TaxTMI 
TaxTMI 
2023 (2) TMI 178
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....rabakar For the Respondents (In 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....
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....r the new regime. Hence, since the source of power is 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)....
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....i. - Del.)]. 14. The authority was also was not right in concluding that non-affiliation with either the National Skill Development Council or National Council 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 ....
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....ection and the other provisions of this Act, copyright shall subsist throughout India in the following classes of works, that is to say,- (a) original literary, dramatic, musical and artistic works; (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 20....
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.... suppression of facts by the petitioner. A detailed response was filed on 09.02.2019, wherein the petitioner has raised objections on maintainability as well as on the merits of the matter. By and large, the submissions echo those made by the other petitioners 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 198....
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....s rely on the judgment in the case of Shree Bhagwati Steel Rolling Mills v. Commissioner of Central Excise and another [2015 (326) ELT 209], Fibre Boards v. Commissioner of Income Tax [376 ITR 596] and State of Rajasthan v. Harnik Singh [2002 (3) SCC 481]. 35. In these 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 LL....
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.... effect is the decision in the case of TT Krishnamachari and Company V. Union of India (W.P.No.1276 of 2010 dated 17.11.2014). 42. The submission is that since the impugned orders-in-original dated 07.02.2019 (W.P.No.12291 of 2019), 17.10.2019 (W.P.No.3354 of 2020) and 30.08.2022 (W.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....
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....of fact that would have a bearing upon the intrinsic question, relating to the applicability of the Exemption Notification to these petitioners. 50. It is best that such issues be decided by the authorities who can call for relevant information from the petitioners for their appreciation, including 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....
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.... period 01.04.2011 to 31.03.2012, but had stopped thereafter. This factor indicates a concerted and conscious effort by the petitioner to wriggle out of its statutory commitment. The extended period of limitation is thus well available to the respondent in such a situation. Respondents have relied upon the decision 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.N....
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....repeal. This interpretation was rejected as fallacious in a later judgment of the Supreme Court in Fibre Boards (supra). The Court held that the term 'repeal' is a wide term, far wider than 'omission', of far larger import, and would include several situations of amendment, including 'omission'. The observations of the Court in Rayala 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 ....
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....ctor, Service Tax or Deputy Director or Assistant Director, Audit Deputy Commissioner or Assistant Commissioner 8. Senior Intelligence Officer, Central Excise Intelligence, Superintendent, Service Tax or Superintendent, Audit Superintendent 9. Intelligence Officer, Central Excise Intelligence, Inspector, Service Tax or Inspector, Audit Inspector 2. This notification shall come into 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 ....
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.... Excise and Customs vide numbers 11/2007-Central Excise (N.T), dated the 1st March, 2007, 16/2007-Service Tax, dated the 19th April, 2007 and 6/2009-Service Tax. dated the 30th January, 2009, published in the Gazette of India Extraordinary vide numbers G.S.R 151 (E) dated the 1st March, 2007, G.S.R 303 (E) dated the 19th April, 2007 and G.S.R 60 (E) dated the 30th January, 2009, respectively, except as respects things done or omitted to be done before such supercession, 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 Officia....
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....alty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, fine, interest, forfeiture or punishment may be levied or imposed as if these Acts had not been so amended or repealed; (f) . . . . (3) The mention of the particular matters referred to in 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 effec....
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.... Additional Solicitor General, assisted by Mrs.Hema Muralikrishnan, learned Senior Standing Counsel for R1 in W.P.No.12291 of 2019, Mr.V.Sundareswaran, learned Senior Panel Counsel for R2 in W.P.Nos.12291 of 2019 and 3354 of 2020 and for respondents in W.P.Nos.5098 of 2020 and 29286 of 2022 and Rajnish Pathiyil, learned Senior Central Government Standing Counsel for R1 in W.P.No.3354 of 2020. 74. Having extracted the relevant Notifications and applicable statutory provisions, I now discuss those cases cited by the parties, as I believe would have a bearing on the decision to be taken. 75. In the case of Sheen 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 q....
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.... General Clauses Act would squarely apply. 81. Section 174, according to the Bench, thus unequivocally saved all rights, obligations, privileges and liabilities that had enured under the old laws which would continue in the new regime. Likewise, they also held that the judgment in Air India does not support the case of the petitioner, as the factual situation was distinguishable. In conclusion, the Bench reiterated its view expressed in the case of Aargus Global Logistics Pvt. Ltd. holding against the petitioner. 82. The Bench also proceeded to reject the argument of that petitioner that Section 24 of the General Clauses Act, 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 offi....
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.... the Service Tax Rules. Rule 5A granted access to a registered premise, to an officer authorized by the Commissioner in this behalf for the purpose of carrying out scrutiny, verification and checks as may be necessary to safeguard the interests of the revenue. Rule 5A(2) refers to such entitlement qua an officer empowered under sub-rule (1) or the audit party deputed by the Commissioner or the Controller and the Auditor General of India or a Cost Accountant or a statutorily nominated Chartered Accountant. 90. The appointment of the Audit officers was in terms of Notification No.2/2017 dated 29.07.2017 and the submission was thus that the repeals 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 t....
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....nd affairs of the corporation) serving in its employment immediately before the appointed day shall, in so far as such officer or other employee is employed in connection with the undertaking which has vested in a company by virtue of this Act. become. as from the appointed day, an officer or other employee, as the case may be, of the company in which the undertaking has vested and shall hold his office or service therein by the same tenure, at the same remuneration, upon the same terms and conditions, with the same obligations and with the same rights and privileges as to leave, passage, insurance, superannuation scheme, provident fund, other funds, retirement, 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 ....
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....mployment when the 1994 Act came into force. Such saving is undoubtedly "to quieten doubts" of those Air India employment who were then in service. What is enacted in Section 8 does not cover those employees who joined Air India's service after the 1994 Act came into force. The limited saving enacted in Section 8 does not, in our opinion, extend to the said Regulations. 98. Indirect tax departments have, over the years, followed the practice of issuance of show cause notices by one authority with adjudication by another. While there can be no dispute with the proposition that what is prescribed has to be done as per the prescription, and in no other way, the duel procedure followed hitherto, is explained 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 sh....
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....n the show cause notice having their principal places of business falling in multiple Commissionerates, the show cause notice shall be adjudicated by the competent central tax officer in whose jurisdiction, the principal place of business of the noticee from whom the highest demand of central tax and/or integrated tax (including cess) has been made falls. 7. Notwithstanding anything contained in para 6 above, a show cause notice issued by DGGSTI in which the principal places of business of the noticees fall in multiple Commissionerates and where the central tax and/or integrated tax (including cess) involved is more than Rs. 5 crores shall be adjudicated by an officer of the rank of Additional Director/Additional Commissioner (as assigned by the Board), who shall not be on the strength of DGGSTI and working there at the 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....
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....e amount involved in the show cause notice(s), by one of the Additional/Joint Commissioners of Central Tax empowered with All India jurisdiction vide Notification No. 02/2022-Central Tax dated 11th March, 2022. Principal Commissioners/ Commissioners of the Central Tax Commissionerates specified in the said notification will allocate charge of Adjudication (DGGI cases) to one of the Additional Commissioners/ Joint Commissioners posted in their Commissionerates. Where the location of principal place of business of the noticee, having the highest amount of demand of tax in the said show cause notice(s), falls under the jurisdiction of a Central Tax Zone mentioned in column 2 of the table below, the show cause notice(s) may be adjudicated by the Additional Commissioner/ Joint Commissioner of Central Tax, holding the charge of Adjudication (DGGI cases), of the Central Tax Commissionerate mentioned 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 n....