| S.No | Name | Date of Order | Subject | Actions |
|---|---|---|---|---|
| 141 | State of Karnataka v. M/s Tallam Apparels | 26-02-2021 | Disallowance of Input Tax Credit on allegation of non-genuine transactions and non-payment of tax by selling dealer under VAT (Sections involved: Section 70(1), Section 39(1), and relevant provisions of the Karnataka Value Added Tax Act, 2003) | View Download |
Facts :The assessee, a registered dealer dealing in garments, claimed input tax credit on purchases supported by invoices. The audit authority disallowed ITC under Section 39(1) alleging that transactions with certain dealers were not genuine and that the burden under Section 70 was not discharged. The First Appellate Authority upheld the disallowance, but the Karnataka Appellate Tribunal allowed the assessee’s appeal. The State filed a revision petition before the High Court challenging the Tribunal’s order. Court Decision:The High Court upheld the Tribunal’s order and dismissed the revision petition. It held that the assessee had discharged the burden under Section 70 by producing invoices and proof of payment through banking channels, establishing genuineness of transactions. The Court further held that once transactions are proved genuine, input tax credit cannot be denied merely because the selling dealer failed to remit tax. It was also held that the statute does not permit action against the purchasing dealer for default of the selling dealer. Cases Referred by Court:• Microqual Techno Pvt. Ltd. v. Additional Commissioner of Commercial Taxes • Packwell Industries v. State of Karnataka | ||||
| State of Karnataka v. M/s Tallam Apparels 26-02-2021 Disallowance of Input Tax Credit on allegation of non-genuine transactions and non-payment of tax by selling dealer under VAT (Sections involved: Section 70(1), Section 39(1), and relevant provisions of the Karnataka Value Added Tax Act, 2003)Facts :The assessee, a registered dealer dealing in garments, claimed input tax credit on purchases supported by invoices. The audit authority disallowed ITC under Section 39(1) alleging that transactions with certain dealers were not genuine and that the burden under Section 70 was not discharged. The First Appellate Authority upheld the disallowance, but the Karnataka Appellate Tribunal allowed the assessee’s appeal. The State filed a revision petition before the High Court challenging the Tribunal’s order. Court Decision:The High Court upheld the Tribunal’s order and dismissed the revision petition. It held that the assessee had discharged the burden under Section 70 by producing invoices and proof of payment through banking channels, establishing genuineness of transactions. The Court further held that once transactions are proved genuine, input tax credit cannot be denied merely because the selling dealer failed to remit tax. It was also held that the statute does not permit action against the purchasing dealer for default of the selling dealer. Cases Referred by Court:• Microqual Techno Pvt. Ltd. v. Additional Commissioner of Commercial Taxes • Packwell Industries v. State of Karnataka | ||||
| 142 | Synergy Fertichem Pvt. Ltd. & Ors. v. State of Gujarat & Ors. | 23-12-2019 | Whether Sections 129 (detention, seizure and release of goods in transit) and 130 (confiscation of goods and conveyance) of the CGST Act, 2017 are sequential — i.e., whether Section 130 can only be invoked after non-compliance of Section 129(6) — or w | View Download |
BackgroundThe lead petitioner is a company engaged in import and sale of Ceramic Pigment Ink. It placed an order for a consignment from its principal in Spain, imported through Ahmedabad Airport. The company filed a bill of entry for home consumption and paid applicable customs duty as well as IGST before commencement of movement of goods. While the goods were being transported from Ahmedabad Airport to the company's warehouse in Vadodara, the truck was intercepted on the Ahmedabad-Vadodara Expressway by the GST Authorities. The transporter duly produced all documents including the bill of entry evidencing prior payment of IGST. The vehicle was detained solely on the ground that the e-way bill had not been generated — the clearing and forwarding agent had urgently dispatched the consignment given its perishable nature without waiting for the e-way bill. On learning of the detention, the company promptly generated the e-way bill. However, the authorities refused to release the goods and raised a demand for release which far exceeded the value of the goods themselves. The authorities proceeded to issue a Show Cause Notice directly under Section 130 of the CGST Act demanding payment of tax, 100% penalty and redemption fine equal to the value of goods in lieu of confiscation — without first following the procedure under Section 129 of the Act. Five writ applications raising identical issues were clubbed and disposed of by a common judgment.Relevant FactsIGST had been paid in full at the time of import — before movement commenced. Bill of entry for home consumption accompanying the goods evidenced prior payment of tax. The only lapse was non-generation of e-way bill at the time of transport — attributable to the C&F agent acting in urgency given the perishable nature of the goods and their limited shelf-life. Despite tax having already been paid, the authorities levied 100% penalty under Section 129 AND simultaneously invoked Section 130 for confiscation with redemption fine equal to the full value of goods. The Show Cause Notice under Section 130 was issued without first completing Section 129 proceedings — i.e., without issuing the Section 129(3) notice, granting hearing, and allowing the 14-day compliance window. The petitioners' central argument was that Section 130 is entirely dependent on non-compliance with Section 129(6) and cannot be independently invoked. The Revenue's case was that both sections carry non-obstante clauses making them independent of each other.Court Observations (Verbatim — Final Conclusions)"(i) Section 129 of the Act talks about detention, seizure and release of goods and conveyances in transit. On the other hand, Section 130 talks about confiscation of goods or conveyance and levy of tax, penalty and fine thereof. Although, both the sections start with a non-obstante clause, yet, the harmonious reading of the two sections, keeping in mind the object and purpose behind the enactment thereof, would indicate that they are independent of each other. Section 130 of the Act, which provides for confiscation of the goods or conveyance is not, in any manner, dependent or subject to Section 129 of the Act. Both the sections are mutually exclusive."— Para 182(i) — Core ratio: Sections 129 & 130 are independent"(ii) The phrase 'with an intent to evade the payment of tax' in Section 130 of the Act assumes importance. When the law requires an intention to evade payment of tax, then it is not mere failure to pay tax. It must be something more. The word 'evade' in the context means defeating the provisions of law of paying tax. It is made more stringent by use of the word 'intent'. The assessee must deliberately avoid the payment of tax which is payable in accordance with law. However, the element of mens rea cannot be read into Section 130 of the Act."— Para 182(ii) — On "intent to evade" in Section 130"(iii) For the purpose of issuing a notice of confiscation under Section 130 of the Act at the threshold, i.e., at the stage of detention and seizure of the goods and conveyance, the case has to be of such a nature that on the face of the entire transaction, the authority concerned should be convinced that the contravention was with a definite intent to evade payment of tax. The action, in such circumstances, should be in good faith and not be a mere pretence. In other words, the authorities need to make out a very strong case. Mere suspicion may not be sufficient to invoke Section 130 of the Act straightway."— Para 182(iii) — Strong case needed for invoking Section 130 at threshold"(iv) If the authorities are of the view that the case is one of invoking Section 130 of the Act at the very threshold, then they need to record their reasons for such belief in writing, and such reasons recorded in writing should, thereafter, be looked into by the superior authority so that the superior authority can take an appropriate decision whether the case is one of straightway invoking Section 130 of the Act."— Para 182(iv) — Mandatory written reasons & superior authority approval"(vi) Section 130 of the Act is not dependent on clause (6) of Section 129 of the Act."— Para 182(vi) — Rejecting assessee's sequential argument"(xiv) The goods are not liable to be detained on the ground that the tax paid on the product was less. In such circumstances, the Inspecting Authority is expected to alert the Assessing Authority to initiate appropriate proceedings 'for assessment of any alleged sale at which the dealer will have his opportunities to put forward his pleas on law and on fact. The process of detention of the goods cannot be resorted to when the dispute is bona fide, especially concerning the exigibility of tax and, more particularly, the rate of that tax.'"— Para 182(xiv) — Inspecting authority has no jurisdiction on valuation"(xvi) The extraordinary powers under Article 226 of the Constitution, directing for release of the vehicles or goods, during the pendency of the confiscation, can only be sparingly exercised under extraordinary situations and circumstances when injustice occurs because of non-fulfillment of the conditions for confiscation."— Para 182(xvi) — Restricted scope of writ interferenceSummary of Mixed OutcomesAgainst AssesseeSections 129 & 130 held independent — Section 130 can be invoked without first completing Section 129. Section 130 is NOT dependent on Section 129(6) non-compliance. Mens rea not required for Section 130.For AssesseeStrong evidence of "definite intent to evade" mandatory at threshold. Written reasons + superior authority approval mandated. Detention for valuation disputes not permissible. Goods directed to be released pending confiscation proceedings.Final VerdictThe Court laid down 16 general principles on the interpretation of Sections 129 and 130 of the CGST Act and directed all matters to be listed before the tax bench for deciding individual confiscation challenges on merits. The primary argument of the assessees — that Section 130 cannot be independently invoked and is subject to Section 129(6) — was rejected. However, the Court ordered interim release of goods and conveyances in all petitions pending confiscation proceedings, subject to final outcome. No final adjudication on the merits of individual petitions was undertaken. | ||||
| Synergy Fertichem Pvt. Ltd. & Ors. v. State of Gujarat & Ors. 23-12-2019 Whether Sections 129 (detention, seizure and release of goods in transit) and 130 (confiscation of goods and conveyance) of the CGST Act, 2017 are sequential — i.e., whether Section 130 can only be invoked after non-compliance of Section 129(6) — or wBackgroundThe lead petitioner is a company engaged in import and sale of Ceramic Pigment Ink. It placed an order for a consignment from its principal in Spain, imported through Ahmedabad Airport. The company filed a bill of entry for home consumption and paid applicable customs duty as well as IGST before commencement of movement of goods. While the goods were being transported from Ahmedabad Airport to the company's warehouse in Vadodara, the truck was intercepted on the Ahmedabad-Vadodara Expressway by the GST Authorities. The transporter duly produced all documents including the bill of entry evidencing prior payment of IGST. The vehicle was detained solely on the ground that the e-way bill had not been generated — the clearing and forwarding agent had urgently dispatched the consignment given its perishable nature without waiting for the e-way bill. On learning of the detention, the company promptly generated the e-way bill. However, the authorities refused to release the goods and raised a demand for release which far exceeded the value of the goods themselves. The authorities proceeded to issue a Show Cause Notice directly under Section 130 of the CGST Act demanding payment of tax, 100% penalty and redemption fine equal to the value of goods in lieu of confiscation — without first following the procedure under Section 129 of the Act. Five writ applications raising identical issues were clubbed and disposed of by a common judgment.Relevant FactsIGST had been paid in full at the time of import — before movement commenced. Bill of entry for home consumption accompanying the goods evidenced prior payment of tax. The only lapse was non-generation of e-way bill at the time of transport — attributable to the C&F agent acting in urgency given the perishable nature of the goods and their limited shelf-life. Despite tax having already been paid, the authorities levied 100% penalty under Section 129 AND simultaneously invoked Section 130 for confiscation with redemption fine equal to the full value of goods. The Show Cause Notice under Section 130 was issued without first completing Section 129 proceedings — i.e., without issuing the Section 129(3) notice, granting hearing, and allowing the 14-day compliance window. The petitioners' central argument was that Section 130 is entirely dependent on non-compliance with Section 129(6) and cannot be independently invoked. The Revenue's case was that both sections carry non-obstante clauses making them independent of each other.Court Observations (Verbatim — Final Conclusions)"(i) Section 129 of the Act talks about detention, seizure and release of goods and conveyances in transit. On the other hand, Section 130 talks about confiscation of goods or conveyance and levy of tax, penalty and fine thereof. Although, both the sections start with a non-obstante clause, yet, the harmonious reading of the two sections, keeping in mind the object and purpose behind the enactment thereof, would indicate that they are independent of each other. Section 130 of the Act, which provides for confiscation of the goods or conveyance is not, in any manner, dependent or subject to Section 129 of the Act. Both the sections are mutually exclusive."— Para 182(i) — Core ratio: Sections 129 & 130 are independent"(ii) The phrase 'with an intent to evade the payment of tax' in Section 130 of the Act assumes importance. When the law requires an intention to evade payment of tax, then it is not mere failure to pay tax. It must be something more. The word 'evade' in the context means defeating the provisions of law of paying tax. It is made more stringent by use of the word 'intent'. The assessee must deliberately avoid the payment of tax which is payable in accordance with law. However, the element of mens rea cannot be read into Section 130 of the Act."— Para 182(ii) — On "intent to evade" in Section 130"(iii) For the purpose of issuing a notice of confiscation under Section 130 of the Act at the threshold, i.e., at the stage of detention and seizure of the goods and conveyance, the case has to be of such a nature that on the face of the entire transaction, the authority concerned should be convinced that the contravention was with a definite intent to evade payment of tax. The action, in such circumstances, should be in good faith and not be a mere pretence. In other words, the authorities need to make out a very strong case. Mere suspicion may not be sufficient to invoke Section 130 of the Act straightway."— Para 182(iii) — Strong case needed for invoking Section 130 at threshold"(iv) If the authorities are of the view that the case is one of invoking Section 130 of the Act at the very threshold, then they need to record their reasons for such belief in writing, and such reasons recorded in writing should, thereafter, be looked into by the superior authority so that the superior authority can take an appropriate decision whether the case is one of straightway invoking Section 130 of the Act."— Para 182(iv) — Mandatory written reasons & superior authority approval"(vi) Section 130 of the Act is not dependent on clause (6) of Section 129 of the Act."— Para 182(vi) — Rejecting assessee's sequential argument"(xiv) The goods are not liable to be detained on the ground that the tax paid on the product was less. In such circumstances, the Inspecting Authority is expected to alert the Assessing Authority to initiate appropriate proceedings 'for assessment of any alleged sale at which the dealer will have his opportunities to put forward his pleas on law and on fact. The process of detention of the goods cannot be resorted to when the dispute is bona fide, especially concerning the exigibility of tax and, more particularly, the rate of that tax.'"— Para 182(xiv) — Inspecting authority has no jurisdiction on valuation"(xvi) The extraordinary powers under Article 226 of the Constitution, directing for release of the vehicles or goods, during the pendency of the confiscation, can only be sparingly exercised under extraordinary situations and circumstances when injustice occurs because of non-fulfillment of the conditions for confiscation."— Para 182(xvi) — Restricted scope of writ interferenceSummary of Mixed OutcomesAgainst AssesseeSections 129 & 130 held independent — Section 130 can be invoked without first completing Section 129. Section 130 is NOT dependent on Section 129(6) non-compliance. Mens rea not required for Section 130.For AssesseeStrong evidence of "definite intent to evade" mandatory at threshold. Written reasons + superior authority approval mandated. Detention for valuation disputes not permissible. Goods directed to be released pending confiscation proceedings.Final VerdictThe Court laid down 16 general principles on the interpretation of Sections 129 and 130 of the CGST Act and directed all matters to be listed before the tax bench for deciding individual confiscation challenges on merits. The primary argument of the assessees — that Section 130 cannot be independently invoked and is subject to Section 129(6) — was rejected. However, the Court ordered interim release of goods and conveyances in all petitions pending confiscation proceedings, subject to final outcome. No final adjudication on the merits of individual petitions was undertaken. | ||||
| 143 | Alfa Group vs The Assistant State Tax Officer & Others | 18-11-2019 | Whether goods can be detained under GST law on the ground of undervaluation compared to MRP and alleged wrong HSN classification. | View Download |
Facts :The petitioner’s goods were detained during transit through a detention order (Form GST MOV-06) on the ground that the invoice value was lower than the MRP and HSN code was wrongly mentioned. The petitioner challenged the detention contending that these grounds do not justify detention under Sections 129 or 130 of the GST Act. It was also contended that there was no discrepancy in tax rate or supporting documents accompanying the goods. The issue arose from detention at a parcel godown during movement of goods.Court Decision:The Court held that undervaluation with reference to MRP is not a valid ground for detention of goods under the GST Act. There is no statutory provision prohibiting sale of goods below MRP, and such comparison cannot justify detention. The Court further held that incorrect HSN classification, without impact on tax rate, does not warrant detention. The detention order was quashed and authorities were directed to release the goods forthwith. Directions were also issued to the Commissioner to ensure such unwarranted detentions are not repeated. | ||||
| Alfa Group vs The Assistant State Tax Officer & Others 18-11-2019 Whether goods can be detained under GST law on the ground of undervaluation compared to MRP and alleged wrong HSN classification.Facts :The petitioner’s goods were detained during transit through a detention order (Form GST MOV-06) on the ground that the invoice value was lower than the MRP and HSN code was wrongly mentioned. The petitioner challenged the detention contending that these grounds do not justify detention under Sections 129 or 130 of the GST Act. It was also contended that there was no discrepancy in tax rate or supporting documents accompanying the goods. The issue arose from detention at a parcel godown during movement of goods.Court Decision:The Court held that undervaluation with reference to MRP is not a valid ground for detention of goods under the GST Act. There is no statutory provision prohibiting sale of goods below MRP, and such comparison cannot justify detention. The Court further held that incorrect HSN classification, without impact on tax rate, does not warrant detention. The detention order was quashed and authorities were directed to release the goods forthwith. Directions were also issued to the Commissioner to ensure such unwarranted detentions are not repeated. | ||||
| 144 | Builders Association of Navi Mumbai v. Union of India | 28-03-2018 | Levy of GST @ 18% on one-time lease premium charged by CIDCO on long-term (60-year) lease of plots to builders/developers in Navi Mumbai. | View Download |
BackgroundCIDCO (City Industrial and Development Corporation of Maharashtra Ltd.), incorporated on 17th March 1970, is designated as the New Town Development Authority under Section 113(3A) of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act). In furtherance of its planning mandate, CIDCO allots residential-cum-commercial and hotel plots on 60-year leases through a tender process. Successful bidders pay a one-time lease premium (lump sum) plus annual lease rent. In April 2017, upon issuance of allotment letters, CIDCO demanded GST @ 18% on the total one-time lease premium via Demand Draft. Petitioners — an association of builders and a partnership firm — challenged this levy before the Bombay High Court after the GST Commissionerate failed to respond to their grievance correspondence. Court Observations (Verbatim)"A perusal of sections 7, 8, 9, 10 and 11 falling in this Chapter leaves us in no manner of doubt that the expression 'supply' includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.""Once this law, in terms of the substantive provisions and the Schedule, treats the activity as supply of goods or supply of services, particularly in relation to land and building and includes a lease, then, the consideration therefor as a premium/one-time premium is a measure on which the tax is levied, assessed and recovered. We cannot then probe into the legislation any further.""It is entirely for the legislature, therefore, to exercise the powers conferred by sub-section (2) of section 7 of the GST Act and issue the requisite notification. Absent that notification, merely going by the status of the CIDCO, we cannot hold that the lease premium would not attract or invite the liability to pay tax in terms of the GST Act.""With respect, it cannot be said that the activities performed by sovereign or public authorities under the provisions of law, which are in the nature of statutory obligations are excluded from the purview of the present enactment.""Pertinently, the dividing line between governmental and non-governmental, sovereign and regal functions and otherwise is not very thin and post globalisation, liberalisation and privatisation."Final VerdictThe demand for GST on the one-time lease premium is held to be in accordance with law. The writ petition is dismissed and Rule is discharged. No order as to costs. | ||||
| Builders Association of Navi Mumbai v. Union of India 28-03-2018 Levy of GST @ 18% on one-time lease premium charged by CIDCO on long-term (60-year) lease of plots to builders/developers in Navi Mumbai.BackgroundCIDCO (City Industrial and Development Corporation of Maharashtra Ltd.), incorporated on 17th March 1970, is designated as the New Town Development Authority under Section 113(3A) of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act). In furtherance of its planning mandate, CIDCO allots residential-cum-commercial and hotel plots on 60-year leases through a tender process. Successful bidders pay a one-time lease premium (lump sum) plus annual lease rent. In April 2017, upon issuance of allotment letters, CIDCO demanded GST @ 18% on the total one-time lease premium via Demand Draft. Petitioners — an association of builders and a partnership firm — challenged this levy before the Bombay High Court after the GST Commissionerate failed to respond to their grievance correspondence. Court Observations (Verbatim)"A perusal of sections 7, 8, 9, 10 and 11 falling in this Chapter leaves us in no manner of doubt that the expression 'supply' includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.""Once this law, in terms of the substantive provisions and the Schedule, treats the activity as supply of goods or supply of services, particularly in relation to land and building and includes a lease, then, the consideration therefor as a premium/one-time premium is a measure on which the tax is levied, assessed and recovered. We cannot then probe into the legislation any further.""It is entirely for the legislature, therefore, to exercise the powers conferred by sub-section (2) of section 7 of the GST Act and issue the requisite notification. Absent that notification, merely going by the status of the CIDCO, we cannot hold that the lease premium would not attract or invite the liability to pay tax in terms of the GST Act.""With respect, it cannot be said that the activities performed by sovereign or public authorities under the provisions of law, which are in the nature of statutory obligations are excluded from the purview of the present enactment.""Pertinently, the dividing line between governmental and non-governmental, sovereign and regal functions and otherwise is not very thin and post globalisation, liberalisation and privatisation."Final VerdictThe demand for GST on the one-time lease premium is held to be in accordance with law. The writ petition is dismissed and Rule is discharged. No order as to costs. | ||||
| 145 | On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi & Ors. | 16-10-2017 | Challenge to constitutional validity of denial of Input Tax Credit to purchasing dealers due to default of selling dealers under DVAT (Section involved: Section 9(2)(g) of the Delhi Value Added Tax Act, 2004) | View Download |
Facts :The petitioners, registered dealers under the DVAT Act, claimed Input Tax Credit on purchases supported by valid tax invoices from registered selling dealers. The tax authorities denied ITC on the ground that the selling dealers had not deposited the tax with the Government or had not properly disclosed the transactions. The denial was based on Section 9(2)(g) of the DVAT Act. Petitioners contended that they had complied with all statutory requirements and could not control the conduct of selling dealers. Court Decision:The High Court held Section 9(2)(g) unconstitutional to the extent it denies ITC to bona fide purchasing dealers. The Court held that the provision fails to distinguish between genuine purchasers and those involved in fraud or collusion, thereby violating Article 14 of the Constitution. It was held that a purchasing dealer who has taken all reasonable steps, such as verifying registration and obtaining valid tax invoices, cannot be denied ITC due to default of the selling dealer. However, ITC can be denied where fraud, collusion, or lack of genuineness is established. Cases Referred by Court:• K.T. Moopil Nair v. State of Kerala • State of Kerala v. Haji and Haji • Shri Ram Krishna Dalmia v. Justice S.R. Tendolkar • Budhan Choudhry v. State of Bihar • Gheru Lal Bal Chand v. State of Haryana • Shanti Kiran India Pvt. Ltd. v. Commissioner, Trade and Tax Department • Rajbala v. State of Haryana • Binoy Viswam v. Union of India • Shayara Bano v. Union of India • Mahalaxmi Cotton Ginning Pressing & Oil Industries v. State of Maharashtra • Jayam & Co. v. Assistant Commissioner | ||||
| On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi & Ors. 16-10-2017 Challenge to constitutional validity of denial of Input Tax Credit to purchasing dealers due to default of selling dealers under DVAT (Section involved: Section 9(2)(g) of the Delhi Value Added Tax Act, 2004)Facts :The petitioners, registered dealers under the DVAT Act, claimed Input Tax Credit on purchases supported by valid tax invoices from registered selling dealers. The tax authorities denied ITC on the ground that the selling dealers had not deposited the tax with the Government or had not properly disclosed the transactions. The denial was based on Section 9(2)(g) of the DVAT Act. Petitioners contended that they had complied with all statutory requirements and could not control the conduct of selling dealers. Court Decision:The High Court held Section 9(2)(g) unconstitutional to the extent it denies ITC to bona fide purchasing dealers. The Court held that the provision fails to distinguish between genuine purchasers and those involved in fraud or collusion, thereby violating Article 14 of the Constitution. It was held that a purchasing dealer who has taken all reasonable steps, such as verifying registration and obtaining valid tax invoices, cannot be denied ITC due to default of the selling dealer. However, ITC can be denied where fraud, collusion, or lack of genuineness is established. Cases Referred by Court:• K.T. Moopil Nair v. State of Kerala • State of Kerala v. Haji and Haji • Shri Ram Krishna Dalmia v. Justice S.R. Tendolkar • Budhan Choudhry v. State of Bihar • Gheru Lal Bal Chand v. State of Haryana • Shanti Kiran India Pvt. Ltd. v. Commissioner, Trade and Tax Department • Rajbala v. State of Haryana • Binoy Viswam v. Union of India • Shayara Bano v. Union of India • Mahalaxmi Cotton Ginning Pressing & Oil Industries v. State of Maharashtra • Jayam & Co. v. Assistant Commissioner | ||||
| 146 | Ansal Housing and Construction Ltd. v. State of U.P. & Ors. | 19-09-2014 | Refund of pre-deposit along with interest under the Indian Stamp Act, 1899 (Sections 33, 40, 45, 47-A, 56 – Indian Stamp Act, 1899) | View Download |
Facts :Petitioner deposited ₹34,67,438 as pre-deposit for filing appeal against stamp duty demand.The original demand order was set aside and matter remanded; ultimately no demand survived.Despite this, refund was delayed for several years and only principal amount was returned without interest.Petitioner filed writ seeking interest on the delayed refund amount.Court Decision:Retention of petitioner’s money after setting aside demand was unauthorised.Even in absence of statutory provision, interest is payable based on principles of restitution.State cannot retain money without compensating the party for deprivation of its use.Non-payment of interest while charging interest from assessee is discriminatory.Directions:Petitioner entitled to simple interest @ 8% per annum.Interest payable from date of deposit (15.12.2005) till date of refund (29.05.2014).Respondents directed to pay interest within stipulated time.General mandamus issued to State to pay interest on refunds in similar cases.Cases Referred by Court:Union of India v. Tata Chemicals Ltd.Hello Minerals Water (P) Ltd. v. Union of IndiaUnion of India v. Oriental EnterprisesSecretary, Irrigation Dept. v. G.C. RoySham Lal Narula v. CITSouth Eastern Coalfields Ltd. v. State of M.P.Sandvik Asia Ltd. v. CITGhaziabad Development Authority v. Balbir SinghONGC Ltd. v. Commissioner of CustomsHari Chand v. State of U.P. | ||||
| Ansal Housing and Construction Ltd. v. State of U.P. & Ors. 19-09-2014 Refund of pre-deposit along with interest under the Indian Stamp Act, 1899 (Sections 33, 40, 45, 47-A, 56 – Indian Stamp Act, 1899)Facts :Petitioner deposited ₹34,67,438 as pre-deposit for filing appeal against stamp duty demand.The original demand order was set aside and matter remanded; ultimately no demand survived.Despite this, refund was delayed for several years and only principal amount was returned without interest.Petitioner filed writ seeking interest on the delayed refund amount.Court Decision:Retention of petitioner’s money after setting aside demand was unauthorised.Even in absence of statutory provision, interest is payable based on principles of restitution.State cannot retain money without compensating the party for deprivation of its use.Non-payment of interest while charging interest from assessee is discriminatory.Directions:Petitioner entitled to simple interest @ 8% per annum.Interest payable from date of deposit (15.12.2005) till date of refund (29.05.2014).Respondents directed to pay interest within stipulated time.General mandamus issued to State to pay interest on refunds in similar cases.Cases Referred by Court:Union of India v. Tata Chemicals Ltd.Hello Minerals Water (P) Ltd. v. Union of IndiaUnion of India v. Oriental EnterprisesSecretary, Irrigation Dept. v. G.C. RoySham Lal Narula v. CITSouth Eastern Coalfields Ltd. v. State of M.P.Sandvik Asia Ltd. v. CITGhaziabad Development Authority v. Balbir SinghONGC Ltd. v. Commissioner of CustomsHari Chand v. State of U.P. | ||||
| 147 | Commissioner of Central Excise vs. Saakeen Alloys Pvt. Ltd. | 06-03-2014 | Whether clandestine/illicit removal of excisable goods can be established and duty demand sustained solely on the basis of retracted confessional statements, in the absence of corroborating positive evidence such as excess raw material purchase, shortage | View Download |
BACKGROUNDThe assessee, a manufacturer of CTD/Round bars, was subjected to simultaneous searches at its premises and at the premises of its associate concern. Three note-books and one pen-drive were recovered allegedly containing details of illicit clearances. A further search at the premises of a transporter yielded parallel invoices purportedly issued by the assessee. Statements of several persons connected with the manufacturing activities were recorded, but all were retracted almost immediately after recording. On the basis of this material, a Show Cause Notice was issued demanding Central Excise duty of Rs.1,93,26,138/-, comprising approximately Rs.1.85 Crores based on data in the note-books and pen-drive, and approximately Rs.8.25 lakhs based on parallel invoices recovered from the transporter's premises. The Order-in-Original confirmed the entire demand. The Commissioner (Appeals) also confirmed the demand and imposed matching penalties. The assessee approached CESTAT, which set aside the demand of Rs.1.85 Crores while confirming the demand of Rs.8.25 lakhs along with penalties under Section 11(c) of the Central Excise Act. The Revenue challenged the CESTAT order before the High Court. FACTSThe CESTAT, while dealing with the demand of Rs.1.85 Crores, found that the entire basis for the same rested only on retracted confessional statements and data in the note-books/pen-drive recovered from the associate concern's premises, without any independent corroborating evidence in the form of excess raw material purchases, shortage of finished goods, excess electricity consumption or cash seizure. Further, the opportunity of cross-examination of the person in-charge of records of the associate concern was not made available by the Department. In contrast, for the demand of Rs.8.25 lakhs, the parallel invoices recovered from the transporter's premises were confirmed not only by the proprietor of the transporter but also by independent evidence, and hence this demand was sustained by the CESTAT. The Revenue's appeals before the High Court challenged the CESTAT's decision to set aside the larger demand. COURT OBSERVATIONS (Verbatim)"The Tribunal rightly concluded that in the case of clandestine removal of excisable goods, there needs to be positive evidences for establishing the evasion, though contended by the Revenue.""In absence of any material reflecting the purchase of excessive raw material, shortage of finished goods, excess consumption of power like electricity, seizure of cash, etc., the Tribunal noted and held that there was nothing to bank upon except the bare confessional statements of the proprietor and of some of the persons connected with the manufacturing activities and such statements were retracted within no time of their recording.""not permitting the cross examination of a person in-charge of records of M/s. Sunrise Enterprises and absence of other cogent and positive evidences, would not permit it to sustain the demand of Rs. 1.85 Crores raised in the Demand notice and confirmed by both the authorities below.""Confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements.""Appeals since do not raise any question of law, much less substantial question of law, deserves no consideration." FINAL VERDICTAll Tax Appeals filed by Revenue were dismissed. The High Court upheld the CESTAT order setting aside the demand of Rs.1.85 Crores (based on note-books and pen-drive) for want of positive corroborating evidence. The confirmed demand of Rs.8.25 lakhs (backed by independent evidence from the transporter's premises) was upheld.👍 IN FAVOUR OF ASSESSEE | ||||
| Commissioner of Central Excise vs. Saakeen Alloys Pvt. Ltd. 06-03-2014 Whether clandestine/illicit removal of excisable goods can be established and duty demand sustained solely on the basis of retracted confessional statements, in the absence of corroborating positive evidence such as excess raw material purchase, shortageBACKGROUNDThe assessee, a manufacturer of CTD/Round bars, was subjected to simultaneous searches at its premises and at the premises of its associate concern. Three note-books and one pen-drive were recovered allegedly containing details of illicit clearances. A further search at the premises of a transporter yielded parallel invoices purportedly issued by the assessee. Statements of several persons connected with the manufacturing activities were recorded, but all were retracted almost immediately after recording. On the basis of this material, a Show Cause Notice was issued demanding Central Excise duty of Rs.1,93,26,138/-, comprising approximately Rs.1.85 Crores based on data in the note-books and pen-drive, and approximately Rs.8.25 lakhs based on parallel invoices recovered from the transporter's premises. The Order-in-Original confirmed the entire demand. The Commissioner (Appeals) also confirmed the demand and imposed matching penalties. The assessee approached CESTAT, which set aside the demand of Rs.1.85 Crores while confirming the demand of Rs.8.25 lakhs along with penalties under Section 11(c) of the Central Excise Act. The Revenue challenged the CESTAT order before the High Court. FACTSThe CESTAT, while dealing with the demand of Rs.1.85 Crores, found that the entire basis for the same rested only on retracted confessional statements and data in the note-books/pen-drive recovered from the associate concern's premises, without any independent corroborating evidence in the form of excess raw material purchases, shortage of finished goods, excess electricity consumption or cash seizure. Further, the opportunity of cross-examination of the person in-charge of records of the associate concern was not made available by the Department. In contrast, for the demand of Rs.8.25 lakhs, the parallel invoices recovered from the transporter's premises were confirmed not only by the proprietor of the transporter but also by independent evidence, and hence this demand was sustained by the CESTAT. The Revenue's appeals before the High Court challenged the CESTAT's decision to set aside the larger demand. COURT OBSERVATIONS (Verbatim)"The Tribunal rightly concluded that in the case of clandestine removal of excisable goods, there needs to be positive evidences for establishing the evasion, though contended by the Revenue.""In absence of any material reflecting the purchase of excessive raw material, shortage of finished goods, excess consumption of power like electricity, seizure of cash, etc., the Tribunal noted and held that there was nothing to bank upon except the bare confessional statements of the proprietor and of some of the persons connected with the manufacturing activities and such statements were retracted within no time of their recording.""not permitting the cross examination of a person in-charge of records of M/s. Sunrise Enterprises and absence of other cogent and positive evidences, would not permit it to sustain the demand of Rs. 1.85 Crores raised in the Demand notice and confirmed by both the authorities below.""Confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements.""Appeals since do not raise any question of law, much less substantial question of law, deserves no consideration." FINAL VERDICTAll Tax Appeals filed by Revenue were dismissed. The High Court upheld the CESTAT order setting aside the demand of Rs.1.85 Crores (based on note-books and pen-drive) for want of positive corroborating evidence. The confirmed demand of Rs.8.25 lakhs (backed by independent evidence from the transporter's premises) was upheld.👍 IN FAVOUR OF ASSESSEE | ||||
| 148 | Shanti Kiran India Pvt. Ltd. v. Commissioner, Trade & Tax Department | 04-01-2013 | Denial of Input Tax Credit to purchasing dealer due to non-payment of tax by selling dealer under DVAT (Section involved: Section 9(1) and Section 9(2) of the Delhi Value Added Tax Act, 2004) | View Download |
Facts :The appellant, a registered dealer, purchased goods from registered selling dealers against valid tax invoices and claimed input tax credit. The VAT authorities disallowed ITC on the ground that selling dealers had deposited disproportionately low tax and their registrations were later cancelled. The assessment orders, objection orders, and Tribunal upheld denial of ITC and imposed tax, interest, and penalty. The appellant challenged these findings before the High Court. Court Decision:The High Court held that denial of ITC was not justified in the absence of any statutory provision (during the relevant period) requiring the purchasing dealer to ensure that the selling dealer deposited tax. It held that Section 9(2) did not contain such a condition prior to insertion of clause (g), and the Tribunal’s interpretation was erroneous. The Court allowed the appeals and directed grant of input tax credit to the appellant after verification. Cases Referred by Court:• State of Maharashtra v. Suresh Trading Company • Althaf Shoes Pvt. Ltd. v. Assistant Commissioner (CT) • V.M. Salgaocar & Bros. Pvt. Ltd. v. Commissioner of Income Tax • Shyam Sunder v. Ram Kumar • Bihar State Council of Ayurvedic and Unani Medicine v. State of Bihar • R.S. Joshi v. Ajit Mills • Shree Sajjan Mills Ltd. v. Commissioner of Income Tax • George Oakes (Private) Ltd. v. State of Madras • Commissioner of Central Excise v. Hari Chand Shri Gopal • State of Jharkhand v. Govind Singh • J.P. Bansal v. State of Rajasthan | ||||
| Shanti Kiran India Pvt. Ltd. v. Commissioner, Trade & Tax Department 04-01-2013 Denial of Input Tax Credit to purchasing dealer due to non-payment of tax by selling dealer under DVAT (Section involved: Section 9(1) and Section 9(2) of the Delhi Value Added Tax Act, 2004)Facts :The appellant, a registered dealer, purchased goods from registered selling dealers against valid tax invoices and claimed input tax credit. The VAT authorities disallowed ITC on the ground that selling dealers had deposited disproportionately low tax and their registrations were later cancelled. The assessment orders, objection orders, and Tribunal upheld denial of ITC and imposed tax, interest, and penalty. The appellant challenged these findings before the High Court. Court Decision:The High Court held that denial of ITC was not justified in the absence of any statutory provision (during the relevant period) requiring the purchasing dealer to ensure that the selling dealer deposited tax. It held that Section 9(2) did not contain such a condition prior to insertion of clause (g), and the Tribunal’s interpretation was erroneous. The Court allowed the appeals and directed grant of input tax credit to the appellant after verification. Cases Referred by Court:• State of Maharashtra v. Suresh Trading Company • Althaf Shoes Pvt. Ltd. v. Assistant Commissioner (CT) • V.M. Salgaocar & Bros. Pvt. Ltd. v. Commissioner of Income Tax • Shyam Sunder v. Ram Kumar • Bihar State Council of Ayurvedic and Unani Medicine v. State of Bihar • R.S. Joshi v. Ajit Mills • Shree Sajjan Mills Ltd. v. Commissioner of Income Tax • George Oakes (Private) Ltd. v. State of Madras • Commissioner of Central Excise v. Hari Chand Shri Gopal • State of Jharkhand v. Govind Singh • J.P. Bansal v. State of Rajasthan | ||||
