TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 937
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....filed. 2. Shri Dhval K Shah Learned Counsel appearing on behalf of the appellant/Assessee reiterating the ground of appeals at the outset submits that the impugned order passed by Adjudicating Authority is illegal as the same is passed without any jurisdiction and without authority of law. He further submits that the Cost Recovery Charges was confirmed invoking provision of Regulation 6 (1) (o) of Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR, 2009). It is his submission that in said Regulation there is no mechanism provided to recover or to confirm demand of cost recovery charges from the custodial. The said Regulation only allow the commissioner of Customs to adjudicate the issue of violation of any of the regulation including non-payment of cost of recovery charges and consequently decide whether to suspend or to revoke the approval granted under the scheme. The adjudicating authority does not possess any authority to adjudicate and demand any amount from the license holder Custodian and to order for recovery of any amount despite which the adjudicating authority had confirmed the demand. Therefore the impugned order needs to be set aside on this ground alone. 2.....
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....rt allowance and house rent allowance for the reason that both these amenities were provided by the assessee to the officers. Therefore the Commissioner has rightly not ordered for recovery of cost recovery charges attributed the transport allowance and house rent allowance. 3. Shri Rajesh R Kurup, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order which relates to the confirmation of cost recovery charges and as regard the Revenue's appeal he reiterates the grounds of appeal. 4. On careful consideration of the submission made by both the sides and perusal of record, we find that the Adjudicating Authority has ordered for recovery of cost recovery charges under Handling of Cargo in Customs Areas Regulations, 2009. The relevant provisions invoked by the Principal Commissioner are reproduce below:- "4. Retrospective Application.- Any action taken or anything done in respect of appointment of Customs Cargo Service providers, immediately preceding the coming into force of these regulations, shall be deemed to have been done under the corresponding provisions of these regulations. Customs Cargo Service providers already appr....
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....recover the cost recovery charges the Ld. Principal Commission in the present impugned order confirming the cost recovery charges is without jurisdiction and without authority of law. It is further observed that Regulation 6 (1) (o) clearly provides that recovery of cost should be at such rate in the manner specified by the Government of India and the Ministry of Finance. However, in the present case there is nothing on record to show that the rates were prescribed and the manner was specified by Government of India in the Ministry of Finance, for this reason also the provision of regulation 6 (1) (o) of HCCAR, 2009 cannot be invoked. This has been held in the case of Commissioner of Customs Ludhiana Vs. Krishna Cargo Movers Pvt. Ltd. as under:- "Tribunal has relied upon judgement of Hon'ble Supreme Court Larsen and Toubro Ltd. (supra) while holding that 'rates and manner' was not specified as required by 2009 Regulations. Clause (o) of Regulation 6 (1) of Regulations casts obligation upon CFS to bear cost of officers posted by Commissioner. The same clause further provides that Government of India would specify rates and manner of charges and concededly, post 2009 Re....
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.... in the Ministry of Finance; * Regulation 6- Responsibilities of Cargo Service provider:- (1) The Customs cargo Service provider shall- (o) shall bear the cost of the customs officers posted by the Commissioner of Customs on cost recovery basis and shall make payments at such rates and in the manner specified by the Government of India in the Ministry of Finance unless specifically exempted by an order of the said Ministry; From the plain reading of above regulation, we find that it is clearly provided that the cost of Customs Officer shall be borne by CCSP only when Custom Officer is posted for the Jetty of the appellant. In the present case, there is no evidence adduced by the department that any of separate officer was posted by an order of competent authority for supervising the operations at appellant's Jetty. Therefore, it is not under dispute as per the record that no separate officer was posted for the work at appellant's Jetty. Therefore Rule 5 (2) and Rule 6 (o) is not applicable in case of the appellant. Moreover, the appellant have been paying MOT charges as per the authority of the department i.e. letter dated 05.05.2009 issued by the Assistant Commissioner, Cust....
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....ate the operations of loading and unloading of goods at such specified places and that too under the supervision of the proper officer of the customs. Further, Section 13 of the Act makes it clear that an importer shall not be liable to pay the duty on pilfered goods unless such pilfered goods are restored to him. Thus, the entire scheme of the statute unmistakably conveys the necessity and primacy for integrity, for safety and security of the places meant for loading and unloading at customs ports and airports. This was warranted to ensure that the state's revenue does not escape through porous premises at the customs port or customs airport. As a part of this well devised and designed activity and to fasten the custodial responsibility of the not yet cleared cargo, both imported and meant for export, provision is created under Section 45 for appointment of custodians. This measure would ensure the integrity of the cargo and also the collection of proper duty thereon. Appointment of an airport under Section 7 as a customs airport and appointment under Section 45 of a person as a custodian, both are obviously a one-time affair. Since the very nature of appointment partakes with it,....
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....in Section 157 of the Act. Sub-section (1) thereof conferred power on the Central Board of Excise and Customs to frame regulations which can be consistent with the rest of the provisions contained in the Act and the rules, if any, framed by the Central Government and that too, such regulations can be made for carrying out the purposes of the Act. Sub-section (2) of Section 157, without prejudice to the generality of the provision contained under sub-section (1) listed out the matters which can be the subject matter of regulations to be framed. It is significant to notice that, powers exercisable in terms of Sections 7, 8 and 45 of the Act are not one of those subject matters which are enumerated under sub-section (2) of Section 157. Therefore going by the generality of the power conferred by sub-section (1) of Section 157 on the Central Board of Excise and Customs to make regulations, the limitation that has got to be kept in mind is that, such regulations can only be made for such purposes which are intended to be carried out under the Act and not otherwise. 10. Then, it takes us to understand the general purposes for which this special piece of legislation was enacted. It is no....
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....ort of the language used alone, a levy can be imposed and consequently no attempt can be made to enlarge the scope of the charging provision so as to embrace matters not specifically provided for therein. It is therefore one of the fundamental principles evolved that a Court cannot read words which are not there in a charging statute or exclude the words which are already there [See Collector of Estate Duty v. R. Kanakasibai (AIR 1973 SC 1214)]. The language employed in a taxation statute therefore cannot be obscure for purposes of justifying the levy which is not intended or provided for in the statute. But at the same time, it is a settled principle in the matter of determination of liability, that the Court must have regard to the substance rather than the form. The rationale behind this concept has been explained by Lord Sumner in Levene v. Inland Revenue Commissioners [1928 Appeal Cases 217 at 227] in the following illustrious words : "It is trite law that his Majesty's subjects are free, if they can, to make their own arrangements so that their cases may fall outside the scope of the taxing Acts. They incur no legal penalties and, strictly speaking, no moral censure if, hav....
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.... as part of the scheme to garner revenue by the State or public authority for purposes of expending it to achieve and implement public purposes. Consequently, a tax is seldom supported by any considerations. In juxtaposition thereto, a fee is essentially levied for services commensurately rendered and hence there is a direct element of consideration or quid pro quo between the fee payer and the public authority which imposes it. Right at this stage, I consider it appropriate to be profited from the crisp statement of the legal principle enunciated by Justice P.B. Gajendragadkar (as the learned CJI was then) speaking on behalf of the majority of the Judges of the Constitution Bench of the Supreme Court, in The Hingir-Rampur Coal Co. Ltd. and Others v. The State of Orissa and Others [AIR 1961 SC 459], while dealing with the validity of Orissa Mining Areas Development Fund Act, 1952 : 9. ................The neat and terse definition of tax which has been given by Latham, C. J., in Matthews v. Chicory Marketing Board (1) is often cited as a classic on this subject. "A tax", said Latham, C. J., "is a compulsory exaction of money by public authority for public purposes enforceable by l....
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.... presence of a fee and not a fee in reality. In other words, whether or not a particular cess levied by a statute amounts to a fee or tax would always be a question of fact to be determined in the circumstances of each case. The distinction between a tax and a fee is, however, important, and it is recognised by the Constitution. Several Entries in the Three Lists empower the appropriate Legislatures to levy taxes; but apart from the power to levy taxes thus conferred each List specifically refers to the power to levy fees in respect of any of the matters covered in the said List excluding of course the fees taken in any Court." (Emphasis is generated by me) It is, therefore, required of the Courts to hold a strict vigil over those to whom the Legislature has entrusted vast powers and take care that no injury is caused by an extravagant assertion of such powers and confine their activity in strict conformity of the terms of their derived authority. 16. It was, therefore, appropriate to decipher as to whether any service either special or even ordinary can be said to be rendered by the respondents to the petitioner for them to justify the levy. With the expansion or advent of q....
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....e for the service rendered by some governmental agency as long as it is not arbitrary." The Hon'ble Supreme Court has made the distinction between tax and fee and held "As the object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the taxpayer and the public authority. Another feature of the taxation is that as it is a part of the common burden, the quantum of imposition upon the taxpayer depends generally upon his capacity to pay. Coming now to fees, a "fee" is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service." This judgment has been referred to by the Hon'ble Supreme Court in the case of Gupta Modern Breweries v. State of Jammu and Kashmir *(2007) 6 SCC 317+." 18. There is one other reason why a fee cannot be collected from the custodian clearing the goods which are either imported or meant for export. Clearing the international passengers or goods, imported or meant for export is a sovereign function of the State. F....
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.... even held that Regulation 5 (2) of Regulation 2009 is illegal. Therefore, considering the entire facts and circumstances of case and settled legal proposition cited above, we hold that demand of Cost Recovery charges will not sustain. Hence the impugned order is set-aside and appeal is allowed with consequential relief if any arise in accordance with law." 4.2 The Learned Counsel also heavily relied upon the judgment of the Principal bench in the case of M/s. The Thar Dry Port Vs. CCE & ST, Jaipur vide order No. 51174-51175/2019 dated 26.07.2019:- "17. We have considered the submissions advanced by the learned Chartered Accountant for the Appellants and the learned Authorised Representative of the Department. 18. The basic issue that arises for the consideration in both the Appeals is as to whether there is a procedure set out for recovery of the outstanding cost recovery charges for the posting of the Custom Officers at ICD/CSF/ACC under the 2009 Regulations. To appreciate the contentions, it will be appropriate to refer to the relevant provisions of the 2009 Regulations. 19. Regulation 5 deals with the conditions to be fulfilled by an applicant for custody and handling of....
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....provider to submit within such time as may be specified in the notice not being less than thirty days, to the Assistant Commissioner or Deputy Commissioner of Customs nominated by him, a written statement of defence and also to specify in the said statement whether the Customs Cargo Service provider desires to be heard in person by the Said Assistant Commissioner or Deputy Commissioner of Customs. (8) If any Customs Cargo Service provider contravenes any of the provisions of these regulations, or abets such contravention or who fails to comply with any provision of the regulation with which it was his duty to comply, then, he shall be liable to a penalty which may extend to fifty thousand rupees." 22. It is seen that Regulation 5 (2) provides that a person who intends to be approved as a Custom Cargo Service provider for custody of imported goods or export goods and for handling of such goods in a customs area, shall fulfill the conditions set out, including the condition set out in Regulation 5 (2) that requires the applicant to undertake to bear the cost of the custom officers posted on cost recovery basis and shall make payments at such rates and in such a manner as prescrib....
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....h of the Tribunal in Container Corporation of India. The Tribunal after examining the various provisions of the regulation observed that the Adjudicating Authority could not have order for recovery of the outstanding cost recovery charges. In this connection, the Tribunal, particularly, noticed the provisions of the Regulation 5 (2) and 6 (1) (o) of the 2009 Regulations the order of the Tribunal is reproduced below: "13. The issue involved in this case is regarding confirmation of cost recovery charge against the Appellant vide the impugned order. The learned Adjudicating Authority has confirmed the demand under the provision raised by the show cause notice dated 29 March, 2016. The show cause notice at para 16 (ii) has invoked the provisions of Regulations 5 (2) and 6 (1) (o) of HCCAR. However, the Commissioner has confirmed the demand without invoking any of those regulations. For the better appreciation of the issue involved we would like to refer to Regulation 5 (2), 6 (1) (o) and 12 of the Regulation of HCCAR. A perusal of the regulations reveals that the same is intended for levying of cost recovery charge and payment thereof. Similarly, the condition at 5 (2) only states....
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....Learned Authorised Representative for the Department, however, submitted that this decision would not come to the aid of the Appellants. This issue was specifically decided by the Tribunal in Container Corporation of India and, therefore, it is not possible to accept the contention of learned Authorised Representative of the Department that the aforesaid decision would not be applicable to the facts of the case. 28. Learned Authorised Representative also placed reliance upon the decision of the Delhi High Court in Allied ICD Service Ltd. to contend that cost recovery charges can be recovered. The contention of the petitioner before the Delhi High Court was that Customs Officers are Government Officers who perform sovereign functions and duties in terms of the statutory mandate and, therefore, the petitioner should not be required to pay any charge for their posting. This contention was not accepted by the Delhi High Court. 29. In view of the aforesaid, decision of the Tribunal in Container Corporation of India, with which we have no reason to differ, it has to be held that the Commissioner, committed an illegality in ordering recovery of the cost recovery charges under the afor....
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....in Bimal Chandra Banerjee vs. State of Madhya Pradesh held that the State Government cannot impose tax when there is no special authorization to do the same by the taxing statute. In paragraphs 13 and 14, it was held as under: "13. Neither Section 25 nor Section 26 nor Section 27 nor Section 62 (1) or clauses (d) and (h) of Section 62 (2) empower the rule- making authority viz. the State Government to levy tax on excisable articles which have not been either imported, exported, transported, manufactured, cultivated or collected under any licence granted under Section 13 or manufactured in any distillery established or any distillery or brewery licensed under the Act. The Legislature has levied excise duty only on those articles which come within the scope of Section 25. The rule-making authority has not been conferred with any power to levy duty on any articles which do not fall within the scope of Section 25. Therefore it is not necessary to consider whether any such power can be conferred on that authority. Quite clearly the State Government purported to levy duty on liquor which the contractors failed to lift. In so doing it was attempting to exercise a power which it did not ....
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....tion of fee or tax. The other decision in Khargram Panchayat Samiti case [(1987) 3 SCC 82] also deals with the exercise of incidental and consequential power in the field of administrative law and the same does not deal with the power of imposing tax and fee." 16. The principles with regard to construction of taxing statute were summarized recently by a three-Judge Bench of the Supreme Court recently in Modi Naturals Limited vs. Commissioner of Commercial Tax, Uttar Pradesh and in paragraph 43, it was held as under: "43. The passages extracted above, were quoted with approval by this court in at least two decisions being CIT v. Kasturi and Sons Limited ((1999) 237 ITR 24 (SC) : (1999) 3 SCC 346) and State of West Bengal v. Kesoram Industries Limited ((2004) 266 ITR 721 (SC) : (2004) 10 SCC 201) (hereinafter referred to as "Kesoram Industries case", for brevity). In the later decision, a Bench of five Judges, after citing the above passage from Justice G. P. Singh's treatise, summed up the following principles applicable to the interpretation of a taxing statute (pg.782): "(i) In interpreting a taxing statute, equitable considerations are entirely out of place. A taxing st....
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.... handled in a customs area in such manner as may be prescribed and the responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed. 19. Section 157 of the Customs Act deals with General power to frame regulations. Section 157 of the Act, which is relevant for the purpose of controversy involved in this appeal, reads as under: "157. General power to make regulations:- (1) Without prejudice to any power to make regulations contained elsewhere in this Act, the Board may make regulations consistent with this Act and the rules, generally to carry out the purposes of this Act. (3) In particular and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely:-- (a) the form and manner to deliver or present of a bill of entry, shipping bill, bill of export, arrival manifest or import manifest, import report, departure manifest or export manifest, export report, bill of transhipment, declaration for transhipment boat note and bill of coastal goods; (ai) the manner of export of goods, relinquishment of title to the goods and abandoning them to customs and destruction ....
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....which suspension may be made, under Chapter XIIB; (l) the goods for controlled delivery and the manner thereof; (m) the measures and separate procedure or documentation for a class of importers or exporters or categories of goods or on the basis of the modes of transport of goods. (n) the form and manner, the time limit and the restrictions and conditions for amendment of any document under section 149." 20. Thus, from a perusal of Section 157 of the Customs Act, it is evident that Section 157 does not enumerate any specific provision under which cost recovery charges i.e., the amount of salary payable to the officials of the Customs Department, who are deployed at the Airport who perform their statutory duties, can be recovered. The 2009 Regulations have been framed in exercise of the powers conferred under Section 141 and Section 157 of the Customs Act. From a close scrutiny of the aforesaid provisions of Sections 141 and 157, it is evident that there is no express statutory provision conferring authority on the appellants to levy cost recovery charges. In the absence of any special authorization to levy cost recovery charges, appellants have no authority to impose cost r....
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....to the contrary. If some governmental functions have been now allowed to be performed and carried out by the private entities that will not make any difference. In that regard, Mr. Jetly's reliance on para-10 of the affidavit in reply and the annexures thereto, is well placed. Mr. Jetly also is justified in relying on section 141(2) and the language of section 157 of the Customs Act to support the validity and legality of the Regulations. By Act 18 of 2008, section 141 has been renumbered as sub section (1) and sub section (2). By sub section (1) what has been clarified is that all conveyances and goods in a customs area are subject to control of officers of customs. They are incharge of enforcing the provisions of this Act and duty bound to do so. It is in that regard and to enable them to enforce the provisions of the Customs Act properly and effectively that by sub section (2) the receipt, storage, delivery, dispatch or otherwise handling of the imported and exported goods in a customs area has to be regulated and controlled. Therefore, it is open to the authorities to make prescription by way of rules or regulations so that responsibilities of person engaged in all the abov....