THE WEEK THAT WENT BY

NOTIFICATIONS

GOODS AND SERVICE TAX

Notification No. 01/2022 – Compensation Cess dated 24.06.2022

Summary

The period for levy and collection of cess under sub-section (1) of section 8 of the Goods and Services Tax (Compensation to States) Act, 2017 shall be upto the 31st March, 2026.

Novello Comments

The taxpayers of India Inc shall continue paying Compensation Cess on all applicable goods/services accordingly.

CUSTOMS, FTP AND SEZ

Notification No. 13/2015-20 dated 21.06.2022

Summary

This notification has revised the conditions that are applicable for Import of Melon Seeds (HSN – 12077090) which is currently imported under a restricted import policy.

The above-mentioned revisions to the policy conditions are as follows:

• Import Policy of Water-Melon seeds is Free till 30.09.2022
• The imports of water-melon seeds without restrictions upto 30.09.2022 may be allowed for clearance at Indian Customs Port provided that the Bill of Entry is filed and such goods are handed over to the Customs Authority for examination by 31.10.2022
• The import shall be permitted only from Kandla and Mundra Ports.

Novello Comments

It is essential that importers of water-melon seeds expedite the import from a procedural perspective by promptly filing Bill of Entries by 31^st October 2022 for the imports made upto 30^th September 2022, to ensure hassle-free imports and reduce the lead time of their inventories.

On SEZ

The MEEPZ has clarified that work from home can continue as a model till the end of this calendar year in a big relief to the industries that is struggling to get the employees back to office.

SUPREME COURT AND HIGH COURT JUDGEMENTS

GOODS AND SERVICE TAX

High Court

1. SD Associates Vs State of Madhya Pradesh

(Madhya Pradesh High Court)

Issue:

• Whether an Appeal under Section 107 of the CGST Act of 2017 can be dismissed by the Appellate Authority on grounds of the appeal being time-barred by period of limitation, without sufficient evidence that the Adjudicating Authority’s Order was properly communicated to the tax-payer.

Facts:

• A writ petition has been filed by the tax-payer against the order passed by the appellate authority i.e. Joint Commissioner (JC) of Sales Tax, Indore, which had dismissed the appeal made by the tax-payer on account of the appeal being time-barred under the provisions of Section 107 of the CGST Act of 2017.
• The appeal was filed after 2 years and 7 months from the date of passing of the adjudicating order.
• The tax-payer had appealed against the earlier order passed by the Adjudicating Authority i.e. Deputy Commissioner (DC) of Sales Tax, which had cancelled their GST Registration in the impugned order.
• As per the provisions of Section 107(1) read with Section 107(4) of the CGST Act, a person aggrieved by an order passed by an adjudicating authority may appeal to the appellate authority within 3 months from the date of communication of the order to such person. Further, the appellate authority condone the delay in filing the appeal by 1 month, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the stipulated deadline.

Tax-payer’s Contentions:

• No Notice was issued by the Adjudicating Authority regarding passing of the adjudicating order.
• The knowledge of the fact that an order was passed was acquired from another source and hence an appeal couldn’t be filed within the period of limitation.
• The appeal has been merely dismissed only on grounds that it has been time-barred.

HC Observation:

• There is no material evidence on record to establish as to when the order was actually passed by the adjudicating authority and communicated to the tax-payer.

HC Judgement:

• The matter regarding lack of proper communication of the adjudicating order by way of a notice, has not been considered by the appellate authority and hence the impugned appellate order cannot be sustained.
• The matter has been remanded back to the Appellate Authority.

1. Sharoff Steel Traders Vs State Tax Officer

(Madras High Court)

Issue:

• Whether goods detained as per provisions of the Section 129 of the CGST Act pertaining to which a detention order has be passed, can be released on a provisional basis and subject to statutory conditions, without issue of final order levying penalty

Facts:

• The petitioners had conveyed goods in vehicles, which were subsequently intersected and upon verification of the documents and the Revenue had found subsequently various discrepancies in the shipment of the goods and the documents accompanying the consignments.
• Detention orders were passed on 24.05.2022 in both cases, proposing penalty for the violations. Penalty has been computed in the case of both the petitioners at figures of Rs.9,15,924/- and Rs. 9,49,678/- respectively.
• The petitioners had admittedly, filed objections to the proposals contained in the show cause notice on 31.05.2022, which the assessing authority rejects in the impugned notices dated 01.06.2022.
• The assessment order quantifying penalty and conditional release of goods are being expedited.
• The impugned notices have been issued on the basis that the penalty proposed is liable to be confirmed and call upon the petitioners to remit the amounts of penalty, within three (3) days from date of receipt of the notices under Section 130 of the Central Goods and Service Tax Act, 2017 (in short ‘Act’) dealing with confiscation of goods or conveyances and levy of penalty.

HC Observation:

The statutory provision entails detention and seizure, if the impugned goods are found to have been conveyed in violation of the provisions of the CGST Act or Rules. Subsequent to detention or seizure, the seized goods ‘shall’ be released

• subject to fulfilment of conditions set out under clauses (a) to (c) of Section 129(1) of the Act.
• Clauses (a) & (b) contain the quantification of the penalty. Clause (a) contains voluntary payment by the assessee and clause (b) contains the cases where the assessee does not come forward to remit the penalty. In either case, the remittance of the penalty is to be by way of security equivalent to the amount payable under clauses (a) or (b), furnished in the prescribed manner

HC Judgement:

• Petitioners must furnish bank guarantees for the amounts quantified in terms of the impugned notices dated 01.06.2022, in proper form, post which, the goods shall be released forthwith by the Officer. The challenges to the notices fail and the writ petition is disposed of.

1. Imax Infrastructure VS P M The Deputy Commissioner and others

(Calcutta High Court)

Issue:

• Whether order passed by the Deputy Commissioner of Revenue, Directorate of Revenue Intelligence and Enforcement u/s 74(9) of the Act, 2017 lacks jurisdiction with respect to initiating a proceeding and whether he can act as an officer under the CGST Act.

Facts:

• Petitioner has challenged the impugned order dated 3rd March, 2022 passed by the Deputy Commissioner of Revenue, Directorate of Revenue Intelligence and Enforcement, under Section 74(9) of the State GST Act, on the grounds that the same is without jurisdiction by contending that the initiation of proceeding in question under the State GST Act is without jurisdiction and that he does not qualify to be an officer under the SGST Act

HC Observation:

• The petitioner has relied on a notification dated 12th Feb 2019, whereas the Revenue has pointed out admissibility of the writ petition on the grounds of availability of alternative remedy by way of an appellate forum.
• The HC has observed that contention of the Revenue regarding availability of alternate remedy is not tenable for the reason that it is a well settled principle that alternative remedy is not always a bar and particularly when the question of jurisdiction is involved in the writ petition , the writ court is very much empowered to entertain the writ petition, if an order or action of an officer is without jurisdiction or there is a violation of principle of natural justice or constitutional validity of a provision of law is involved and prima facie the petitioner has been able to make out a case that the issue involved in this case is the jurisdiction of the officer concerned who has exercised the power of a GST Officer.

 The interpretation of several provisions of law and notifications are involved and this writ petition cannot be thrown out at the motion stage on the ground of

• availability of alternative remedy and this writ petition has to be heard and decided on merit.

HC Judgement:

• The Revenue to file affidavit-in-opposition within four weeks, petitioner to file reply thereto, if any, within two weeks thereafter.
• Prima facie the petitioner has been able to make out a case for an interim order. Considering this aspect there will be conditional stay of the impugned adjudication order dated 3rd March, 2022 and subject to deposit of 10% of the demand in question, by the petitioner, within ten days from date ‘and if such payment is made by the petitioner within the time stipulated herein, no coercive action shall be taken against the petitioner for recovery of the demand in question.

1. Manokamna Vs Union of India

(Patna High Court)

Issue:

• Whether personal savings bank account can be de-attached upon deposit of 20% of disputed tax amount, during the recovery of amounts due under the CGST Act.

Facts:

• The petitioner submits that the coercive action has been taken by freezing the accounts from the petitioner’s firm including the saving bank account of the proprietor as a recovery measure, of the amount of tax interest and penalty in terms of the impugned order.
• The Revenue contends petitioner has been challenging the vires of Section 16 (4) of the GST Act and his challenge to the impugned order and the demand raised are totally dependent upon his success in challenging the vires of Section 16(4) of the GST Act. It is his submission in such circumstance stay of the impugned order would amount to virtually staying the operation of the provisions of Section 16(4) of the GST Act. It is submitted that the High Court while dealing with the vires of the statute would not normally stay the effect of legislation.
• The Revenue has further placed before this Court a copy of the order dated 20.04.2022 passed by the Hon’ble Division Bench of this Court in C.W.J.C. No. 5403 of 2022 to submit that in similar circumstance when the petitioner in the said case challenged the constitutional validity of the provision and prayed for stay of the demand, the Hon’ble Division Bench took a view that the petitioner’s account may be de-attached if the petitioner positively deposits the entire liability amount. The Revenue, thus, submits that at this stage the petitioner may also be treated similarly.

Tax-payer’s Contentions:

The petitioner, in the present application , challenges the vires of Section 16(4) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘GST Act’) has on different grounds including that it is a violation  of the fundamental

rights guaranteed to the petitioner under Article 14 and 19 (1)(g) and the constitutional right granted under Article 300A of the Constitution of India.

• The main submission for purpose of interim relief of de-freezing of savings bank account is that, currently the GST council is not constituted in the State of Bihar. Hence, the petitioner is deprived of availing the remedy available under Section 112 of the GST Act which provides for appeals to the appellate tribunal.

HC Observation:

• Having regard to the submissions and on perusal of the records, the Court finds that in the prayer portion of the writ application in, the petitioner has prayed for quashing of the order dated 16.12.2021 and summary of the demand issue in form GST APL-04 dated 21.12.2021, the petitioner has also challenged the order passed under Section 73 of the GST Act and the summary demand issued in Form GST DRC-07 dated 03.03.2020 but from the tone and tenor of the prayer itself it is clear that such reliefs are by way of consequential reliefs and unless the petitioner succeeds in challenging the vires of Section 16(4), perhaps he may not get the relief as prayed in the writ application.
• Staying the impugned order in the light of Sub Section (8) of Section 112 of the GST Act would in sum and substance amount to staying the effect of Section 16(4) of the GST Act which the Court would restrain from doing.
• This Court would take a similar view as has been taken by the Hon’ble Division Bench in C.W.J.C. No. 5703 of 2022. If the petitioner deposits the liability amount in full subject to result of the writ application the saving bank account of the proprietor shall be de-attached.

HC Judgement:

• This Court would take a similar view as has been taken by the Hon’ble Division Bench in C.W.J.C. No. 5703 of 2022. If the petitioner deposits the liability amount in full subject to result of the writ application, the saving bank account of the proprietor shall be de-attached.

1. Sanjay Trading Company Vs State of Madhya Pradesh

(Madhya Pradesh High Court)

Issue:

• Whether Revenue should revalue/re-verify stock of inventory if search is not carried out in accordance of the provisions of Section 67 of the CGST Act, 2017 read with Code of Criminal Procedure 1973, which requires presence of 2 witnesses during the search.

Facts:

• The facts reveal that the premises of the petitioner was searched at the instance of the revenue in exercise of powers conferred under Section 67 of the M.P. GST Act, 2017 and thereafter the petitioner since had certain grievances as regards the manner of search, made an application before the Revenue and prayed that stock of coal lying in the premises be measured and checked again as earlier on 25/01/2022, the team which carried out the search did not seize any material and left the premises.
• The Revenue had submitted that the entire procedure was carried out in accordance with law and the search was carried out in the presence of independent witness. Even the nephew of petitioner was also present at the time of search and signed the Panchnama, therefore the petitioner cannot allege that the search was carried out in violation of statutory provisions.
• Learned counsel for the respondent also submits that there are two independent witnesses who signed panchnama and submits that the search was carried out strictly in accordance with law in the presence of representative of the petitioner and none of the representatives who were available at the time of search, raised any kind of objection as regards manner in which the search was carried out.
• The Revenue submits that it is not the case of Revenue that any material has been seized. On the contrary, during course of search the liability was admitted by the petitioner itself and therefore, the action to challenge the process at this stage, is grossly misconceived, thus has prayed that the petition deserve to be dismissed.

Tax-payer’s Contentions:

• The petitioner contends that the authority should have reasons to believe that search is required while issuing authorization for inspection/search under Section 67 the M.P. GST Act, 2017 and in the present case there was no satisfaction arrived at by the Commissioner State Tax, while authorizing the Assistant Commissioner of Sales Tax to carry out the search.
• Thus, the petitioner submits that the authority should have recorded the reasons which required the search in the premises of the present case. Thus assail is to the order of authorization dated 21/01/2022 as well as the order dated 27/01/2022 by which the application of petitioner has been turned down by respondent No.5 to re-measure the stock of coal.

HC Judgement:

• The core of the matter lies in a document in the present case I.e. the Panchnama which has been produced on record by the petitioner itself. The same reveals that on 25/01/2022 a search team reached the premises of the petitioner and at the premises there were two persons including nephew of proprietor of the petitioner’s firm were available and signatures of all these persons were obtained while carrying out the Panchanama and then the stocks were checked there only.
• It was found that there were discrepancies in the stock which attracted the levy of tax, hence, the petitioner out of his own free will deposited the amount of tax as well as penalty of Rs.38,46,195/-.
• It is evident that on the date of search itself, the amount of tax and a penalty was deposited by the petitioner as discrepancies were found in the stock and thus there was no question of any kind of seizure.
• There is no infirmity as far as the order/letter impugned are concerned and accordingly the present petition being devoid of merits stands dismissed.

1. TPI Advisory Services India Pvt. Ltd. Vs CCT [CESTAT]

(Karnataka High Court) – 2022-TIOL-864-HC-KAR-ST

Issue:

• The issue that was examined was whether Tribunal is justified in dismissing the appeal of the Appellant thereby upholding rejection of refund claim of the service tax paid by the Appellant despite the fact that they had also paid Goods and Service Tax (GST) on the very same transaction.

Facts:

• The company had raised four Invoices for payment of Service Tax agsinst Clients in whose names the Invoices were raised had expressed reservation to make the payment in view of the transition from service tax to GST, therefore, appellant issued credit notes to those customers and raised fresh Invoices under the provisions of GST and paid the said amount – Refund was, thereafter, filed of the service tax paid earlier and which was rejected by the lower authorities and Tribunal.

HC Judgement:

The High court held that in view of the undisputed facts that the appellant has paid the service tax and also the GST and the Commissioner of Central Excise has held that appellant was not liable to pay GST, rejection of applications for refund is untenable. The High Court ordered the refund of the service tax amount with interest to be payable within three months.

1. Ushman Khan Vs the State of MP commercial taxes

(Madhya Pradesh High Court) – 2022-TIOL-869-HC-MP-GST

Issue:

• The issue that was examined was whether the GST registration of the company that was cancelled was just and in order.

Facts:

• The fact of the case was that post the cancellation of the GST registration, after a delay of 865 days, the petitioner preferred an appeal before the Joint Commissioner who dismissed the appeal. The  Petitioner company  submitted that they are entitled for the relaxation as provided by the Apex Court in the matter of Cognisance for extension of Limitation order.

HC Judgement:

• It was held by the High Court that Held: Section 29 of the Act of 2017 is confined to an application for revocation against cancellation of registration whereas Section 107 of the Act of 2017 deals with the provisions of Appeal including limitation to file appeal . that the limitation under Section 107 of the Act of 2017 is three months which is evident from the perusal of the statutory provision contained in Section 107 of the Act of 2017.
• However, Section 29 of the Act of 2017 is entirely different and only deals with the application for revocation of cancellation of registration and that CBIC Circular dated 25.06.2020 deals only with section 29 of the Act, 2017 and not s.107 of the Act and is of no assistance to the case of the petitioner. It was further held that the directive of Apex Court were issued subsequently upon out break of Covid-19 pandemic in the year 2020 whereas in the present case, the registration was cancelled on 04/02/2019. Holding that the reasoning given by the lower Appellate Authority are just and proper, the petition filed by the company was dismissed.

CUSTOMS, FTP AND SEZ

HIGH COURT

1. Halliburton Offshore Services Inc Vs Union of India

(Bombay High Court)

Issue:

• Whether application to the Settlement Commission under Section 127-B of the Customs Act of 1962 can rejected on grounds that the applicant wasn’t the importer who filed the Bill of Entry.

Facts:

• Writ-Petition was filed to the Bombay High Court against order by Settlement Commission rejecting an application made by Halliburton Offshore Services Inc (hereinafter referred to as “petitioner” or “applicant”) for payment of Customs Duty.
• The Petitioner is a company incorporated in Cayman Islands and is operating in India since 1983 for providing logging and perforating services to Oil Companies.
• The Petitioner provided it’s services only to ONGC upto 1998. The petitioner made ONGC import logging tools for discharging their logging services without payment of duty at all (by way of subsequent re-export after discharging their service) or by paying duty under concessional rates under different notifications of the Customs Act and subsequently retaining the tools in India. The ownership of the tools always vested with the petitioner.
• Post 1998, the petitioner also provided it’s services to Hardy Exploration and Production Inc (hereinafter referred to as “Hardy”) and entered into a similar arrangement with respect to import of capital equipment required for performing their service.
• Post completion of contract with Hardy, the petitioner re-exported certain equipment imported under concessional rates earlier.

During investigations carried out by Customs Authorities, the petitioner realized that the tools re-exported were that of ONGC’s instead of Hardy’s. As a result, a Show-Cause notice (hereinafter referred to as “SCN” was issued to petitioner for

• payment of customs duty on import of capital equipment by Hardy. The Petitioner offered to pay Customs Duty and subsequently filed an application to the Settlement Commission to avail the benefit of reduced liability.
• The Settlement Commission rejected the application on the premise that only the person who filed the bill of entry could file the application under Section 127-B of the Customs Act without analysing the merits of the case.
• As per Proviso (a) to Section 127-B of the Customs Act, no application shall be made unless or the applicant has filed a Bill of Entry, Shipping bill, in respect of import or export of goods and a SCN has been issued to him by a proper officer.

Tax-payer’s Contentions:

• The petitioner contends that Section 127-B of the Customs Act of 1962 provides that any importer, exporter or any other person who has been issued a SCN, can file an application to the Settlement Commission.

HC Observations:

• On a Plain reading of Section 127-B of the Act, “any other person” appearing in the said Section would mean any other person to whom SCN has been issued charging him with duty and such any other person can file an application.
• Use of the words “filed bill of entry” would not mean that a bill of entry in the case has to be necessarily filed by him. Only requirement is that there must be a case properly relating to applicant with reference to a bill of entry filed and in this case, the case relating to petitioner has been pending before a Proper Officer.
• A SCN had been issued to petitioner and therefore, a proceeding under this Act for the levy, assessment and collection of customs duty was pending before an adjudicating authority when the application under Section 127B was made.

Term “any other person” appearing in Section 127-B of the Act has to be interpreted to mean in its literal sense and proviso to the said Section should be interpreted to mean that a bill of entry must be filed in a case, not necessarily by the person who approaches the settlement commission, provided such person is served with a SCN charging him with duty. Therefore, a person who may not be an

• Importer, can still file such an application u/s 127-B of the Act before the Settlement Commission if he is served with a SCN.
• Reference has been made by is made to the case law- Mahendra Petrochemicals Ltd. Vs. Union of India 2010 (257) E.L.T. 412 (Guj) in this regard.

HC Judgement:

• The order made by the Settlement Commission has been set aside and the Settlement Commission is directed to re-examine the application of the petitioner according to the merits of the case.

1. Commissioner of Customs Vs CMS Info Systems Ltd

(Madras High Court)

Issue:

• Whether refund claim should be granted on payment of Special Additional Duty (SAD) when application for refund is filed after the expiry of 1 year from the date of payment of SAD, in case of imports made in accordance with Notification No. 102/2007-Cus dated 14.09.2017, and also whether interest on belated refund of SAD is permissible.

Facts:

• A claim for refund of SAD duty was made by the importer (CMS Info Systems Ltd), in respect of two Bills of Entry dated 05.11.2013 and 29.10.2013, which was rejected, by the adjudicating authority, by way of an order-in-original (hereinafter referred to as “OIO”) dated 14.07.2016 on the premise that the said application was filed after the expiry of one year from the date of payment of duty.
• The impugned OIO was then set aside by the appellate authority, on the grounds that the right to refund originates from the date the goods are sold and therefore, limitation period shall start from the date of sale of the goods and not from the date on which SAD has been paid, which is in agreement with the decision of the Delhi High Court in M/s.Sony India Pvt. Ltd Vs Commissioner of Customs , New Delhi.
• The Appellate Authority further held that the respondent / assessee was also entitled for interest on SAD refund beyond a period of three months from the date of filing, in the light of the decision of the Delhi High Court in the case of Principal Commissioner of Customs Vs M/s. Riso India PLtd.  
• Accordingly, the Appellate Authority in its Order-In-Appeal (hereinafter referred to as “OIA”) directed the adjudicating authority to process the claim for refund in respect of the two bills and also pay the interest on the delayed refund in accordance with the provisions of section 27A of the Customs Act.

The revenue then went on appeal before the CESTAT. The CESTAT, on the perusal of the submissions made in the appeal, opined that the Revenue had challenged OIA only in respect of grant of interest on the belated refund and hence,

• restricted the relief to that extent alone. Ultimately, the Tribunal affirmed the order of the Appellate Authority and rejected the appeal filed by the Revenue as devoid of merit, by Final order dated 25.07.2017 and pronounced in the order that there is no other High Court Judgement that is contrary to the Riso India case (supra).

Tax-payer’s Contentions:

• Aggrieved by the above-metioned CESTAT Order, the Revenue has filed a Civil Miscellaneous Appeal at the Madras High Court on the following question of law –

Whether the Tribunal is correct in granting interest under Section 27A of the Customs Act, when the refund of special additional duty is consequent to exemption granted under section 25(1) of the Customs Act, 1962 and it is a special extension granted to the importers under the relevant Notifications and therefore, the refund is granted by virtue of Notification No. 102/2007-Customs dated 14.09.2007 and it is not a refund under section 27 of the Customs Act, 1962 and therefore, Section 27A of the Customs Act, 1962 is not applicable to the facts of the case?”

HC Observation:

• During the hearing, the learned senior panel counsel appearing for the Revenue contented that the question of law had already been decided by the Bombay HC in CMS Info Systems Ltd v. Union of India (different case), wherein, after considering the decision of the Delhi High Court in M/s. Sony India Ltd case, it was categorically held that “the period of limitation as mentioned in the notification dated 14th September, 2007 as amended by the notification dated 1st August 2008 will operate with all the force and therefore, refund will be governed by the limitation as prescribed in the notification”.

The Revenue further contended that though the decision of the Delhi High Court in M/s.Sony India Ltd’s case was challenged by the Revenue by filing a Special Leave Petition, the Hon’ble Supreme Court dismissed the said SLP on the ground of limitation but kept the substantial question of law open and hence, the ruling of the Delhi High Court did not attain finality. 

• It was also contended that aforesaid decision of the Bombay High Court in CMS Info Systems Ltd.’s case was put to challenge before the Hon’ble Supreme Court by filing Special Leave to Appeal by the importer, and after granting leave, the same is now, pending consideration.

HC Judgement:

• Having given due consideration to the present position of law, the Madras HC in this case, sets aside the OIAs by the Appellate Authorities and remands the matter to the Adjudicating Authority for fresh consideration of the application for refund in respect of two Bills of Entry dated 05.11.2013 and 29.10.2013, after providing opportunity of hearing to the parties, based on the pending outcome of the SLP filed against the order passed by the Bombay High Court in CMS Info System Limited (supra), to be ruled by the Hon’ble Supreme Court.

1. Global Oil And Company Vs Assistant Commissioner of Customs

Issue:

• Whether imported goods that are subject to detention and investigation proceedings can be re-exported without adjudication, fine and penalty.

Facts:

• The petitioners of this case have imported a consignment of betelnut from entities based in Indonesia and Myanmar.
• The said goods have been detained and, according to the submissions made by respondents, investigation is still being conduct with regard to the classification of the goods and assessment of duty.
• The aspect of whether the goods are prohibited goods is also under investigation.

Tax-payer’s Contentions:

• The petitioners have moved representations before the respondents on 01.04.2022, 24.03.2022, 24.03.2022 & 30.03.2022 (4 representations as there are 4 petitioners in this case).
• In these representations, the petitioners have contended that goods are perishable in nature and it would amount to a national waste if it’s not allowed to be re-exported.

HC Observation:

• The aforementioned representations have been received by Respondent 1on 01.04.2022 and are pending till date. The Revenue has pointed out that there have been several attempts made to pursue the investigation/adjudication proceedings but there has been no cooperation from the petitioners.
• The petitioner have submitted that they will cooperate with the respondents in respect of the pending proceedings and to notices, if any, received from the respondents.

HC Judgement:

• The submissions of the petitioners to direct the respondents to re-export the consignment is tenable, as the matter of re-export involves determination of various facts, which only the authorities would be competent to undertake. Hence the petition has been disposed.

Novello Comments:

• It is virtually impossible to re-export detained imported goods that are subject to on-going assessment proceedings.

1. Gold Processors Vs Commissioner of Customs

(Madras High Court)

Issue:

• Whether Writ Petition can be filed be filed alternate remedy (CESTAT Appeal) is clearly available.

Facts:

• The petitioner (Gold Processors) was issued a SCN the petitioner to show cause as to why the goods which were proposed to be exported under duty draw back scheme should not detained and why the petitioner should not be imposed with penalty.
• Subsequently an order in original (hereinafter referred to as “OIO) was passed Commissioner seeking to impose penalty and ordering confiscation of the entire cargo by rejecting the transaction value declared by the petitioner in the shipping bills by giving an option to pay redemption fine of Rs.30,00,000/- under Section 125 of the Customs Act.
• During the time interval between receipt of SCN and issue of the OIO, the petitioner had approached the Madras High Court for reclaiming the export goods. The Madras HC ruled that petitioner was allowed to take back the cargo to their premises, and the question of insisting the petitioner to furnish the bank guarantee did not arise when the petitioner wanted to take back the goods, due to cancellation of the export order. The HC quashed communication dated 08.07.2021 issued by the Assistant/Deputy
• Commissioner of Customs (SIIB) and the respondents were directed to permit the petitioner to take back the cargo to their premises, comprising of “Readymade Garments” presented for the export, without insisting on Bank Guarantee (hereinafter referred to as “BG”) .

Tax-payer’s Contentions:

The petitioner submitted that despite the positive ruling made by the Madras HC (mentioned above), the Revenue has not complied with the same and therefore

• the petitioner filed a contempt petition. An interim order came to be passed in the aforesaid contempt petition by directing the respondents to report compliance as of the date of interim order.
• The petitioner submitted that even as on date, the respondents had not complied with the directions.
• The petitioner submitted that the impugned order passed by the Commissioner be declared by the Commissioner be declared void and that the impugned order is liable to be quashed.

HC Observation:

• The Revenue in it’s submissions, submits that there is no merit in the present writ petition as far as the challenge to the impugned order is concerned, as the petitioner has an alternate remedy before CESTAT, Chennai. Therefore, the writ petition is liable to be dismissed.
• It was further submitted by the Revenue that the order in W.P.(MD).Nos. 10363 and 12925 of 2021 directing the respondents to release the cargo is in appeal before the Division Bench of the Madras High Court in Writ Appeal Nos. 409 and 410 of 2022.
• The Revenue further submitted that the writ petition is therefore liable to be dismissed with the direction to the petitioner to file a statutory appeal before the CESTAT, Chennai.

HC Judgement:

• The HC in it’s ruling has pronounced that there is no merits in the writ petition and as far as the challenge to the impugned order is concerned, the petitioner has an alternate remedy.
• The HC has dismissed the current writ petition and has granted an option to the petitioner to file an appeal before CESTAT within a period of 60 days from the date of the order dismissing the writ petition.

1. AS ENTERPRISES Vs CC

(Madras High Court) – 2022-TIOL-862-HC-MAD-CUS

Issue:

• The case pertains to a Revenue by way of an intra-court appeal assailing the order passed by the Single Judge of allowing the writ petition and directing to the appellant to release the imported goods within a weeks’ time in terms of Section 110(2) of Customs Act, 1962 on the premise that no action was initiated by way of issuance of show cause notice under section 124(a) ibid, within six months or extended period stipulated under section 110(2) ibid and hence, the person from whose possession the goods were seized, becomes entitled to their return.

 Tax payer’s Contentions :

• The Respondent submitted that the subject goods lying in the custody of the Department, which are perishable in nature, have now, become obsolete and, therefore, the same are of negligible value.

HC Judgement:

The High Court held in their order only to the extent of directing the completion of the adjudication proceedings and pass orders as expeditiously as possible.

1. M/s N C Alexander Vs the Commissioner of Customs Chennai II commissionerate (Madras High Court) – 2022 RIOL 870 HC Mad Cus

Issue:

• The Hon’ble court examined the issue of who a “proper officer” is.

 Facts:

• It was held that currently, the senior officers in the Directorate of Revenue Intelligence (DRI) consist of Officers of the Customs who are on deputation to the Board. The Officers of the Directorate of Revenue Intelligence (DRI) like their counterparts in the Director General of GST Intelligence (formerly Directorate General of Central Excise Intelligence), are Officers drawn from these Group A and Group B Services of the Department of Revenue, Ministry of Finance and that on fact, these officers from the Directorate of Revenue Intelligence (DRI) under the Department of Revenue, Ministry of Finance (MOF) do not cease to be Officers of Custom on their deputation to the said Directorate.

HC Observation:

• The Hon’ble HC was of the opinion that the Hon’ble Supreme Court appears to have not been informed about the important changes brought to Section 17 of the Customs Act, 1962 vide Section 38 of the Finance Act, 2011 with effect from 08.04.2011 when it passed its decision in Canon India Private Limited (2021-TIOL-123-SC-CUS-LB). Thus, over a period of time, the officers of Directorate of Revenue Intelligence (DRI) who are primarily drawn from the Customs Department were also given the task of issuing show cause notice and adjudicating the same in terms of Notifications issued as “Proper Officer”, as defined in Section 2(34) of the Customs Act, 1962.
• Now, under the amended Section 2(34), the word “under Section 5” has been inserted. Thus, what was implicit in the Customs Act, 1962 has now been made explicit in the amendment to the Customs Act, 1962 vide Finance Act, 2022.

HC Judgement:

The Hon’ble HC also held that sweeping changes have been brought to the Customs Act, 1962 by Finance Act, 2022 leaving no scope for any doubt as to status of the officers including the officers from the Directorate of Revenue Intelligence (DRI) as officers of Customs.

ERSTWHILE INDIRECT TAX LAWS

High Court

1. Commissioner of Central Excise Bolpur, Commissionerate Vs M\s Hindustan Cables Ltd

(Kolkata High Court) – 2022 TIOL 872 HC Kol Cx

Facts:

• The matter that was examined by the High Court was that during the period from November 1986 to March 1990.
• The assessee had removed a total quantity of 3587.207 M.T. of various copper scrap and a total quantity of 803.93 M.T. was short received after processing from their re-processors which was required to be returned to their factory – It was alleged that the assessee neither returned the waste and scrap to their factory nor the Central Excise duty at appropriate rate was paid and that such short received quantity has been shown as “process loss” in their Rule 57F(2) challans and registers for which there is no provision of in MODVAT rules and, therefore, the assessees are liable to pay duty on the short received quantity.
• The Tribunal had earlier allowed the Company appeal by holding that that as regards the duty directed to be paid on waste and scrap of PVC wire and cables, it was held that PVC waste and scrap was not excisable and hence, not liable for duty; that there was no allegation of suppression or mis-statement in the show-cause notice and therefore, the extended period of limitation under Section 11A of the Act could not have been invoked.

HC Judgement:

• The Hon’ble HC held that a reading of the show-cause notice clearly shows that the information was gathered from the registers and challans maintained by the assessee and the show-cause notice is not on account of any discovery of new facts by the department either by conducting an inspection or based on intelligence, therefore, the Tribunal was right in holding that the extended period of limitation could not have been invoked by the authority.
• The revenue was harping upon the fact that it is not plastics alone which are wastes and scraps but also copper – The test is as to whether the material which comes out as scrap, does possess the characteristics of a telecommunication cable or in other words, can it be used for the process of conducting electricity. That there is no intermediary product such as cable scrap as the essential character of the telecommunication cables is that it should be capable of conducting electricity.
• If it fails such a test then it qualifies to be termed as scrap, order passed by the Tribunal does not call for interference.