TaxTMI 
TaxTMI 
2024 (7) TMI 937
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.... the Order-In-Original the present appeals 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 ne....
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....th regard to the Revenue's appeal, he submits that the adjudicating authority has dropped the demand of cost recovery charges representing the transport 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 ....
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...., it is observed that though there is condition for payment of cost recovery charges by the custodian. However, there is no statutory mechanism to recover the cost recovery charges by the Commissioner. Therefore, in absence of any power to 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. Cl....
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.... (2) Undertake to bear the cost of the Customs officers posted, at such Customs area, on cost recovery basis, by the Commissioner and shall make payments at such rates and in the manner prescribed, unless specifically exempted by an order of the Government of India 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 offi....
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....customs clearance is undertaken by the officers of the Customs. Once the Board exercises this power, thereafter in accordance with Section 8 of the Act, it is the Commissioner of Customs who would approve proper places in such customs ports or customs airports for unloading and loading of goods. Sections 33 and 34 regulate 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 custodia....
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....on 45 of the Act). Hence, this provision does not lay down any policy guideline for cost recovery of the salary and allowances payable to the customs officers under whose overall control the aforementioned operations are to be handled in a customs area. 9. Let us also have a closer scrutiny of the provision contained 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 Cus....
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....eficiary. It is, hence, implicit that no levy can be imposed except through clear and unambiguous words. No one can be taxed by implication. It is, therefore, imperative that if a person had not been brought within the ambit of the charging provision by clear words, he cannot be taxed at all. What is of utmost significance is that, only through clear import 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 ....
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.... special services rendered to individuals or organizations by some governmental agency or the other and such a charge has an element of quid pro quo in grinded into it. It is true, that there is no grave distinction between a tax and a fee since both are compulsory exactions of money by public authorities. However, it will be appropriate to bear in mind that a tax is imposed 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 dealin....
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....ing a fee Legislature may attempt to impose a tax: and in the case of such a colourable exercise of legislative power courts would have to scrutinize the scheme of the levy very carefully and determine whether in fact there is a co-relation between the service and the levy, or whether the levy is either not co-related with service or is levied to such an excessive extent as to be a 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 tak....
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....that what is demanded from the petitioner is a fee, by making the following statement : "(2) In reply to Para 2, it is submitted that the Constitutional Bench of the Hon'ble Supreme Court in the case of Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshimindra Thirtha Swamiar of Sri Shirur Mutt, reported as (1954) SCR 1005 (at 1040, 1041 and 1044) has held that "a fee could be charged by the state 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....
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....herefore, I am of the opinion that, Regulation 5 (2) of Regulations, 2009 has no legal substratum to survive and accordingly the consequential levy made on the petitioner by the respondents towards cost recovery charges is wholly unsustainable. 20. The writ petition, accordingly, stands allowed. Costs easy. 14. From the above judgments, we find that Hon'ble High Court not only set-aside the demand of Cost Recovery charges but 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 basi....
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.... the approval granted to the Customs Cargo Service Provider subject to the observance of procedure prescribed under regulation 12 and also order for forfeiture of security, if any, for failure to comply with any of the provisions of the Act and the rules, regulations notifications and orders made thereunder. 12 (1) The Commissioner of Customs shall issue a notice in writing to the Customs Cargo Service provider stating the grounds on which it is proposed to suspend or revoke the approval and requiring the said Customs Cargo Service 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 l....
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....ns and also forfeiture of security and imposition of penalty under Regulation 12 (8) of the 2009 Regulations. The Commissioner under the impugned order did not either revoke the approval of the Custodianship or was the security forfeited. The Commissioner ordered that the outstanding cost recovery charges should be covered from the Appellant and the Regulations 5 (2) and 6 (1) (o) of the 2009 Regulations and also imposed penalty. 26. This about the issue as to whether the recovery of outstanding cost recovery charges could have been confirmed was examined by a Division Bench 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....
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....ion for imposition of interest under the Rule for the default made by the CCSP then how his attention escaped to notice that there is also no similar provision for recovery of default payment either under Regulations 5 (2), 6 (1) (o) of the Regulation. We also find that the Regulation 5 (2) states 'undertaken to bear the cost of Custom Officer posted, at such Customs area, on cost recovery basis, by the Commissioner and shall make payment at such rate and in the manner prescribed unless specifically exempted by an order of the Government of India in the Ministry of Finance." [emphasis supplied] 27. 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 re....
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....gment is reproduced below:- "12. We have considered the submissions made on rival sides and have perused the record. The singular issue which arises for consideration in this intra Court Appeal is whether the impugned 2009 Regulations are ultra vires the Customs Act, 1962. 13. The principles of interpretation with regard to taxing statutes are well-settled. A Constitution Bench of the Supreme Court in CST vs. Modi Sugar Mills Limited held that the construction has to be made on express language used in the statute and there is no room for equitable consideration and presumption cannot apply. 14. A three-Judge Bench of the Supreme Court 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, cult....
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....rcise of fiscal power. The facts and circumstances in the case of District Council of Jowai are entirely different. The exercise of powers by the Autonomous Jaintia Hills Districts are controlled by the constitutional provisions and in the special facts of the case, this Court has indicated that the realisation of just fee for a specific purpose by the autonomous District was justified and such power was implied. The said decision cannot be made applicable in the facts of this case or the same should not be held to have laid down any legal proposition that in matters of imposition of tax or fees, the question of necessary intendment may be looked into when there is no express provision for imposition 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 ....
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....yances and goods in a customs area shall, for the purpose of enforcing the provisions of this Act, be subject to the control of officers of customs. (2) The imported or export goods may be received, stored, delivered, despatched or otherwise 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." 18. It is evident that all the conveyances and goods in a customs area shall, for the purposes of enforcing the provisions of the Customs Act shall be subject to control of the officers of customs. Section 141 (2) of the Customs Act provides that the imported or export goods may be received, stored, delivered, despatched or otherwise 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) Wit....
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....goods; (j) the conditions, restrictions and the manner of making deposits in electronic cash ledger, the utilisation and refund therefrom and the manner of maintaining such ledger; (ja) the manner of maintaining electronic duty credit ledger, making payment from such ledger, transfer of duty credit from ledger of one person to the ledger of another and the conditions, restrictions and time limit relating thereto; (k) the manner of conducting audit; (ka) the manner of authentication and the time limit for such authentication, the document or information to be furnished and the manner of submitting such document or information and the time limit for such submission, the form and the manner of furnishing alternative means of identification and the time limit for furnishing such identification, person or class of persons to be exempted and conditions subject to 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 g....
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....same is also violative of Article 265 of the Constitution of India. Even assuming that the said levy to be a fee, the same cannot be recovered from the respondent as no services are provided to it by deployment of additional staff at the Airport between the years 2008 and 2013. 23. We may take note of decision of Bombay High Court in Mumbai International Airport Private Limited (supra). In the aforesaid decision, the validity of Regulation 5 (2) of the 2009 Regulations was challenged on the ground that the same is ultra vires Sections 157 and 158 of the Customs Act as well as violative of Articles 14 and 19 (1) (g) of the Constitution of India. The aforesaid ground of challenge was dealt by the Division Bench in paragraph 53, which reads as under: "53. Mr. Jetly was, therefore, justified in urging that the Petitioners communication firstly requesting for grant of a status as a custodian and thereafter seeking approval would bely their contentions and 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 t....