TaxTMI 
TaxTMI 
2023 (3) TMI 234
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....lant to outbound and inbound international passengers from such duty free shops which operate at the departure and arrival terminals of the Airport. For granting license to the shops in the duty free area, agreements were executed between the appellant and Delhi International Airport Limited DIAL. License fee, airport service charges, marketing fees and utility charges were included in the invoices issued by DIAL and service tax, krishi kalyan cess and swachh bharat cess were paid by the appellant under the provisions of the Finance Act, 1994 the Finance Act. A Division Bench of the Tribunal in Commissioner of Services Tax-VII vs. M/s. Flemingo Duty Free Shop Pvt. Ltd. 2018 (8) G.S.T.L. 181 (Tri.-Mumbai), however, held on 28.09.2017 that the duty free area at the Airport qualifies as a non-taxable territory and, therefore, service tax would not be chargeable on the rent paid by such shops, whether they are in the arrival terminal or in the departure terminal. The Tribunal, therefore, held that the service tax charged on the rent paid for the duty free shops would be without authority of law and refund could be claimed. 2. The appellant, therefore, filed refund applications under....
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....nvolved in the four appeals, namely Service Tax Appeal No. 51853 of 2020, Service Tax Appeal No. 50902 of 2020, Service Tax 50901 of 2020 and Service Tax Appeal No. 51827 of 2021. 5. The facts giving rise to these four appeals are that the appellant had filed three refund applications, each dated 31.01.2018, for an amount of Rs. 40,62,18,793/- for the 1st and 2nd periods, pursuant to the decision of the Tribunal in Flemingo. A show cause notice dated 24.08.2018 was issued to the appellant proposing to reject the claim for the 1st period on the ground that the claim was barred by limitation. The reply submitted by the appellant was not accepted and the Assistant Commissioner, by order dated 06.09.2018, rejected the refund of Rs. 12,77,92,894/- for the 1st period but sanctioned refund of Rs. 27,84,25,899/- for the 2nd period. The appellant challenged the denial of refund for the 1st period and the department also challenged the grant of refund for the 2nd period. The Commissioner (Appeals) disposed of the appeal filed by the appellant for the 1st period on 02.05.2019 with a direction for re-examination of the matter on certain aspects. However, the said order dated 02.05.2019 pass....
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....refund for the 2nd period, the Department filed an appeal on 19.12.2018 before the Commissioner (Appeals) on the sole ground that the services were provided to the appellant in a taxable territory. This appeal was dismissed by the Commissioner (Appeals) by order dated 18.05.2020. The said order dated 18.05.2020 passed by the Commissioner (Appeals) has been assailed by the Department in Service Tax Appeal No. 50902 of 2020. Third Period (ST No. 50901 of 2020 and ST Appeal No. 51827 of 2021) 8. The appellant filed a refund application on 31.12.2018 for the 3rd period, but a show cause notice dated 01.02.2019 was issued to the appellant proposing to deny the refund on the grounds that the duty free shops were located in a taxable territory; the Tribunal had committed an error in the decision rendered by the Tribunal in Flemingo; and that an appeal had also been preferred by the Department before the Commissioner (Appeals) against the order dated 06.09.2018 granting refund to the appellant for the 2nd period. 9. The reply filed by the appellant to the show cause notice was not accepted, and by an order dated 27.06.2019 the Assistant Commissioner rejected the refund for the ....
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....e refund by issuing show cause notices on the grounds already settled by Appellate orders. In this connection, reliance has been placed on the following decisions: (a) Union of India vs. Kamalakshi Finance Corporation 1992 Supp (1) Supreme Court Cases 433; (b) East India Commerical Co. Ltd. vs. Collector of Customs, Calcutta 1983 (13) E.L.T. 1342 (SC); (c) Khandwala Enterprises vs. Union of India 2020 (371) E.L.T. 50 (Del.); and (d) Nav Bharat Impex vs. Union of India 2010 (255) E.L.T. 324 (Del.); (ii) When on the same facts, the Tribunal and Commissioner (Appeals) had held that limitation and principle of unjust enrichment are inapplicable, it was not open to the authority to issue show cause notices on these issues and subsequently deny refund. Collateral proceedings could not have been initiated through issuance of the show cause notices. In this connection, reliance has been placed on the following decisions: (a) BSNL vs. Union of India (2006) 3 Supreme Court Cases 1; (b) Amalgamated Coalfields Ltd. vs. Janapada Sabha Chhindwara 1963 Supp (1) SCR 172; (c) Radhasoami Satsang vs. CIT, Agra (1992) 1 Supreme Co....
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....rtment to comply with the decision of the Tribunal; (ix) The show cause notices have wrongly construed the letters filed by the appellant for the implementation of the order as refund applications; and (x) The show cause notice dated 04.08.2020 seeking to review the Appellate order dated 26.05.2020 is without jurisdiction and there is no infirmity in the order dated 26.05.2020 passed by the Commissioner (Appeals) for granting refund for the 2nd period. 12. Shri Mihir Ranjan, learned special counsel appearing for the Department made the following submissions: (i) The impugned orders, each dated 10.12.2020, passed by the Assistant Commissioner rejecting the refund claim for the 1st period and 3rd period do not suffer from any illegality. To claim refund, the appellant relied upon the decision of the Tribunal in Flemingo, but this decision of the Tribunal has been assailed by the Department before the Supreme Court and, therefore, the decision of the Tribunal has not attained finality; (ii) Even otherwise, the legal position has now changed in view of the judgment of the Madhya Pradesh High Court in Vasu Clothing, though this judgment of the Madh....
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....reason that it was barred by limitation under section 11B of the Excise Act. A reply was filed by the appellant, but by an order dated 06.09.2018 passed by the Assistant Commissioner, in view of the decision of the Tribunal in Flemingo, the refund claim for the 2nd period was allowed, but the refund claim for the 1st period was denied solely for the reason that it was barred by limitation under section 11B of the Excise Act. The Assistant Commissioner, however, decided the issue relating principle of unjust enrichment in favour of the appellant. The observations in connection with the principle of unjust enrichment are as follows: "46. In any case, the Applicant has produced a certificate from cost accountants M/s Amit Singhal & Associates whereby it is certified that the cost of such service tax charged by service providers has not been included in determining the selling price and therefore has not been passed onto the end customers. I have also verified that said data relied by cost accountant on sample basis and find that the Applicant has not passed on the cost of service tax on the input services under consideration, to its customers. Further I am in receipt of a let....
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....er referred to as "SCN") proposing the denial of partial refund claim. On perusal of the show cause notice, I find that the same has been issued on the basis that the sale at duty free shops by the appellant qualifies as export and accordingly, the period of limitation as exists in respect of export related cases would be applicable. However, this fact has not been examined in the impugned order as to whether or not the sales by the appellant at the duty free shops qualify as export. Thus, the very basis to issue the show cause notice has not been examined in the impugned order. To this extent, the same is a non-speaking order inasmuch as the Adjudicating Authority must have examined the issue on the basis of which the show cause notice has been issued to the appellant. I find that the Chandna Impex vs CCU 2011 (269) ELT 433 (SC), the Hon'ble Supreme Court has held that "Statutory appeal dismissed in limine by non-speaking order by High Court, as submitted High Court should have examined each question formulated with reference to material considered by Tribunal and given its reasons." Thus, it must have been examined as to whether or not the supply by the appellant qualifies as....
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.... by the appellant for the reason that the amount had been collected without authority of law. The Tribunal, in the decision rendered on 14.08.2019, set aside the order dated 02.05.2019 passed by the Commissioner (Appeals) and allowed the appeal by holding that the appellant would clearly be entitled to refund of the amount of Rs. 12,77,92,894/- that was denied to the appellant by the Assistant Commissioner. The relevant portion of the order passed by the Tribunal is reproduced below: "15. It was imperative for the Commissioner to have confined himself to the issue raised in the show cause notice but what transpires from the Order passed by the Commissioner is that the Commissioner instead of examining this limited issue relating to limitation went beyond the show cause notice and in fact went to the extent of observing that it was necessary for the adjudicating authority to have examined whether the supply by the Appellant qualifies "export of goods". As noticed above, the show cause notice did not call upon the Appellant to submit a reply on this issue and in fact proceeded on the footing that the sale of goods by a duty free shop to outbound international passengers was ....
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....of payment made by them under mistaken notion." 24. Thereafter, the Tribunal observed as follows: "28. Learned Authorized Representative of the Department, however, placed reliance upon the decision of the Madhya Pradesh High Court in Vasu Clothing Pvt. Ltd. The Court held that supply made to duty free shop in the form of services by DIAL would not qualify as export of goods. 29. As noticed above this was not even the allegation in the show cause notice and in fact the show cause notice proceeded on the footing that the Appellant qualified as an exporter of goods. In the earlier paragraphs of this order it has been held that the adjudicating authority or the appellate authority cannot go beyond the allegations contained in the show cause notice. It would, therefore, not be necessary to consider the submission of the learned Authorized Representative of the Department. 30. The impugned order dated 2 May, 2019 is, accordingly, set aside and the Appeal is allowed. The Appellant would be clearly entitled to refund of the amount of Rs. 12,77,92,894/- that was denied to the Appellant by the Assistant Commissioner." (emphasis supplied) 25. At this....
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.... Supreme Court in Aban Lloyd Chiles Offshore Ltd. while resolving a dispute on the geographical jurisdiction for levy of tax on tangible goods, did draw the circle within which „taxable territory‟ would lie. For the purpose of Finance Act, 1994, with effect from 1st July, 2012, „taxable territory‟ has a connotation and „India‟ has a distinct definition; the equating of the two may well suit the applicant-Commissioner but inappropriate citing would not advance that cause." 27. The Department had also placed reliance on the decision of the Supreme Court in Hotel Ashoka vs. Assistant Commissioner of Commercial Taxes 2012 (276) E.L.T. 433 (SC), but the Commissioner (Appeals) held that this judgment would support the case of the appellant. 28. The Commissioner (Appeals) relied upon the decision of the Bombay High Court in A-1 Cuisines Pvt. Ltd. vs. Union of India 2019 (22) G.S.T.L. 326 (Bom.), which referred to the decision taken by the Government of India on 31.08.2018 in a Revision relating to Aarish Altaf Tinwala to hold that the transaction effected at duty free shops at the arrival or departure terminals of International Airports in India m....
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....ugh the transaction might take place within India but technically looking to the provisions of Section 2(11) of the Customs Act and Article 286 of the Constitution, the said transaction would be said to have taken place outside India. In other words, it cannot be said that the goods are imported into the territory of India till the goods or the documents of title to the goods are brought into India. Admittedly, in the instant case, the goods had not been brought into the customs frontiers of India before the transaction of sales had been taken and, therefore, in our opinion, the transactions had taken place beyond or outside the custom frontiers of India." (emphasis supplied) 31. After referring to the aforesaid decision of the Government of India and the decision of the Supreme Court in Hotel Ashoka, the Bombay High Court, in A-1 Cuisine, held as follows: "11. The Central Government has thus applied the ratio laid down by Hon'ble Supreme Court in Hotel Ashoka (supra) and correctly held that the transactions effected at the duty free shops at the arrival or departure of the International Airports in India located after the passenger clears immigration might....
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.... S. No. Period Amount 1 October 2016 to December 2016 Rs. 12,77,92,894/- 2. January 2017 to March 2017 Rs. 14,28,46,179/- 3. April 2017 to June 2017 Rs. 12,84,96,629/- While we were granted refund of Rs. 27,84,25,899/- for the period January 2017 to June 2017 by your order dated 06.09.2018, refund of Rs. 12,77,92,894/- pertaining to the period October 2016 to December 2016 was rejected on the ground of limitation. Subsequently, the Ld. Commissioner (Appeals) also rejected our appeal and directed the Adjudication Officer to re-examine the matter against which we preferred an appeal before the Hon'ble CESTAT, New Delhi being Appeal No. ST/51447/2019. It may be noted that vide order dated 14.08.2019 in Appeal No. ST/51447/2019, the Hon'ble CESTAT, New Delhi is p....
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....that held that the duty free shops were not situated in a taxable territory was correct or not and after observing that the Tribunal erred in holding that the duty free shops were situated in a non-taxable area, called upon the appellant to show cause as to why refund claim for Rs. 12,77,92,894/- for the 1st period should not be rejected. The relevant portions of the show cause notice are reproduced below: "23. ***** In view of the above observation of the Hon'ble CESTAT, it appears that if the department takes a view that duty free shop and the bonded warehouse is beyond the Customs frontier of India and is outside India (contrary to the Chapter-IX- Warehousing provisions) then the department cannot charge Service Tax on the rent paid by the duty free shops. However, the fact remains that the application of definition of territory under Customs Act and Finance Act, were not an issue in dispute before the Hon'ble Tribunal and Hon'ble Tribunal's observations on this issue appears to be beyond the scope of the appeal. It further appears that the observation of Hon'ble CESTAT is not correct in as much as Section 2(27) of Customs Act 1962 defines India as, ....
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....e shops were situated within the taxable territory and after referring to the decision of the Madhya Pradesh High Court in Vasu Clothing held as follows: "16.19 In view of the foregoing facts and discussion I find that the duty free shops at the Customs area are situated in taxable territory and liable to service tax. Accordingly, the service tax charged by DIAL from DDF and paid to the government was under proper authority of Law and therefore the provisions of Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 is rightly applicable in such cases if any refund arises. Accordingly, I find that impugned refund claim is not admissible." 42. As regards the limitation for filing the refund claim, the Assistant Commissioner observed as follows: "17.3 I find that in the instant case the appellant himself filed the claim under Section 11B of the Act and in view of discussion held in forgoing paras, the provision of Section 11B, in whole are applicable for processing of the refund claim including provisions of relevant date provided for filing of refund claim. Further Hon'ble Supreme Court has held in the matter of Mafatlal Vs....
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....n filed by the appellant for refund of Rs. 12,77,92,894/-. As would be seen, the appellant had made it clear in the communication dated 05.09.2019 that it was in the context of the refund application dated 31.01.2018 and the prayer made was to grant refund in view of the decision rendered by the Tribunal on 14.08.2019. Thus, the proceeding initiated by the Assistant Commissioner by treating the said communication as a fresh refund application was without jurisdiction and consequently all orders passed thereon are without jurisdiction and liable to be set aside. Likewise, the proceeding initiated by the Assistant Commissioner by treating the letter dated 19.06.2020 submitted by the appellant for implementation of the order dated 26.05.2020 passed by the Commissioner (Appeals) as a fresh application for refund would be without jurisdiction and all orders passed thereon are liable to be set aside. The Assistant Commissioner, unless the decisions of the Tribunal and the Commissioner (Appeals) had been set aside, had necessarily to comply with the directions issued by the Tribunal and the Commissioner (Appeals) and grant refund to the appellant for the 1st period and 2nd period. 47. ....
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....case laws to hold that the services rendered by the appellant were not liable to service tax without giving any finding on this issue. In regard to the decision rendered by the Tribunal in Flemingo on 28.09.2017, the Assistant Commissioner observed that the definition of „territory‟ under the Customs Act and the Finance Act was not even an issue before the Tribunal, but yet the Tribunal examined it and so it travelled beyond the scope of the appeal. Not only this, the Assistant Commissioner further observed that the Tribunal was not correct in taking such a view and in fact erred in holding/describing the duty free shops at the departure terminal of the International Airport as being within a non-taxable territory, though, it is undoubtedly within the taxable territory of India. 49. The Commissioner (Appeals) agreed with the appellant that the duty free shops were situated beyond the customs frontier of India and, therefore, the service tax paid by the appellant was refundable, but decided the issue of limitation and the issue of unjust enrichment against the appellant. The Commissioner (Appeals) was bound by the decision of the Tribunal rendered on 14.08.2019 wherei....
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....ercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly condemning the respondent for refusing to carry out the directions of the superior tribunal, yet held that no manifest injustice resulted from such refusal. It must be remembered that the order of the Tribunal dated April 22, 1954, was not under challenge before the Judicial Commissioner. That order had become final and binding on the parties, and the respondent could not question it in any way. As a matter of fact the Commissioner of Income-tax had made an application for a reference, which application was subsequently withdrawn. The Judicial Commissioner was not sitting in appeal over the Tribunal and we do not think that in the circumstances of this case it was open to him to say that the order of the Tribunal was wrong and, therefore, there was no injustice in disregarding that order. As we have said earlier, such view is destructive of one of the basic principles of the administration of justice. In fairness to him it must be stated that learn....
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....served: "The fact is, and I hope it will never be necessary to say so again, that in the hierarchical system of courts which exist in this country, it is necessary for each lower tier, including the Court of Appeal, to accept loyally the decisions of the higher tier." Lord Reid added: "It seems to me obvious that the Court of Appeal failed to understand Lord Delvin's speech but whether they did or not, I would have accepted them to know that they had no power to give any such direction and to realise the impossible position in which they were seeking to put those judges in advising or directing them to disregard a decision of this House." Lord Diplock observed at p. 874 of the Reports: "It is inevitable in a hierarchical system of courts that there are decisions of the Supreme appellate tribunal which do not attract the unanimous approval of all members of the judiciary. When I sat in the Court of Appeal, I sometimes thought the House of Lords was wrong in over ruling me. Even since that time there have been occasions, of which the instant appeal is one, when alone or in company. I have dissented from a decision of the majority of th....
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....f authorities higher to them in the appellate heirarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws. ***** 8. We have dealt with this aspect at some length, because it has been suggested b....
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....ssistant Commissioner also noticed that DIAL had submitted a letter dated 24.08.2018 declaring that it had not claimed refund of service tax. The finding of the Assistant Commissioner on the issue of limitation was set aside by the Tribunal in the decision rendered on 14.08.2019 holding that limitation would not be applicable in a case where tax was realised without authority of law and so the appellant was entitled to refund. Thus, the show cause notice that was again issued by a different Assistant Commissioner on 05.05.2020 when the appellant filed an application for implementing the said decision of the Tribunal, seeks to not only nullify the decision of the Tribunal but also seeks to re-open the issues that had earlier settled by the Assistant Commissioner. 58. What needs to be emphasized at this stage is that two orders had been passed by the Commissioner (Appeals). The order dated 18.05.2020 is with regard to the claim made for the 2nd period while the order dated 26.05.2020 is with regard to the claim made for the 3rd period. In both these orders the Commissioner (Appeals) decided the issues in favour of the appellant. In the former order dated 18.05.2020, the Commission....
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....f the Tribunal in Flemingo, the decision of the Supreme Court in Hotel Ashoka and the decision of Bombay High Court in A-1 Cuisine and ultimately concluded as follows: "(xi) In view of above, I observe - (i) that a part of the refund claim has already been sanctioned to the appellant by the Adjudicating authority for the period from 01.02.2017 to 30.06.2017 vide the OIO dated 06.09.2018 whereas the appeal filed by the Revenue against such sanction of Refund claim has been dismissed vide the OIA dated 18.05.2020 and - (ii) that appeal filed by the appellant, against rejection of refund claim for the period 01.10.2016 to 31.01.2017 vide the OIO dated 06.09.2018 as being time barred, has been allowed by the Hon'ble CESTAT (New Delhi) vide the judgment dated 14.08.2019. Hence, on the same reasoning, the refund claim in appeal having similar grounds for claiming the refund for a period continuing with the period, the refund of which has already been allowed by the CESTAT vide the judgment dated 14.08.2019, needs to be allowed following the settled principle of judicial discipline." (emphasis supplied) 60. The order dated 14.08.2019 of the Tribunal, the orders da....
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....eturn of deposit made under section 35F of the Excise Act or section 129E of the Customs Act. The Board took a decision that not only the pre-deposit amount should be refunded within three months of the decision of appeal in favour of the assessee but also directed that all Commissioners should ensure implementation of the directions. The Board also took a view that any delay beyond three months will be viewed adversely and appropriate disciplinary proceedings will be initiated against the defaulting officers and the amount may also be recoverable from the concerned officers. 63. It is also a fit case where the matter should be referred to the Delhi High Court under section 10 of the Contempt of Court of Act, 1971 for considering whether contempt proceedings should be initiated against Shri Subhash Chandra the Assistant Commissioner, Division-Vasant Kunj, who passed the order dated 10.12.2020 and Shri P.R. Lakra the Commissioner (Appeals-II), Central Tax/Excise, who passed the order on 23.09.2021 for wilful disobedience of the order dated 14.08.2019 passed by the Tribunal in Service Tax Appeal No. 51447 of 2019 (M/s. Delhi Duty Free Services Pvt. Ltd. vs. Commissioner, CGST Divi....