TaxTMI 
TaxTMI 
2024 (8) TMI 909
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....titution of India, Petitioner seeks to challenge a show cause notice No. 127 of 2018 dated 23rd October 2018 issued to Petitioner-L & T Hydrocarbon Engineering Limited ("LTHE"), for the period 2013-14 to show cause why service tax demand should not be raised under the Finance Act, 1994 (hereinafter referred to as "Service Tax"). 3. Larsen & Toubro Limited (L & T) is a public limited company comprising of various divisions such as, L & T Hydrocarbon Division, L & T Heavy Engineering Division, L & T Power Division and L & T Construction Groups. L & T decided to hive off of its Hydrocarbon Division as an independent business unit with identifiable revenue streams, dedicated employees etc. L & T filed a scheme of arrangement under Section 391 read with Section 394 of Companies Act, 1956 before the Company Court for approval of the said scheme of arrangement. The Company Court, vide its order dated 20th December 2013, approved the scheme from the appointed date which was 1st April 2013. As per the said scheme, for the period between appointed date and effective date, the transferor company (L & T) would be deemed to have been carrying on the business relating to the transferred under....
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....notice was issued. Similar show cause notice was issued by Gujarat Excise Officials to Petitioner which was challenged by Petitioner by filing a writ petition before the Gujarat High Court and the Gujarat High Court by an order and judgment dated 3rd February 2022 has quashed the show cause notice issued by Gujarat Excise Officials. The said order of the Gujarat High Court has not been challenged by any authority before the apex court and, therefore, has attained finality. 6. Mr. Sridharan, learned senior counsel for Petitioners submitted that the impugned show cause notice is without jurisdiction. He submitted that the foundation or the basis on which the show cause notice is contrary to the order passed by the Bombay High Court approving the scheme of arrangement. He also submitted that on similar facts, the Gujarat High Court has entertained a writ petition and quashed the notice issued for recovery of excise duty by Excise Officials at Gujarat. Relying upon the averments made in the petition, Mr. Sridharan submitted that the transferor company (L & T) has discharged all the liability of the transferee company (LTHE) for the period 2013-14 and, therefore, any attempt to recov....
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....was the subject matter of adjudication before Gujarat High Court. Respondent themselves on an application made by Petitioner pursuant to the approval of the demerger scheme transferred the unutilised Cenvat Credit from the transferor company to Petitioner, transferee company. 10. This very issue had come up for consideration under the excise law before the Gujarat High Court in the case of this very Petitioner in Special Civil Application No. 11308 of 2019 and the Gujarat High Court by order and judgment dated 3rd February 2022 (said judgment) entertained the writ and quashed the show cause notice under the excise law. The basis of show cause notice before Gujarat High Court is similar to that which is impugned in the present petition. The Gujarat High Court after considering the scheme approved by this Court under the Companies Act quashed the show cause notice. The relevant Paragraphs of the said judgment is re-produced herein :- "72. Thus, in the case on hand, the facts are not in dispute. A pure question of law is to be decided based on the very averments made by the Respondent in the show cause notice. Therefore, in our view the present writ application could be sa....
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....entire notice, it can be seen that how the said scheme of arrangement had contravened various provisions of the Central Excise Act, 1944 and the Rules made thereunder. 80. One of the issues is the question of jurisdiction of the Central Excise authorities to question the legality and validity of the scheme approved by the High Court. 81. In the present case, the Central Government was a party to the scheme through the Office of the Regional Director, Ministry of Corporate Affairs, Western Region Mumbai. Thus, the respondent No. 1 was aware of the Scheme at all times. Once, the Scheme has been approved by the High Court and has attained finality, the Respondent is now barred to raise any objection to the said scheme in the present proceeding. ....... 90. The primary ground of the show cause notice is that as per the scheme approved by the Bombay High Court on 20th December 2013, the appointed date is 1st April 2013. Hence, the writ applicants ought to have registered itself with the central excise department from 1st April 2013. The writ applicants should have issued invoices for removals from 1st April 2013 itself. It should have paid excise duty....
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....of the Transferor Company as acts, deeds and things done and executed by and on behalf of the Transferee Company." 96. In view of the above, the writ applicants could be said to have had a bona fide belief and that since the predecessor has discharged the excise duty liability wherever applicable and complied with the central excise provisions like issuing the invoice and filing of returns during the period in dispute, the writ applicant itself is not required to do so in its own name. Also, in terms of the Clause 4.5 (a), the excise registration in the name of the predecessor stood vested in name of the writ applicant automatically and without anything more. Hence, none of the ingredients of Section 11A (4) are applicable to the present case. ........ 120. The above would indicate that the sole basis to demand the excise duty of Rs.96,20,02,091/- is that the writ applicant should have issued the invoice instead of the predecessor i.e., Larsen & Toubro Ltd. ........ 122. The present impugned notice is raising excise duty demand on the very same goods on which the duty has already been paid by the L&T (albeit at nil rate availing the exem....
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....agreement takes place, the transfer of assets takes place by the force of the company's court order and/or by operation of law; it ceases to be a contractual or a consensual transfer. The respondents are bound by the order dated 20th December 2013 passed by the Bombay High Court approving the scheme of demerger. [d] The writ application challenging the legality and validity of the show cause notice is maintainable as no disputed questions of fact are involved and the legal issues have been decided on the basis of the facts as admitted by the parties. The impugned show cause notice could be said to be lacking inherent jurisdiction and therefore, asking the writ applicant to avail of an alternative remedy, therefore, could not arise." 11. Learned counsel for Respondents submitted that as per paragraph 7.9 of the show cause notice, Petitioners have not provided details to explain whether the expenditure incurred relates to output services provided to domestic customers or foreign customers and in the absence of documentary proof it is not possible to ascertain the actual recipient of service and their correct location on which tax is payable by them and, therefore, service....