TaxTMI 
TaxTMI 
2026 (9) TMI 472
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....Annexure-A for the reasons stated in the grounds. (B) Grant such other beliefs as this Honorable High Court may think fit including the cost of this writ petition." In W.P. No. 8067/2025, petitioner seeks for the following reliefs:- "(A) Stay of operation of the impugned Order-in-Original Sl.No.48/ADC/BNW/2023-24 BNW dated: 23.12.2024 passed by the Respondent No. 1 enclosed as Annexure-A. (B) Stay of operation of the impugned Show Cause notice No. 117/2021 having Digital Identification No. ('DIN') 20210457YX0000000FFB dated: 27.04.2021 passed by the Respondent No. 1, enclosed as Annexure-B." 2. Briefly stated the facts giving rise to the present petitions are as under:- Petitioner in W.P. No. 29162/2025 is a joint venture between IVRCL and DRN Infra, formed for the purpose of applying tenders and executing works contracts relating to lift irrigation projects. Karnataka Neeravari Nigama Limited ("KNNL") through a tender awarded the work of construction of lift irrigation project named Tubchi-Bableshwar lift irrigation project to the petitioner. It is contended by the petitioner that the respondent issued summons based on the information available ....
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....8.07.2021 to the show cause notice inter-alia contending that they are engaged in the sale of goods and did not provide services during the said Financial Year. Further, it also contended that the sales reflected in Form 26AS were made to the Government organizations and has also been transparent in revealing the gross sales in the financial statements. It also contended that the applicable output VAT was paid on such sales, which is appropriately disclosed Annual Returns in Form-240 and VAT returns. 2.2 Thereafter it is contended that, the SCN was adjudicated and Order-in-Original bearing No. 07/ADC/BNW/2022-23/BNM dated 17.06.2022 and having Digital Identification No.('DIN') 20220657YX00005075C4 was passed. The said order was challenged by the petitioner before this Court in W.P. No. 17591/2022 and vide dated 03.07.2024, this Court set aside the order of the respondents and directed the respondent to re-adjudicate keeping in mind the principles as set out therein. Thereafter, the petitioner attended the personal hearing on 30.10.2024 and submitted letter / reply dated 30.10.2024 to the said SCN. Further, vide letter dated 18.11.2024, the petitioner submitted a reconciliation s....
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....i) Whether the petitioner in W.P. No. 29162/2025 is entitled to exemption from service tax? (iii) Whether the demands are barred by limitation under Section 73 of the Finance Act, 1994? Re: Point No. 1; 8. Before adverting to the rival contentions of the parties, it is profitable to extract the relevant provisions of the Finance Act, 2012 and Service Tax Rules which are as under; Charge of service tax on and after Finance Act, 2012. 66B. There shall be levied a tax (hereinafter referred to as the service tax) at the rate of [fourteen per cent.] on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. 65B (44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,-- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods....
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....taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons. Explanation 4.- A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory; [Declared services. 66E. The following shall constitute declared services, namely:-- (a) renting of immovable property; (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority. Explanation.- For the purposes of this clause,- (I) the expression "competent authority" means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of non requirement of such certificate from such authority, from any of the following, namely:-- (A) architect registered with the Council of Architecture constituted under the Architects Act....
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....b) value of works contract service shall include, - (i) labour charges for execution of the works; (ii) amount paid to a sub-contractor for labour and services; (iii) charges for planning, designing and architect's fees; (iv) charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract; (v) cost of consumables such as water, electricity, fuel used in the execution of the works contract; (vi) cost of establishment of the contractor relatable to supply of labour and services; (vii) other similar expenses relatable to supply of labour and services; and (viii) profit earned by the service provider relatable to supply of labour and services; (c) Where value added tax or sales tax has been paid or payable on the actual value of property in goods transferred in the execution of the works contract, then, such value adopted for the purposes of payment of value added tax or sales tax, shall be taken as the value of property in goods transferred in the execution of the said works contract for determination of the value of service portion in the execution of works co....
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.... any inputs, used in or in relation to the said works contract, under the provisions of CENVAT Credit Rules, 2004.] 8.1 It is a matter of record and an undisputed fact that under the Finance Act, 1994, Section 65B (44) defines the phrase 'service', which inter alia excludes the activity of 'sale of goods' and 'transactions referred to in Article 366(29A) of the Constitution', from the scope of service; further, in terms of Section 66E(h) of the Finance Act, 2012, service portion in the execution of works contract is considered as declared services. In terms of these provisions, service tax could be levied only on the service portion of the works contract and for this purpose Rule 2A(i) of the Service Tax (Determination of Value) Rules, 2006, specifically provide for exclusion of value of goods transferred. This mechanism is to ensure that the value of goods is not taxed, which is in the exclusive domain of the State and outside the scope of 'service' and 'service tax'. 8.2 The Apex Court in the case of BSNL vs UOI - 2006 (3) SCC 1, held as under: 81. This does not however allow State to entrench upon the Union List and tax services by including the cost of such servi....
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.... invoices and returns submitted which have been completely ignored by the respondents - authorities even after the same was remanded by this Court for proper verification. Further, the petitioners have also submitted reconciliation between the ST3 returns, VAT returns and the income tax 26AS statement clearly indicates that respective taxes have been paid in respect of the said transactions. 8.5 In the light of the aforementioned facts, circumstances, and law laid down by the Apex Court and this Court, I am of the considered view that the scope of works contract was wholly exempted from payment of service tax and in the case wherein there was involvement of service, the material on record indicates payment of service tax. Point No. 1 is accordingly answered in favour of the petitioners. Re-Point No. 2; 9. Before adverting to the rival contentions of the parties, it would be profitable to extract the relevant portions of the Exemption Notification No. 25/2012 dated 20.6.2012, which reads as under; "12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitt....
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....canal, dam or other irrigation works. d. The Governmental authority is entrusted with functions which are done by municipalities under Article 243W of the Constitution of India. 9.2 Learned Senior Counsel for the petitioners contended that there is no dispute regarding the fact that irrigation works done for a Governmental authority would be exempted from payment of tax. However, the dispute is centered around the definition of what is a Governmental authority and on the aspect of whether the activity of lift irrigation could fall under the scope of Article 243W r/w Schedule XII to the Constitution. 9.3 A perusal of the material on record would indicate that the definition of Governmental authority would be applicable to the petitioners as it is a body under clause (ii) established with 90% or more participation or control by the Government. However, the Learned ASG for respondents contended that Karnataka Neeravari Nigam Ltd., does not carry out any function entrusted to a municipality under Article 243W of the Constitution. 9.4 It is apposite here to mention that careful reading of the exemption notification would indicate that any body / organisation which is s....
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....l purposes." 9.8 In the case of The Commissioner BDA vs State of Karnataka - 2005 SCC Online Kar 652, this Court held as under: 14. A look at the objects and reasons to the Seventy Third and Seventy Fourth Amendment, would reveal that though Panchayat Raj Institutions have been in existence for a long time, it was observed that these institutions were not able to acquire the status and dignity of viable and responsive peoples bodies due to a number of reasons. Similarly local bodies had become week and ineffective on account of variety of reasons. The reasons so identified are, absence of or failure to hold regular elections, prolonged supersessions, insufficient representations of weaker sections like Schedule Castes, Schedule Tribes and women, inadequate devolution of powers, and lack of financial resources. It is to remedy this malady Chapter IX and IXA was added to the Constitution. 15. The development plan referred to in the said Chapters is not for carrying out building, engineering or other operations in or over or under land or the making of any material change in any building or land. It is a plan for economic development and social justice for the who....
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....e said project falls within the activities which are entrusted to municipalities and therefore, would very well be entitled to the exemption under the notification. 9.10 It is important to mention here that exemption Notifications, while being interpreted strictly, should also be interpreted in a manner that they become workable so that the purpose of the exemption is conserved, catena of judgments by the Apex Court and this Court have held unlike charging provision, construction of an exemption Notification has to be tested on different touchstone. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment state revenue, however, once exception or exemption is applicable, no rule or principle requires it to be construed strictly. 9.11 A liberal and strict construction of an exemption provision is to be invoked at different stages of its interpretation. When the question is whether a subject falls in the notification or in the exemptio....
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....ribe the following procedure for claiming refund of sales tax by new industries. 2. The new industries intending to take advantage of the system of adjustment shall apply to the Deputy Commissioner of Commercial Taxes (Administration) of the Division concerned through the assessing authority. The application must contain the following particulars: (i) Name and address of the new industry; (ii) Date of commencement of the industry; (iii) Reference number of the certificate issued by the Director of Industries and Commerce, Bangalore; (iv) Year for which the permission to withhold tax amount is related; (v) The description of finished products in which the materials are used. 3. The Deputy Commissioner of Commercial Taxes (Administration) of the concerned Division, after scrutinising the application filed by the new industry and after satisfying himself that the industry is covered by the scheme sanctioned in G.O. No. OI 58 FMI 69 dated June 30, 1969 will permit the industry to withhold the amount of tax payable on raw materials purchased and used in the manufacture of goods. 4. (Omitted as unnecessary) ....
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....to adjust the refunds". The contention virtually means this: "No doubt you were eligible and entitled to make the adjustments. There was also no impediment in law to grant you such permission. But see language of clause 5. Since we did not give you the permission you cannot be permitted to adjust." Is this the effect of the law? 10. The sales tax already paid by the appellant on the raw materials procured by it is the subject matter of the refunds. The sales tax against which the refund is sought to be adjusted is the sales tax payable by appellant on the sales of goods manufactured by it. If the contention of the Revenue is correct, the position is that while the appellant is entitled to the refund it cannot, however, adjust the same against current dues of the particular year but should pay the tax working out its refunds separately. The situation may well have been such but the snag comes here. If the adjustments made by the appellant in its monthly statements are disallowed, the sales tax payable would be deemed to be in default and would attract a penalty ranging from 11/2 per cent to 21/2 per cent per month from the date it fell due. That penalty, in the facts of thi....
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....ained to another condition stipulated in the same Notification of January 12, 1977. This Court held that industries established prior to that date were not governed by those altered conditions. Though in the present case the altered condition set up against appellant was a different one, on the principle decided in Dharmendra Trading Company case [(1988) 3 SCC 570 : 1988 SCC (Tax) 432] the altered condition would not be attracted. But the High Court took a different view of the matter. It held, in our opinion quite erroneously, that the principle of the earlier decision of this Court was not applicable because it was rendered in the context of another condition in the 1977 notification. What fell for decision was not whether a particular condition was or was not applicable; but the very basic question was whether a subsequent notification could undo the eligibility for the concession stipulated and conferred under the 1969 notification. 14. Shri Narasimhamurthy with his usual fairness said that he found it difficult to support the approach of the High Court to the question. The main point on which the case turned is thus settled in favour of the appellant. 15. But....
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....ission was held - and rightly - by the High Court to be a 'condition precedent' and that non-satisfaction of that condition precedent, whatever be the reason for the non-satisfaction, automatically entailed the logical consequences. Learned counsel further submitted that it was not as if the right to the refund was denied or defeated by the inaction of the Deputy Commissioner but only one mode of the refund - by adjustment - became unavailable. Learned counsel urged that the benefit envisaged by the Notification of August 11, 1975 was in the nature of a concession and that the appellant in order to avail itself of its benefit had to show strict compliance with conditions subject to which it was available. Learned counsel placed reliance on Kedarnath Jute Manufacturing Co. v. CTO [(1965) 3 SCR 626, 628-30 : AIR 1966 SC 12 : (1965) 16 STC 607] and Collector of Central Excise v. Parle Exports (P) Ltd. [(1989) 1 SCC 345 : 1989 SCC (Tax) 84] to support his contention that where exemptions were concerned, the conditions thereof ought to be strictly construed and strict compliance with them exacted before a person can lay claim to the benefit of the exemptions. 18. Learned counse....
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.... 'prior permission' for adjustment stipulated therein must also be held to be statutory. Such a condition must, says counsel, be equated with the requirement of production of the declaration form in Kedarnath case [(1965) 3 SCR 626, 628-30 : AIR 1966 SC 12 : (1965) 16 STC 607] and thus understood the same consequences should ensue for the non-compliance. Shri Narasimhamurthy says that there was no way out of this situation and no adjustment was permissible, whatever be the other remedies of the appellant. There is a fallacy in the emphasis of this argument. The consequence which Shri Narasimhamurthy suggests should flow from the non-compliance would, indeed, be the result if the condition was a substantive one and one fundamental to the policy underlying the exemption. Its stringency and mandatory nature must be justified by the purpose intended to be served. The mere fact that it is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditio....
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....e inter-departmental issues. Appellant had nothing to do with those issues. Appellant is now told, "We are sorry. We should have given you the permission. But now that the period is over, nothing can be done". The answer to this is in the words of Lord Denning: [See Wells v. Minister of Housing and Local Government, (1967) 1 WLR 1000, 1007 : (1967) 2 All ER 1041] "Now I know that a public authority cannot be estopped from doing its public duty, but I do think it can be estopped from relying on a technicality and this is a technicality". 23. Francis Bennion in his Statutory Interpretation, (1984 edn.) says at page 683: "Unnecessary technicality: Modern courts seek to cut down technicalities attendant upon a statutory procedure where these cannot be shown to be necessary to the fulfillment of the purposes of the legislation." 24. Shri Narasimhamurthy again relied on certain observations in CCE v. Parle Exports (P) Ltd. [(1989) 1 SCC 345 : 1989 SCC (Tax) 84], in support of strict construction of a provision concerning exemptions. There is support of judicial opinion to the view that exemptions from taxation have a tendency to increase the burden on the other....
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....uld be issued making it operative from the time it was applied for. 26. We, therefore, allow the appeal set aside the judgment of the High Court under appeal and direct the Deputy Commissioner of Sales Tax (Admn.) to grant the permission for the said three years operative from the dates of the application. The permission shall entitle the appellant to the adjustment of the refunds against the taxes due for the respective years. We issue these directions in view of the admitted position that, apart from the technical objection that periods to which the applications related had since expired, there was no other impediment for the grant of permission. It also follows that the demand notices which proceed on the premise that adjustment of refunds against taxes due was unavailable cannot also stand. They are quashed. 27. There will be no order as to costs. 9.13 So also in Commissioner of Customs vs. Dilip Kumar & Company - 2018 (361) ELT 577, the Apex Court held as under; This Constitution Bench is set up to examine the correctness of the ratio in Sun Export Corpn. v. Collector of Customs [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] (herein....
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....ioner of Customs (Appeals) reversed the order of the Assistant Commissioner and came to the conclusion that Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] was indeed applicable. The Department then approached the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which affirmed the order of the Commissioner of Customs (Appeals). Aggrieved thereby, the present appeal is filed. 4. When the appeal was placed, as noticed earlier, before a Bench of two Judges, the ruling in Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] was doubted, observing as follows: (Dilip Kumar case [Commr. of Customs v. Dilip Kumar, (2018) 9 SCC 40], SCC p. 47, paras 11-12) "11. We have serious doubts as to whether the Bombay High Court judgment [Glindia Ltd. v. Union of India, 1988 SCC OnLine Bom 614 : (1988) 36 ELT 479] affirmed in Sun Export Corpn. case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] is correct. First and foremost, it is clear that the subsequent exemption notification largely expanded the first notification which referred only to animal feeds and nothing else. That being the case, it would ....
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....inion, this Court did not adequately deal with why Sun Export Corpn. case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564], which is a binding decision of a three-Judge Bench, should not be followed, apart from a specious distinction between "ingredients" and "supplements" which is logically speaking a distinction without a difference. *** 17. This being the unsatisfactory state of law as it stands today, we feel that this matter should be placed before Hon'ble the Chief Justice of India to constitute an appropriate Bench to resolve the doubts pointed out by us in the body of this order." (emphasis supplied) 6. We feel that the reference to Surendra Cotton Oil Mills case [Collector of Customs & Central Excise v. Surendra Cotton Oil Mills & Fertilizers Co., (2001) 1 SCC 578], may not be necessary as the distinction was drawn on a factual footing, which this Court may not concern itself with, as we are only concerned with the principle of law. With this, the Division Bench was of the tentative view that the opinion expressed in Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] would require reconsideration, ....
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....vision reading the language therein and no interpretation is required if the language is clear. In the event of any ambiguity, according to her, the benefit has to be given to the Revenue and that such ambiguity in tax exemption provision must not be interpreted to benefit the assessee who fails to demonstrate without any doubt that such assessee is covered by the tax exemption notification. She elaborated her arguments by relying on various judgments and contends that the ratio in Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564], which was doubted in Surendra Cotton Oil Mills case [Collector of Customs & Central Excise v. Surendra Cotton Oil Mills & Fertilizers Co., (2001) 1 SCC 578], is not correct law. On merits of the case, she submitted that the artificial distinction created by Surendra Cotton Oil Mills case [Collector of Customs & Central Excise v. Surendra Cotton Oil Mills & Fertilizers Co., (2001) 1 SCC 578], in distinguishing the ingredients from supplements is not sound and may not be accepted by the Court. 9. Per contra, among others, Mr Somnath Shukla, learned counsel appearing on behalf of the respondents would submit that the rat....
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....3. We are in agreement with the above view expressed by the Bombay High Court. No doubt it was contended on behalf of the Revenue that the contrary view taken by the Tribunal has been challenged in this Court which was rejected in limine at the admission stage. We do not think that dismissal at the admission stage can be relied upon as a binding precedent. Even assuming that there are two views possible, it is well settled that one favourable to the assessee in matters of taxation has to be preferred." (emphasis supplied) 12. There cannot be any doubt that the ratio in Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] that, if two views are possible in interpreting the exemption notification, the one favourable to the assessee in the matter of taxation has to be preferred. This principle created confusion and resulted in unsatisfactory state of law. In spite of a catena of judgments of this Court, which took the contra view, holding that an exemption notification must be strictly construed, and if a person claiming exemption does not fall strictly within the description of the notification otherwise then he cannot claim exemption. ....
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.... SCC 796 : 1989 SCC (Tax) 67; Commr. of Customs v. Reliance Petroleum Ltd., (2008) 7 SCC 220.]. 15. We may passingly, albeit, briefly reiterate the general principles of interpretation, which were also adverted to by both the counsel. In his treatise, Principles of Statutory Interpretation, Justice G.P. Singh lucidly pointed out the importance of construction of statutes in a modern State as under: "Legislation in modern State is actuated with some policy to curb some public evil or to effectuate some public benefit. The legislation is primarily directed to the problems before the legislature based on information derived from past and present experience. It may also be designed by use of general words to cover similar problems arising in future. But, from the very nature of things, it is impossible to anticipate fully the varied situations arising in future in which the application of the legislation in hand may be called for, and, words chosen to communicate such indefinite "referents" are bound to be, in many cases lacking in clarity and precision and thus giving rise to controversial questions of construction." 16. An Act of Parliament/Legislature cann....
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....n. The external aids to construction are parliamentary debates, history leading to the legislation, other statutes which have a bearing, dictionaries, thesaurus. 20. It is well accepted that a statute must be construed according to the intention of the legislature and the courts should act upon the true intention of the legislation while applying law and while interpreting law. If a statutory provision is open to more than one meaning, the Court has to choose the interpretation which represents the intention of the legislature. In this connection, the following observations made by this Court in District Mining Officer v. TISCO [District Mining Officer v. TISCO, (2001) 7 SCC 358], may be noticed: (SCC pp. 382-83, para 18) "18. ... A statute is an edict of the legislature and in construing a statute, it is necessary, to seek the intention of its maker. A statute has to be construed according to the intent of them that make it and the duty of the court is to act upon the true intention of the legislature. If a statutory provision is open to more than one interpretation the court has to choose that interpretation which represents the true intention of the legislature....
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....tion has to be preferred." (emphasis supplied) 12. There cannot be any doubt that the ratio in Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] that, if two views are possible in interpreting the exemption notification, the one favourable to the assessee in the matter of taxation has to be preferred. This principle created confusion and resulted in unsatisfactory state of law. In spite of a catena of judgments of this Court, which took the contra view, holding that an exemption notification must be strictly construed, and if a person claiming exemption does not fall strictly within the description of the notification otherwise then he cannot claim exemption. 13. About three years after Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564], in the year 2000, this Court in Surendra Cotton Oil Mills case [Collector of Customs & Central Excise v. Surendra Cotton Oil Mills & Fertilizers Co., (2001) 1 SCC 578], expressed reservations as to the soundness of the dicta in Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564], observing that Sun Export case [Sun Export Corpn. v. Collector ....
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....curb some public evil or to effectuate some public benefit. The legislation is primarily directed to the problems before the legislature based on information derived from past and present experience. It may also be designed by use of general words to cover similar problems arising in future. But, from the very nature of things, it is impossible to anticipate fully the varied situations arising in future in which the application of the legislation in hand may be called for, and, words chosen to communicate such indefinite "referents" are bound to be, in many cases lacking in clarity and precision and thus giving rise to controversial questions of construction." 16. An Act of Parliament/Legislature cannot foresee all types of situations and all types of consequences. It is for the Court to see whether a particular case falls within the broad principles of law enacted by the legislature. Here, the principles of interpretation of statutes come in handy. In spite of the fact that experts in the field assist in drafting the Acts and Rules, there are many occasions where the language used and the phrases employed in the statute are not perfect. Therefore, Judges and courts need t....
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....rpretation which represents the intention of the legislature. In this connection, the following observations made by this Court in District Mining Officer v. TISCO [District Mining Officer v. TISCO, (2001) 7 SCC 358], may be noticed: (SCC pp. 382-83, para 18) "18. ... A statute is an edict of the legislature and in construing a statute, it is necessary, to seek the intention of its maker. A statute has to be construed according to the intent of them that make it and the duty of the court is to act upon the true intention of the legislature. If a statutory provision is open to more than one interpretation the court has to choose that interpretation which represents the true intention of the legislature. This task very often raises difficulties because of various reasons, inasmuch as the words used may not be scientific symbols having any precise or definite meaning and the language may be an imperfect medium to convey one's thought or that the assembly of legislatures consisting of persons of various shades of opinion purport to convey a meaning which may be obscure. It is impossible even for the most imaginative legislature to forestall exhaustively situations and circumst....
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....1928 AC 143 (HL)] ]. Considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity [Mapp v. Oram [Mapp v. Oram, 1970 AC 362 : (1969) 3 WLR 557 : (1969) 3 All ER 215 (HL)]]. It has also been said that if taxing provision is 'so wanting in clarity that no meaning is reasonably clear, the courts will be unable to regard it as of any effect [IRC v. Ross and Coulter [IRC v. Ross and Coulter, (1948) 1 All ER 616 (HL)] ]'." 33. Further elaborating on this aspect, the learned author stated as follows: "Therefore, if the words used are ambiguous and reasonable open to two interpretations benefit of interpretation is given to the subject [Central India Spg. and Wvg. & Mfg. Co. Ltd. v. Municipal Committee, Wardha [Central India Spg. and Wvg. & Mfg. Co. Ltd. v. Municipal Committee, Wardha, AIR 1958 SC 341]]. If the legislature fails to express itself clearly and the taxpayer escapes by not being brought within the letter of the law, no question of unjustness as such arises [CIT v. Jalgaon Electric Supply Co. Ltd. [CIT v. Jalgaon Electric Supply Co. Ltd., AIR 1960 SC 1182]]. But equitable consid....
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.... to catch him on account of the legislature's failure to express itself clearly." 35. Now coming to the other aspect, as we presently discuss, even with regard to exemption clauses or exemption notifications issued under a taxing statute, this Court in some cases has taken the view that the ambiguity in an exemption notification should be construed in favour of the subject. In subsequent cases, this Court diluted the principle saying that mandatory requirements of exemption clause should be interpreted strictly and the directory conditions of such exemption notification can be condoned if there is sufficient compliance with the main requirements. This, however, did not in any manner tinker with the view that an ambiguous exemption clause should be interpreted favouring the Revenue. Here again this Court applied different tests when considering the ambiguity of the exemption notification which requires strict construction and after doing so at the stage of applying the notification, it came to the conclusion that one has to consider liberally. 36. With the above understanding the stage is now set to consider the core issue. In the event of ambiguity in an exemption....
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....ion "to sales to the Indian Stores Department, the Supply Department of the Government of India, and any railway or water transport administration".(AIR p. 203, para 3) The Court was to interpret the aforesaid provision in order to ascertain whether the sale to the Government of India, Ministry of Industries and Supplies would be covered under the section. 38. The majority was of the view that the Government of India, Ministry of Industries and Supplies was not similar to those mentioned in the exemption notification. The majority extensively relied on the history and origin of the Ministry of Industries and Supplies and concluded that the functions of the aforesaid Ministry were different from the erstwhile departments mentioned under the exemption provision. The majority reasoned that the exemption being the creation of the statute itself, it should have to be construed strictly and the interpretation cannot be extended to sales to other departments. We might find some clue as to the content of a strict construction also. It was canvassed before the Court that the object of Section 5(2)(a)(iii) of the relevant statute, was to give exemption not to the particular departme....
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....ated department of the Government. The question therefore arises whether in those circumstances the Government of India could claim the benefit of the exemption. The High Court in answering that question in the negative has gone upon mere nomenclature. It has emphasised the change in the name and overlooked the substance of the matter." 42. The minority construed "strict interpretation" to be an interpretation wherein least number of "determinates in terms of quantity" would fall under the exemption. The minority referred to an old English case of IRC v. James Forrest [IRC v. James Forrest, (1890) LR 15 AC 334 (HL)]. It may be relevant to note that the minority could not find the justification to apply strict interpretation as the exemption notification was broad enough to include exemptions for commodities purchased by the Government of India. 43. The Court was of the opinion that the strict interpretation provided by the majority was uncalled for as there was no additional burden on others by giving such exemptions. The relevant observations are as follows: (CTO case [Union of India v. CTO, AIR 1956 SC 202], AIR pp. 211-12, para 27) "27. ... The High Co....
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.... the Central Excise Act. It would be relevant to understand the factual context which gave rise to the aforesaid case before the Court. The appellant was the sole proprietor who used to procure cotton from a cooperative society during the relevant period. The society had agreed to carry out the weaving work for the appellant on payment of fixed weaving charges at Re. 0.19 np. per yard which included expenses the society would have to incur in transporting the aforesaid cotton fabric. In the years 1959 and 1960, the Government issued an exemption notification which exempted cotton fabrics produced by any cooperative society formed of owners of cotton power looms, registered on or before 31-3-1961. The question before the Court was whether the appellant who got the cotton fabric produced from one of the registered cooperative societies was also covered under the aforesaid notification. It may be of some significance that the Revenue tried to interpret the aforesaid exemption by relying on the purposive interpretation by contending that the object of granting the above exemption was to encourage the formation of cooperative societies which not only produced cotton fabrics but also con....
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.... the Act, we cannot add, and mend, and, by construction, make up deficiencies which are left there.' The learned counsel for the respondents is possibly right in his submission that the object behind the two notifications is to encourage the actual manufacturers of handloom cloth to switch over to power looms by constituting themselves in cooperative societies. But the operation of the notifications has to be judged not by the object which the rule-making authority had in mind but by the words which it has employed to effectuate the legislative intent." 46. In the judgment of the two learned Judges in Union of India v. Wood Papers Ltd. [Union of India v. Wood Papers Ltd., (1990) 4 SCC 256 : 1990 SCC (Tax) 422] (hereinafter referred to as "Wood Papers Ltd. case", for brevity), a distinction between stage of finding out the eligibility to seek exemption and stage of applying the nature of exemption was made. Relying on the decision in CCE v. Parle Exports (P) Ltd. [CCE v. Parle Exports (P) Ltd., (1989) 1 SCC 345 : 1989 SCC (Tax) 84], it was held: (Wood Papers Ltd. case [Union of India v. Wood Papers Ltd., (1990) 4 SCC 256 : 1990 SCC (Tax) 422], SCC p. 262, para 6) ....
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....o the benefit of the Notification dated 30-6-1969. There was also no dispute that the refunds were eligible to be adjusted against sales tax payable for the respective years. The only controversy was whether the appellant, not having actually secured the "prior permission" would be entitled to adjustment having regard to the words of the Notification of 11-8-1975, that "until permission of renewal is granted by the Deputy Commissioner of Commercial Taxes, the new industry should not be allowed to adjust the refunds". The contention of the appellants therein was that the permission for the three years had been sought well before the commencement of the respective years but had been withheld for reasons which were demonstrably extraneous. Therefore, contention was that if, in these circumstances, the Deputy Commissioner could withhold the permission. 48. This Court while accepting the interpretation provided by the appellant, observed on the aspect of strict construction of a provision concerning exemptions as follows: (Mangalore Chemicals case [Mangalore Chemicals and Fertilisers Ltd. v. CCT, 1992 Supp (1) SCC 21], SCC p. 31, para 24) "24. ... There is support of j....
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.... the preconditions for claiming exemption and therefore is not exempt or absolved from following the statutory requirements as contained in the Rules. The Constitution Bench then considered and reiterated the settled principles qua the test of construction of exemption clause, the mandatory requirements to be complied with and the distinction between the eligibility criteria with reference to the conditions which need to be strictly complied with and the conditions which need to be substantially complied with. The Constitution Bench followed the ratio in Hansraj Gordhandas case [Hansraj Gordhandas v. CCE and Customs, AIR 1970 SC 755 : (1969) 2 SCR 253], to reiterate the law on the aspect of interpretation of exemption clause in para 29 as follows: (Hari Chand case [CCE v. Hari Chand Shri Gopal, (2011) 1 SCC 236], SCC p. 247) "29. The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed i....
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....e statute' and the Court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. 33. A fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance with an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly writte....
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....which were cited before us and after giving our anxious consideration, we would be more than justified to conclude and also compelled to hold that every taxing statute including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. 54. In Govind Saran Ganga Saran v. CST [Govind Saran Ganga Saran v. CST1985 Supp SCC 205 : 1985 SCC (Tax) 447], this Court pointed out three components of a taxing statute, namely, subject of the tax; person liable to pay tax; and the rate at which the tax is to be levied. If there is any ambiguity in understanding any of the components, no tax can be levied till the ambiguity or defect is removed by the legislature. [See Mathuram Agrawal v. State of M.P. [Mathuram Agrawal v. State of M.P., (1999) 8 SCC 667] ; Indian Banks' Assn. v. Devkala Consultancy Service [Indian Banks' Assn. v. Devkala Consultancy Service, (2004) 11 SCC 1 : AIR 2004....
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....69) 2 SCR 253], the Constitutional Bench unanimously pointed out that an exemption from taxation is to be allowed based wholly by the language of the notification and exemption cannot be gathered by necessary implication or by construction of words; in other words, one has to look to the language alone and the object and purpose for granting exemption is irrelevant and immaterial. 57. In Parle Exports case [CCE v. Parle Exports (P) Ltd., (1989) 1 SCC 345 : 1989 SCC (Tax) 84], a Bench of two Judges of this Court considered the question whether non-alcoholic beverage base like Gold Spot base, Limca base and Thums Up base, were exempted from payment of duty under the Central Government Notification of March 1975. While considering the issue, this Court pointed out the strict interpretation to be followed in interpretation of a notification for exemption. These observations are made in para 17 of the judgment, which read as follows: (SCC p. 357) "17. How then should the courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur. T....
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.... a fiscal enactment." This observation may appear to support the view that ambiguity in a notification for exemption must be interpreted to benefit the subject/assessee. A careful reading of the entire para, as extracted hereinabove would, however, suggest that an exception to the general rule of tax has to be construed strictly against those who invoke for their benefit. This was explained in a subsequent decision in Wood Papers Ltd. case [Union of India v. Wood Papers Ltd., (1990) 4 SCC 256 : 1990 SCC (Tax) 422]. In para 6, it was observed as follows: (SCC p. 262) "6. ... In CCE v. Parle Exports (P) Ltd. [CCE v. Parle Exports (P) Ltd., (1989) 1 SCC 345 : 1989 SCC (Tax) 84], this Court while accepting that exemption clause should be construed liberally applied rigorous test for determining if expensive items like Gold Spot base or Limca base or Thums Up base were covered in the expression food products and food preparations used in Item No. 68 of First Schedule of Central Excises and Salt Act and held 'that it should not be in consonance with spirit and the reason of law to give exemption for non-alcoholic beverage basis under the notification in question'. Ratio....
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....CC 21] was approved by a three-Judge Bench in Novopan India Ltd. v. CCE [Novopan India Ltd. v. CCE, 1994 Supp (3) SCC 606]. In this case, probably for the first time, the question was posed as to whether the benefit of an exemption notification should go to the subject/assessee when there is ambiguity. The three-Judge Bench, in the background of English and Indian cases, in para 16, unanimously held as follows: (SCC p. 614) "16. We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicals [Mangalore Chemicals and Fertilisers Ltd. v. CCT, 1992 Supp (1) SCC 21] - and in Union of India v. Wood Papers Ltd. [Union of India v. Wood Papers Ltd., (1990) 4 SCC 256 : 1990 SCC (Tax) 422], referred to therein - represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound - does not apply to the construction of an exception or an exempting provision, they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is cover....
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....ion notification. 66.2. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue. 66.3. The ratio in Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] is not correct and all the decisions which took similar view as in Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] stand overruled. 67. The instant civil appeal may now be placed before the appropriate Bench for considering the case on merits after obtaining orders from the Hon'ble Chief Justice of India. 9.14 In the present case, it can be said that once the objective of the exemption is to encourage economic development and foster social development, a liberal interpretation to the wordings of the Notification should be given to include lift irrigation as part of exemption as the project fulfills the objective of economic and social development and therefore, the impugned orders are liable to be side aside on this score also. Point No. 2 is accordingly answered in favour of the petitio....
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....ve effect, as if, for the words "[thirty months], the words "five years" had been substituted. 9.17 The provisions of the Finance Act, 1994, make it clear that returns are to be filed within a specified period as contemplated in Section 70 read with Rule 7 of the Service Tax Rules, 1994. Rule 7 makes it mandatory to file returns by the 25th of the month following the end of every six months. In other words, for the period April 2015 to September 2015, returns ought to be filed by October 25th, 2015 and for the period October 2015 to March 2016, by April 25th 2016. Section 73 makes it mandatory to issue show cause notices within a period of 30 months of these dates in normal cases which gets extended to 5 years in cases of collusion, suppression, willful misstatement or fraud with intention to evade taxes. In the case of NCS Pearson vs UOI - (2025) 9 TMI 1205, this Court held as under: 7. A perusal of the material on record will indicate that 2nd respondent has issued the Impugned Show cause Notice dated 12.02.2024 under Section 74 of the CGST Act seeking to demand GST on supply of Type-III Tests upon alleging that the petitioner, being clearly aware of its GST Liability....
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....erson chargeable with tax. (4) The service of statement under sub-section (3) shall be deemed to be service of notice under sub-section (1) of section 73, subject to the condition that the grounds relied upon in the said statement, except the ground of fraud, or any wilful-misstatement or suppression of facts to evade tax, for periods other than those covered under subsection (1) are the same as are mentioned in the earlier notice. (5) The person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. (6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder. (7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he ....
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....he proper officer. 9. A plain reading of Explanation 2 to Section 74 will indicate that the sine qua non for an allegation of 'wilful suppression' under Section 74 of the CGST Act, to be made out is the non-declaration of facts or information which an Assessee is required to declare in its return or any other document furnished under the Act etc., or a failure on the part of the Assessee to furnish information sought by a Proper Officer in writing. It is the specific contention of the petitioner that the impugned Show-cause Notice dated 12.02.2024 issued under Section 74 of the CGST Act, by 2nd respondent on the ground of 'wilful suppression' is illegal and arbitrary being manifestly violative of the law for want of satisfaction of the jurisdictional fact of Section 74 of the CGST Act and that the impugned show cause notice is wholly without jurisdiction or authority of law as the foundational jurisdictional facts to trigger / invoke Section 74 of the CGST Act i.e., existence of wilful suppression to evade / avoid payment of GST in relation to Type - III tests has not been satisfied by the respondents and the impugned show cause notice deserves to be quashed. 10. ....
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....ossessed the requisite knowledge in relation to the supply of services of Type-II and Type-III Tests by the petitioner. It is a matter of record that the proceedings before the AAR culminated in a ruling dated 22.05.2020, which opined that while Type-II Tests were classifiable as OIDAR services, Type-III tests did not qualify as OIDAR services under GST Laws; significantly, the Ruling recorded the participation of the OIDAR Division Bengaluru West Commissionerate, in the proceedings before the AAR. 13. It is an undisputed fact that in relation to the findings of the AAR that Type-III Tests were not classifiable as OIDAR services, an appeal dated 27.08.2020 against such Ruling of the AAR was carried by the Revenue/Department to the AAAR, wherein they spelled out the modalities and the granular details of the transaction of supply of Type-III Tests by the petitioner which clearly establishes that the entire gamut of supply of Type-III Tests by the petitioner, along with knowledge of the modalities, methodology and manner thereof, was well within the knowledge of the Revenue/Department and its jurisdictional officer/concerned officer. Further, the AAAR allowed the appeal of t....
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....ion/details as sought by the 2nd respondent in relation to the supply of Type-I, Type-II and Type-III tests to non-taxable recipients In India and the GST paid thereon as and when such information was sought by such Revenue authorities during 2021-22 itself as can be seen from the communications, correspondence etc., detailed in paragraph-82 of the memorandum of writ petition, thereby establishing that the petitioner cannot be said to be guilty of having deliberately, consciously or wilfully suppressed any information so as to evade that payment of tax as wrongly alleged in the impugned show cause notice. 17. As stated supra, it is the specific contention of the petitioner that the impugned SCN dated 12.02.2024 issued under Section 74 of the CGST Act, by the 2nd respondent on the ground of 'wilful suppression' is illegal and arbitrary being manifestly violative of the law for want of satisfaction of the jurisdictional fact of Section 74 of the CGST Act and that the impugned show cause notice is wholly without jurisdiction or authority of law as the foundational jurisdictional facts to trigger / invoke Section 74 of the CGST Act i.e., existence of wilful suppression to evad....
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.... "Where the jurisdiction of a tribunal is dependent on the existence of a particular state of affairs, that state of affairs may be described as preliminary to, or collateral to the merits of, the issue. If, at the inception of an inquiry by an inferior tribunal, a challenge is made to its jurisdiction, the tribunal has to make up its mind whether to act or not and can give a ruling on the preliminary or collateral issue; but that ruling is not conclusive." The existence of a jurisdictional fact is thus a sine qua non or condition precedent to the assumption of jurisdiction by a court or tribunal. Jurisdictional fact and adjudicatory fact 29. But there is distinction between "jurisdictional fact" and "adjudicatory fact" which cannot be ignored. An "adjudicatory fact" is a "fact in issue" and can be determined by a court, tribunal or authority on "merits", on the basis of evidence adduced by the parties. It is no doubt true that it is very difficult to distinguish "jurisdictional fact" and "fact in issue" or "adjudicatory fact". Nonetheless the difference between the two cannot be overlooked. 30. In Halsbury's Laws of England (4th Edn.), Vol. 1, ....
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....f the court wrongly decided the said fact and thereby conferred jurisdiction not vested in it, the High Court could interfere with the order. The Court stated (at AIR p. 498, para 21) that "once it had the power it could determine whether the question of the date of construction was rightly or wrongly decided". (See also Arun Kumar v. Union of India [(2007) 1 SCC 732].) 34. But, in Roshan Lal Mehra v. Ishwar Dass [AIR 1962 SC 646 : (1962) 2 SCR 947] this Court held that the Rent Controller had jurisdiction to fix standard rent for new construction made after 24-3-1947. The question was as to when the construction was made. The Rent Controller recorded a finding of fact that the construction was put up after 24-3-1947. The finding was confirmed by the District Judge. But the High Court interfered in revision. 35. Setting aside the decision of the High Court, this Court stated: (Roshan Lal Mehra case [AIR 1962 SC 646 : (1962) 2 SCR 947], AIR p. 659, para 17) "17. ... It is clear from the orders of the Rent Controller and of the District Judge in appeal that the question whether the second floor was newly constructed or not was really a question of fact, tho....
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....der Section 18(3-B). He accordingly set aside the order impugned. The revenue went up in appeal against the order of the learned Single Judge to the Appellate Bench. That Bench allowed the appeal with the observations, "in the present case the question before the Income Tax Officer, Rampur, was whether the firm Nathirmal and Sons was non-resident or not. There was material before him on this question. He had jurisdiction to decide the question either way. It cannot be said that the officer assumed jurisdiction by a wrong decision on this question of residence". The Appellate Bench appears to have been under the impression that the Income Tax Officer was the sole Judge of the fact whether the firm in question was resident or non-resident. This conclusion in, our opinion, is wholly wrong. No authority, much less a quasi-judicial authority, can confer jurisdiction on itself by deciding a jurisdictional fact wrongly. The question whether the Jurisdictional fact has been rightly decided or not is a question that is open for examination by the High Court in an application for a writ of certiorari. If the High Court comes to the conclusion, as the learned Single Judge has done in this cas....
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....ctual position warrant modification of the classification. When Heading/Sub-Heading 7211.31 is specific (cold-rolled strips), the goods cannot be consigned to Sub-Heading 7308.90 which is not specific and is a residuary item. As long as the subject goods were not classifiable under TI 68 when it existed, they cannot attract the corresponding Sub-Heading 7308.90. We also submit that Rule 9(2) cited in the show-cause notice is not applicable since there was no clandestine clearance." 66. It is, therefore, evident that the contention of the appellant was that Rule 9(2) cited in the show-cause notice was not applicable. But, unfortunately, despite the same it had not been adverted to by the Tribunal. We must notice that the appellant herein succeeded before the Appellate Collector. The Revenue went up in appeal. The Tribunal was, therefore, bound to take the aforementioned question into consideration inasmuch as a finding of fact was required to be arrived at that the period of limitation for issuing such notices under Section 11-A of the Act would depend upon the question as to whether such short-levy was due to any act of fraud, collusion, wilful misstatement or suppression ....
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.... upon the petitioner for the period under dispute, which is impermissible in law and consequently, the very issuance of the impugned SCN dated 12.02.2024 under Section 74 of the CGST Act is illegal and violative of Article 265 of the Constitution inasmuch as the impugned SCN seeks to realize monies from the petitioner under the guise of tax without the authority of the law and the impugned SCN deserves to be quashed. 22. The impugned SCN also fails to consider and appreciate that the issue of classification of Type-III Tests had not attained finality on account of W.P. No. 3555/2021 preferred by the petitioner against the order of the AAAR pending adjudication before the Division Bench of this Court, in which there is an interim order in favour of the petitioner as stated supra; despite the sub-judice nature of the issue of classification and taxability of Type-III Tests pending before this Court, and interim orders having been granted in favour of the petitioner, the 2nd respondent has issued the impugned SCN relating to Type-III Tests, even though this very issue/question relating to classification and taxability of such supply of service was pending consideration of thi....
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....that the mere default or failure of the assessee to pay duty, without the existence of any intent to wilfully suppress information/details in itself would attract the extended period of limitation as hereunder: 31. It is settled law that for invoking the extended period of limitation duty should not have been paid, short-levied or short-paid or erroneously refunded because of either fraud, collusion, wilful misstatement, suppression of facts or contravention of any provision or rules. This Court has held that these ingredients postulate a positive act and, therefore, mere failure to pay duty and/or take out a licence which is not due to any fraud, collusion or wilful misstatement or suppression of fact or contravention of any provision is not sufficient to attract the extended period of limitation. 26. Similarly, in the case of Anand Nishikawa Co. Ltd. vs. Commissioner of Central Excise Meerut - (2005) 7 SCC 749, the Apex Court held that a mere failure to declare does not amount to wilful suppression as hereunder: 26. In Tata Iron & Steel Co. Ltd. v. Union of India [(1988) 3 SCC 403 : 1988 SCC (L&S) 381 : (1988) 35 ELT 605] this Court held that when the c....
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....e assessee to find wilful suppression. Therefore, in view of our findings made hereinabove that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in the proviso to Section 11-A of the Act. We are, therefore, of the firm opinion that where facts were known to both the parties, as in the instant case, it was not open to CEGAT to come to a conclusion that the appellant was guilty of "suppression of facts". In Densons Pultretaknik v. CCE [(2003) 11 SCC 390] this Court held that mere classification under a different sub-heading by the manufacturer cannot be said to be wilful misstatement or "suppression of facts". This view was also reiterated by this Court in CCE v. L.M.P. Precision Engg. Co. Ltd. [(2004) 9 SCC 703]. 27. So also, in Continental Foundation Joint Venture vs. Commissioner of Central Excise, Chandigarh -(2007) 216 ELT 177 (SC), it was held by the Apex Court that mere omission to give correct information is not suppression of facts, unless it was deliberate to stop the payment of duty an....
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....herefore refer to an act of mere omission, and must be interpreted as referring to a deliberate act of non-disclosure aimed at evading duty, that is to say, an element of intentional action must be present. 15. Similarly, in CCE v. Chemphar Drugs & Liniments [CCE v. Chemphar Drugs & Liniments, (1989) 2 SCC 127 : 1989 SCC (Tax) 245], this Court, while dealing with a similar situation of invocation of extended period of limitation under Section 11-A of the Act, this Court held as under : (SCC p. 131, para 9) "9. ... In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section (1) of Section 11-A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information wh....
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....ignored. Secondly, we also find this contention to be diametrically opposite to what the Revenue itself has been contending on merits right from the show-cause notice till the appeal filed before this Court. 24. On merits, the Revenue's case throughout had been that the issue of valuation is covered against the assessee by the judgment of this Court in IFGL Refractories [CCE v. IFGL Refractories Ltd., (2005) 6 SCC 713]. Even in the order of CESTAT under challenge the Tribunal has proceeded on the basis that the principle of valuation laid down by this Court in IFGL Refractories [CCE v. IFGL Refractories Ltd., (2005) 6 SCC 713] holds good and remains valid even under the amended valuation provisions for the period post July 2000. We therefore find it strange that for the purposes of justifying its case on limitation, the Revenue wishes to take a position exactly contrary to what it has taken in the show-cause notice on merits. We cannot allow the Revenue to blow hot and cold in the same breath by relying upon IFGL case [CCE v. IFGL Refractories Ltd., (2005) 6 SCC 713] on merits while at the same time arguing that the same had no relevance for the purposes of examining the p....
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....ntral Excise vs. Neminath Fabrics Pvt. Ltd., -2010 (256) ELT 369 (Guj.) to justify the invocation of the extended period of limitation under Section 74 of the CGST Act by submitting that the concept of knowledge cannot be an appropriate defence; in this context, it is relevant to state that the said judgment is circumscribed and applicable only to cases wherein 'suppression' is established or admitted as can be seen from the relevant portion of the judgment as hereunder: "18. The Proviso comes into play only when suppression etc. is established or stands admitted. It would differ from a case where fraud, etc. are merely alleged and are disputed by an assessee. Hence, by no stretch of imagination the concept of knowledge can be read into the provisions because that would tantamount to rendering the defined term "relevant date" nugatory and such an interpretation is not permissible." 32. The aforesaid judgment in Neminath's case supra was considered by the CESTAT in Amway India Enterprises Pvt. Ltd. vs. Commissioner of Central Excise, New Delhi - 2017 (3) GSTL 69 (Tri.-Del), wherein it was held as under: "7. The show cause notice in this case has been issue....
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....es; the petitioner having approached the revenue for an advance ruling with all data available cannot be foisted with a demand alleging suppression of facts. 34. The aforesaid discussion clearly establishes that the impugned Show Cause Notice dated 12.02.2024 issued under Section 74 of the CGST Act, by the 2nd respondent is illegal and arbitrary being manifestly violative of the law for want of satisfaction of the jurisdictional facts contemplated in Section 74 of the CGST Act and that the impugned show cause notice is wholly without jurisdiction or authority of law as the foundational jurisdictional facts to trigger / invoke Section 74 of the CGST Act i.e., existence of wilful suppression to evade / avoid payment of GST in relation to Type - III tests has not been satisfied by the respondents and the impugned show cause notice deserves to be quashed. 35. Insofar as the various other contentions, claims and reliefs urged and sought for by the petitioner are concerned, having regard to the findings recorded hereinbefore that the impugned SCN is illegal, arbitrary and without jurisdiction or authority of law and is contrary to law and the provisions contained in Sec....
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....usly refunded because of either fraud, collusion, wilful misstatement, suppression of facts or contravention of any provision or rules. This Court has held that these ingredients postulate a positive act and, therefore, mere failure to pay duty and/or take out a licence which is not due to any fraud, collusion or wilful misstatement or suppression of fact or contravention of any provision is not sufficient to attract the extended period of limitation. 9.20 So also, in the case of Anand Nishikawa Co. Ltd. vs. Commissioner of Central Excise Meerut - (2005) 7 SCC 749, the Apex Court held as hereunder: 26. In Tata Iron & Steel Co. Ltd. v. Union of India [(1988) 3 SCC 403 : 1988 SCC (L&S) 381 : (1988) 35 ELT 605] this Court held that when the classification list continued to have been approved regularly by the Department, it could not be said that the manufacturer was guilty of "suppression of facts". As noted herein earlier, we have also concluded that the classification lists supplied by the appellant were duly approved from time to time regularly by the Excise Authorities and only in the year 1995, the Department found that there was "suppression of facts" in the matter o....
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.... both the parties, as in the instant case, it was not open to CEGAT to come to a conclusion that the appellant was guilty of "suppression of facts". In Densons Pultretaknik v. CCE [(2003) 11 SCC 390] this Court held that mere classification under a different sub-heading by the manufacturer cannot be said to be wilful misstatement or "suppression of facts". This view was also reiterated by this Court in CCE v. L.M.P. Precision Engg. Co. Ltd. [(2004) 9 SCC 703]. 9.21 In Continental Foundation Joint Venture vs. Commissioner of Central Excise, Chandigarh -(2007) 216 ELT 177 (SC), the Apex Court held as hereunder: 12. The expression "suppression" has been used in the proviso to Section 11-A of the Act accompanied by very strong words as "fraud" or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop (sic evade) the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Reve....