a copy of this order along with a copy of the Scheme of Arrangement with the concerned Registrar of Companies, electronically, along with E-Form 21 in addition to physical copy as per provisions of law. • WRIT JURISDICTION OF THE HIGH COURT UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA AT THE STAGE OF SHOW CAUSE NOTICE: - 58 Ordinarily, in any tax matter, a writ petition under Article 226 against a show cause notice may not be maintainable. However, in special and peculiar facts of the case, this principle may not apply. 59 The impugned Show cause notice has been issued on 31st December 2018, raising duty demand for the period December 2013 to March 2014. This is beyond the normal period of limitation of two years prescribed under Section 11A(1) of the Central Excise Act, 1944. The Extended/longer period of limitation of 5 years has been prescribed under Section 11A(4) of the Central Excise Act, 1944. The extended period of limitation of 5 years, applies when 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 misstatement or ....
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....in passing the impugned judgment." [emphasis supplied] 64 In ITW Signode India Ltd. Vs. CCE - 2003 (158) ELT 403 (SC), in the context of Section 11A itself, the Supreme Court held as under:- 62. The question of limitation involves a question of jurisdiction. The findings of fact on the question of jurisdiction would be a jurisdictional fact. Such a jurisdictional question is to be determined having regard to both fact and law involved therein. The Tribunal, in our opinion, committed a manifest error in not determining the said question, particularly, when in the absence of any finding of fact that such shortlevy of excise duty related to any positive act on the part of the appellant by way of fraud, collusion, wilful mis-statement or suppression of facts, the extended period of limitation could not have been invoked and in that view of the matter no show cause notice in terms of Rule 10 could have been issued. 65 In Deputy CCE Vs. Sushil & Company - 2016 (42) STR 625 (SC), the Supreme Court held that the High Court was correct in entertaining the writ petition as no disputed questions of fact were involved and the legal issue was to be decided on the basis of the fac....
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....ssment can be completed at any time but once completed it is final. Once a final assessment has been made, it can only be reopened to rectify a mistake apparent from the record (section 35) or to reassess where there has been an escapement of assessment of income for one reason or another (section 34). Both these sections which enable reopening of back assessments provide their own periods of time for action but all these periods of time, whether for the first assessment or for rectification, or for reassessment, merely create a bar when that time passed against the machinery set up by the Income-tax Act for the assessment and levy of the tax. They do not create an exemption in favour of the assessee or grant an absolution on the expiry of the period. The liability is not enforceable but the tax may again become exigible if the bar is removed and the taxpayer is brought within the jurisdiction of the said machinery by reasons of a new power. This is, of course, subject to the condition that the law must say that such is the jurisdiction, either expressly or by clear implication. If the language of the law has that clear meaning, it must be given that effect and where the language e....
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....uch intermediate chemical is not a marketable goods and therefore, not exigible to excise duty. Whatever be the legal validity of such a stand, surely, it is highly a debatable and arguable point. Particularly when the Department has full knowledge that the petitioners are manufacturing such drugs, it can clearly be stated that there is any fraud, concealment or wilful misstatement on the part of the petitioners. In fact, the very premise of the second show cause notice is that in the first round of litigation, the Tribunal having observed that there is no evidence to hold that the product is marketable, and on further investigations, the Department has issued the second show cause notice. If this be so, we are left to wonder on what basis does the Department contend that the evasion of duty if at all is on account of fraud, collusion or wilful misstatement on the part of the petitioners so as to invoke extended period of limitation. 42. Looking from any angle, we are of the opinion that the petition must succeed. The same is, accordingly, allowed. The impugned show cause notice dated 1-8-2001 issued by the Commissioner of Central Excise, Surat, is hereby quashed and set a....
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....onths. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case." (emphasis supplied) This passage has been quoted and applied by Division Bench of this Court in Hindustan Electrographite Ltd. v. Union of India (supra). 10. The Supreme Court again had an occasion to pronounce on the point in Padmini Products v. Collector of Central Excise [ 1989 (43) E.L.T. 195 (S.C.)]. Reiterating the observations made in the case of Collector of Central Excise v. Chemphar Drugs & Liniments (supra) it was observed that in order to claim the extended period of limitation of 5 years, it had to he established 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 misstatement or suppression of facts or contravention of any provisions of the Act or the Rules made thereunder with an intent to evade payment of duty. It was further observed that mere failure or negligence on the part of the producer or manufacturer....
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.... a valid central excise licence and payment or duty of excise levied thereon. 70 In Hindustan Construction Company Ltd. Vs. State of Haryana - [2005] 141 STC 119 (P&H), the High Court held as under: 8.. We have given our anxious consideration to the preliminary objection raised by the respondents with regard to the maintainability of the present petition and also the contentions raised by the learned counsel for the petitioner-company. The rule that the High Court will not entertain writ petition under article 226 of the Constitution of India if an effective alternative remedy is available to the petitioner is not a statutory rule, but is a rule of self-imposed restraint evolved by the courts and there are well recognised exceptions to this Court some of which have been noticed in Baburam Prakash Chandra Mahesweri v. Antarim Zila Parishad (Now Zila Parishad, Muzaffar Nagar) AIR 1969 SC 556, State of U.P. v. Bridge & Roof Co. (India) Ltd. [1997] 104 STC 78 (SC); (1996) 6 SCC 22 and Kerala State Electricity Board v. Kurien E. Kalaithil AIR 2000 SC 2573. One of the exceptions carved out by the Courts is that if the order under challenge is per se without jurisdiction, the ....
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....ve 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 of 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 judgment." This Court in the case of Hindustan Construction Company Ltd. v. State of Haryana (supra) while deciding question of maintainability of writ where issue involved was repeal of statute and effect of saving clause, in Para 8 has dealt with similar objection. Para 8 reads as under : "8. We have given our anxious consideration to the preliminary objection raised by the respondents with regard to the maintainability of the present petition and also the contentions raised by the Learned Counsel for the petitioner-Company. The rule that the High Court will not entertain writ petition under Article 2....
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.... paid by predecessor. Hence, the present case is a clear case of double taxation. 74 In the aforesaid context, we have in hand an interesting judgement delivered by the Income Tax Appellate Tribunal, Delhi Bench 'D' in the case of Modipn Ltd vs. Deputy Commissioner of Income Tax reported in (1995) 54 ITD 433 (Delhi). In the above case, the board of directors of the assessee- company, namely, MPL, passed a resolution for the merger of another company, viz., ICL, with it, subject to necessary approvals. The appointed date was fixed as 1st July 1982. The Department of Company Affairs approved the scheme of amalgamation vide the letter dated 18th January 1985. The Allahabad and Bombay High Courts resply approved the scheme of amalgamation vide the orders dated 9th July 1985 and 16th September 1985, respectively. The Controller of Capital issues granted the approval for the issue of share capital to the shareholders of the ICL vide the letter dated 18th November 1985. The RBI approved the issue of shares to non-resident shareholders vide the letter dated 1st February 1986. Thus, the last of the approvals required for completion of the scheme of amalgamation was given on 1st February ....
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.... the High Court. In this case, it is not disputed that by March 1986 all the formalities relating to the amalgamation of the two companies had been completed. It is also not disputed that the effective date referred to in the scheme of amalgamation is 1-7-1982. The Hon'ble Allahabad and Bombay High Courts have also indicated the appointed date as 1st July, 1982. Thus, the amalgamation, in our considered view, is effective from 1 -7-1982. We, therefore, hold that the income of Indofil Chemicals Ltd. for the previous year relevant to assessment year 1986-87 is assessable in the hands of the assessee on substantive basis as the scheme of amalgamation was effective from 1- 7-1982. 14. The next related issue is as to whether the tax recovered/paid by the IFCL is to be adjusted in the hands of the assessee-company. A sum of Rs. 65,10,495 has been paid as advance-tax and TDS by erstwhile IFCL. Assessing Officer has not adjusted the amount in the assessment of the assessee. Since the income of the IFCL had been assessed on protective basis and the income was said to be assessable in the hands of IFCL, adjustment of taxes paid in the name of IFCL was not allowed. Since we have ....
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.... 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. 79 Then the relevant portion of impugned show cause notice reads as under: 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 parties 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....
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....ad also called the ninth respondent for a hearing which was held some time in June, 1994. Even in the affidavit of Prayag Jha dated October 17, 1994, in which the omission in clause (11) of the amalgamation scheme has been highlighted and detailed reference has been made to the order of the company court, issuance of shares by the ninth respondent and so on, there is no prayer made that the order of amalgamation be set aside or reviewed or recalled, nor were any steps taken by the fifth respondent to set aside the amalgamation order on the ground of misrepresentation, suppression of facts or fraud, as contended before this court. • ABSENCE OF MANDATORY PRE-SHOW CAUSE NOTICE CONSULTATION IS FATAL TO THE PRESENT SHOW CAUSE NOTICE. 83 In view of the Circular No. 1053/2/2017-CX., dated 10th March 2017, it is clear that the Board had made the pre-show cause notice consultation mandatory for the Principal Commissioner/Commissioner prior to the issuance of show cause notice in cases involving the demands of duty above Rs. 50 lakh. Such consultation is required to be done by the adjudicating authority with the assessee as an important step towards reducing the necessity of ....
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....aster Circular. 14. The above submission runs contrary to the very object of para 5.0 which is to narrow down the scope of the dispute by engaging the Assessee on specific areas where the Respondent may require information/clarification from the Assessee regarding alleged evasion of service tax. In the context of the present case, in relation to documents recovered during the search and statements recorded of representatives to the Petitioner in that process, several questions may have arisen for consideration by the Respondent which may require a clarification from the Petitioner as to its conduct. It is to facilitate this very exercise that para 5.0 finds place in the Master Circular. The mere possibility that at the end of the adjudication process, the Petitioner may have to face consequences for having committed an 'offence' under Finance Act, 1994 need not per se render the SCN itself as an 'offence related' SCN. If that were to be the logic, then in every case para 5.0 can be dispensed with on the ground that the adjudication of the SCN is likely to be lead to the noticee facing proceedings for having committed an offence. The exception would then become the rule and....
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....eously refunded, for any reason, other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,- (a) the Central Excise Officer shall, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice; (4) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of- (a) fraud; or (b) collusion; or (c) any wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty. by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show ....
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....ion 11 AA of the Central Excise Act, 1944." 90 The primary ground of the show cause notice is that as per the scheme approved by the Bombay High Court on 20th December 2013, the appointed date is 1st April 2013. Hence, the writ applicants ought to have registered itself with the central excise department from 1st April 2013. The writ applicants should have issued invoices for removals from 1st April 2013 itself. It should have paid excise duty on removal of goods from 1st April 2013 and should have filed the return in the Form ER-1 from 1st April 2013 itself. Failure to do so attracts the extended period of limitation. 91 In the aforesaid context, there are two things which are relevant: (i) Order of Bombay High Court dated 20th December 2013 approving the scheme with 1st April 2003 as the "appointed date" and (ii) the writ applicants not being registered in its own name with the Central Excise Department during the period 2013-14. It is difficult for us to believe that the department had no idea of these two aspects. The record reveals that the writ applicant on its own had applied to the department on 1st April 2014 for obtaining the central excise registration in the name ....
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.... Company relating to the Transferred Undertaking, are concerned, the same shall vest with and be available (of the Transferee Company on the same terms and conditions as applicable to the Transferor Company, as if the same had been allotted and/or granted and/or sanctioned and/or allowed to 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 Transferor Company in relation to the Transferred Undertaking shall for all purposes be treated as compliances to be done or done by the Transferee Company. ..." 12. SAVING OF CONCLUDED TRANSACTIONS The transfer and vesting of the assets, liabilities and specific identified reserves of the Transferred Undertaking as 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 th....
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....ould have been with intention to evade payment of duty. Both must concur to enable the Excise Officer to proceed under this proviso and invoke the exceptional power. Since the proviso extends the period of limitation from six months to five years, it has to be construed strictly. The initial burden is on the Department to prove that the situations visualised by the proviso existed. But once the Department is able to bring on record material to show that the appellant was guilty of any of those situations which are visualised by the Section, the burden shifts and then applicability of the proviso has to be construed liberally. When the law requires an intention to evade payment of duty then it is not mere failure to pay duty. It must be something more. That is, the assessee must be aware that the duty was leviable and it must deliberately avoid paying it. The word `evade' in the context means defeating the provision of law of paying duty. It is made more stringent by use of the word `intent'. In other words the assessee must deliberately avoid payment of duty which is payable in accordance with law." 100 We may also refer to a decision of the CESTAT in the Geep Industrial....
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....duty should not had been paid, short-levied or short-paid or erroneously refunded because of either any fraud, collusion or wilful mis-statement or suppression of material facts or contravention of any provision of the Act or Rules made thereunder being the are essential ingredients. These ingredients postulate a positive act, therefore, failure to pay duty or take out a licence is not necessary due to fraud or collusion or wilful misstatement or suppression of facts or contravention of any provisions of the Act. Likewise suppression of facts is not failure to disclose the legal consequences of a certain provision. 102 In the case (Pushpam Pharmaceuticals Company v. Collector of C. Ex., Bombay) (supra), it was held that Section 11A empowers the department to reopen the proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is ....
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.... 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 the period of six months taking advantage of the proviso to the Section. 104 The decision of the Supreme Court in Pushpam Pharmaceuticals (supra) was followed by the Supreme Court in Anand Nishikawa Co. Ltd. Commissioner of Central Excise, Meerut [(2005) 7 SCC 749] and the relevant paragraph is as follows: "27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceuticals Co. v. CCE we find that "suppression of facts" can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty. When facts were known to both the parties, the omission by one to do what he might have done and not that he must have done, would not render it suppression. It is settled law that mere failure to declare does not amount to wilful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made hereinabove that there was no deliberate intention on the par....
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....Commissioner of Central Excise, Chandigarh [[2007 (216) ELT 177 (SC)] also observed in connection with section 11A of the Central Excise Act, that suppression means failure to disclose full information with intention to evade payment of duty and the observations are as follows: "10. The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as "fraud‟ or or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with knowledge that the statement was not correct." (emphasis supplied) 108 The Annexure A to the i....
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....ies of excise partake of the nature of indirect taxes as known to standard works on economics and are to be distinguished from direct taxes like taxes on property and income. 24. Similarly in the case of duties of customs including export duties though they are levied with reference to goods, the taxable event is either the import of goods within the customs barriers or their export outside the customs barriers. They are also indirect taxes like excise and cannot in our opinion be equated with direct taxes on goods themselves. Now, what is the true nature of an import or export duty? Truly speaking, the imposition of an import duty, by and large, results in a condition which must be fulfilled before the goods can be brought inside the customs barriers i.e. before they form part of the mass of goods within the country. Such a condition is imposed by way of the exercise of the power of the Union to regulate the manner and terms on which goods may be brought into the country from a foreign land. Similarly an export duty is a condition precedent to sending goods out of the country to other lands. It is not a duty on property in the sense of Article 289(1). Though the expressio....
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....tated that though LTHE had neither registered under central excise law nor filed mandatory ER-1 returns for the year 2013- 14 and LT-HCIC discharged applicable Central Excise duty and filed the ER-1 returns for and on behalf of LTHE for the year 2013-2014 3.9 On being asked whether LTHE have paid the applicable Excise duty during the financial year 2013-2014, he stated that the excise duty liability was paid by LT-HCIC for and on behalf of LTHE as per Article 10.4 of the 'Scheme of Arrangement' under Section 391 read with Section 394 of the Companies Act, 1956. 4.3. LTHE had obtained registration under central excise law for their office in Hazira, Surat on 07.04.2014. The central excise duty liability for the year 2013-2014 in respect of LTHE was discharged by LT-HCIC for and on behalf of LTHE and the same was carried out in terms of Article 10.4 of the Scheme of Arrangement under Section 391 read with Section 394 of the Companies Act, 1956 which was approved by Hon'ble High Court of Bombay which reads as under: 'All compliances with respect to advance tax, with holding taxes or tax deduction at source, service tax, VAT, other indirect ta....
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....writ applicant. Declining to do so, would lead to double taxation of the same transaction & clearly impermissible. • DEMAND OF EXCISE DUTY OF Rs. 96,20,02,091/- 114 The demand of Rs. 96,20,02,091/- is proposed in respect of the goods cleared availing the benefit of exemption as detailed in Annexure - B to the show cause notice. 115 The predecessor i.e., Larsen & Toubro Ltd. had been awarded contract by the Gujarat State Petroleum Corporation Ltd. (GSPCL) and the Oil And Natural Gas Corporation Ltd. ("ONGC") for supply under the International Competitive Bidding. The supplies against these contract were exempt from the excise duty vide Sl. No. 336 of Notification No.12/2012-CE dated 17th March 2012. 116 For the supplies pursuant to the ICB contracts to these customers, goods were always allowed to be cleared without payment of the excise duty by availing the above exemption provided under Sl. No. 336 of Notification 12/2012-CE dated 17th March 2012 as discussed hereinafter. 117 For the period prior to 1st April 2013, the predecessor Hydrocarbon Division of the Larsen & Toubro supplied goods against this very ICB contract without payment of the central excise....
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....have issued the invoice instead of the predecessor i.e., Larsen & Toubro Ltd.. 121 The above objection is totally baseless and incorrect in view of the Order of Bombay High Court approving the scheme of demerger. The relevant clause of the scheme is extracted hereunder for ease of reference: "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 Iha Transferor Company relating to the T....
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....the scheme as approved by the Bombay High Court is reproduced below: "4.5. LICENSES AND PERMISSIONS (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 Iha Transferor Company relating to the Transferred Undertaking, are concerned, the same shall vest with and be available (o the Transferee Company on the same terms and conditions as applicable Io the Transferor Company, as if Iho s....
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....endant upon a statutory procedure where these cannot be shown to be necessary to the fulfilment of the purposes of the legislation." 127 Our final conclusions may be summarized as under: [a] The Revenue is not correct in its stance that in the case on hand, the pre-show cause notice consultation was not necessary as the impugned show cause notice is for preventive / related to an offence. Just because, the origin of the show cause notice is the intelligence gathered from the Additional Director General, the same by itself would not bring the show cause notice within the ambit of preventive / offence. [b] The extended period of limitation under Section 11A(4) of the Act, 1944 is not applicable in the case on hand as it is the case of the Revenue that the goods were removed illicitly without a statutory invoice. The failure to follow any procedure may be an error or omission on the part of the assessee, but the same by itself would not amount to suppression. The question of suppression would arise only when an assessee makes an attempt to obtain a benefit not available to him under the law. [c] The amalgamation has its origin in the statute and is statut....