Customs, Excise and Service Tax Appellate Tribunal

Dynamic Elecpower Pvt Ltd vs. Commissioner of Central Goods and Service Tax

MANU/CE/0091/2024

21.03.2024

Excise

Assessee is deemed to have passed on the full incidence of service tax refund to the service receiver unless the contrary is proved

The Appellant has assailed the order-in-appeal, whereby the rejection of the refund claim on the ground of unjust enrichment in terms of Section 11 B of the Central Excise Act, 1944 was upheld. The Appellant were engaged in providing services under the category of 'Erection, Commissioning or Installation Services', 'Business Auxiliary Services' and 'Management, Maintenance & Repair Services' to PHED and others during the period 2004-2005 to 2008-2009. The issue that arises is whether the refund claim of the Appellant has been rightly credited to the Consumer Welfare Fund on the ground of unjust enrichment.

Section 12B of the Act, 1944, provides that unless the contrary is proved by the assessee, it shall be deemed that the assessee has passed on the full incidence of service tax refund to the service receiver. In terms of the provisions, the applicant was required to submit the necessary documents and evidences in support of his claim that the principle of unjust enrichment would not apply as he has not passed on the incidence of duty to the service receiver. Both, the Adjudicating Authority and the Appellate Authority had specifically noted that, either the Appellant had not produced the documents or had only submitted the photocopies of the Ledger Account and invoices.

The refund claim filed by the Appellant includes the amount of Rs.7,24,463 excess paid under the category of 'Management, Maintenance & Repair Services'. As the refund claim is found to be hit by unjust enrichment clause for want of requisite documents, an opportunity may be granted to the Appellant to produce the documents and other evidences proving that the incidence of duty has not been passed on either directly or indirectly to the service receiver. The matter is remanded to the Adjudicating Authority, granting liberty to the Appellant to substantiate that the claim is not hit by unjust enrichment in the light of the documents produced. The appeal, is allowed by way of remand.

Tags : Refund Rejection Legality

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Income Tax Appellate Tribunal

Jatin Enterprises, Mumbai vs. ACIT

MANU/IU/0173/2024

21.03.2024

Direct Taxation

Where addition is made purely on estimate basis, no penalty is leviable

Present appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi ['the CIT(A)'], for the Assessment Year 2009-10, confirming levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961[IT Act].

It is an undisputed fact that, the Assessing Officer has made addition in the case of assessee on account of alleged bogus purchases. The Assessing Officer made addition of 100% of unproved purchases, the CIT(A) restricted the addition to 12.5% of such purchases. The addition made by the Assessing Officer and subsequently restricted by the CIT(A) to 12.5% is merely on estimations.

The Hon'ble Rajasthan High Court in the case of CIT vs. Krishi Tyre Retreading and Rubber Industries has held that, where addition is made purely on estimate basis, no penalty under Section 271(l)(c) of the Act is leviable. Similar view has been expressed by the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Sangrur Vanaspati Mills Ltd. The Hon'ble High Court approving the order of Tribunal held that, when the addition has been made on the basis of estimate and not on any concrete evidence of concealment, penalty under Section 271(l)(c) of the Act is not leviable. The High Court in the case of CIT vs. Subhash Trading Co. Ltd. has taken a similar view in respect of penalty levied under Section 271(l){c) of the Act on estimated additions. There are catena of decisions by different High Courts and various Benches of the Tribunal wherein penalty levied under Section 271(l)(c) of the Act on estimated additions has been held to be unsustainable.

Thus, in the facts of the instant case, penalty levied under Section 271(1)(c) of the Act unsustainable. The Assessing Officer is directed to delete the penalty.

In assessment order, the Assessing Officer had initiated penalty proceedings for furnishing inaccurate particulars of income only. Since, both limbs i.e. "concealed particulars of income and furnished inaccurate particulars of income" are recorded in the notice, the notice is defective. The penalty levied under Section 271(1)(c) is liable to be deleted on the ground of defective notice as well. Impugned order is set aside. Appeal of assessee is allowed.

Tags : Assessment Penalty Levy

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Supreme Court

Kozyflex Mattresses Private Limited Vs. SBI General Insurance Company Limited and Ors. (Neutral Citation: 2024 INSC 234)

MANU/SC/0226/2024

20.03.2024

Consumer

A Company can file complaint under Consumer Protection Act

Present appeal under Section 67 of the Consumer Protection Act, 2019 has been preferred by the Appellant for assailing final order rendered by National Consumer Disputes Redressal Commission ('National Commission'), rejecting the Consumer Case filed by Kozyflex Mattresses Private Limited('insured-Appellant') praying for a direction to the SBI General Insurance Company('insurer-Respondent') to indemnify it for the loss caused by fire in the insured premises being the manufacturing unit of the insured-Appellant company.

The definition of 'person' as provided in the Act of 1986 is inclusive and not exhaustive. Consumer Protection Act being a beneficial legislation, a liberal interpretation has to be given to the statute. The very fact that in the Act of 2019, a body corporate has been brought within the definition of 'person', by itself indicates that the legislature realized the incongruity in the unamended provision and has rectified the anomaly by including the word 'company' in the definition of 'person'. Hence, the first preliminary objection raised by learned Counsel for the Respondent regarding 'company' not being covered by the definition of 'person' under Act of 1986 has no legs to stand and deserves to be rejected.

The second preliminary objection raised by the Respondent was regarding claim being filed for a commercial purpose. The insurance policy in the present case was taken under the title 'Standard Fire and Special Perils Policy (Material Damage)' and was covering the risk of these elements only and nothing else. The claim was also filed for indemnifying the insured-Appellant for the damage caused in a fire accident at the insured premises. Hence, this Court has no hesitation in holding that, both the preliminary objections raised by the learned Counsel for the Respondent are unsustainable.

The insured-Appellant has taken a pertinent plea in the instant civil appeal that the copies of the surveyor's report and the investigators' report were not provided timely and thus, the insured-Appellant did not get proper opportunity to rebut the same. This pertinent plea taken by the insured-Appellant in the memo of appeal has not been specifically refuted and only a formal denial was offered in the counter-affidavit filed by the insurer-Respondent.

Ends of justice require that the insured-Appellant should have been provided proper opportunity to file its rebuttal/objections to the affidavit/reports submitted by the insurer-Respondent before the National Commission and consequently, the complaint should be reconsidered on merits after providing such opportunity to the Appellant. The impugned order is set aside. The matter is remitted to the National Commission. Appeal disposed off.

Tags : Complaint Filing of Jurisdiction

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Supreme Court

NBCC (India) Limited Vs. Zillion Infraprojects Pvt. Ltd. (Neutral Citation: 2024 INSC 218)

MANU/SC/0216/2024

19.03.2024

Arbitration

Arbitration Clause from another contract can be incorporated into the contract only by a specific reference

The present appeals challenge the interim order and final judgment passed by the High Court, whereby the High Court allowed the application under Section 11(6) of the Arbitration and Conciliation Act 1996 (Arbitration Act) and appointed the Sole Arbitrator to adjudicate the dispute between the parties to the present lis, arising from the Letter of Intent dated 4th December 2006.

When the parties enter into a contract, making a general reference to another contract, such general reference would not have the effect of incorporating the arbitration Clause from the referred document into the contract between the parties. It has been held that, the arbitration Clause from another contract can be incorporated into the contract (where such reference is made), only by a specific reference to arbitration clause.

A perusal of Sub-section (5) of Section 7 of the Arbitration Act itself would reveal that it provides for a conscious acceptance of the arbitration Clause from another document, by the parties, as a part of their contract, before such arbitration Clause could be read as a part of the contract between the parties. A reference to the document in the contract should be such that shows the intention to incorporate the arbitration Clause contained in the document into the contract.

The intention between the parties is very clear. Clause 7.0 of the L.O.I. which also forms part of the agreement specifically provides that the redressal of the dispute between the NBCC and the Respondent shall only be through civil courts having jurisdiction of Delhi alone. It is pertinent to note that Clause 7.0 of the L.O.I. specifically uses the word "only" before the words "be through civil courts having jurisdiction of Delhi alone".

When there is a reference in the second contract to the terms and conditions of the first contract, the arbitration Clause would not ipso facto be applicable to the second contract unless there is a specific mention/reference thereto.

The present case is not a case of 'incorporation' but a case of 'reference'. As such, a general reference would not have the effect of incorporating the arbitration clause. In any case, Clause 7.0 of the L.O.I., which is also a part of the agreement, makes it amply clear that the redressal of the dispute between the NBCC and the Respondent has to be only through civil courts having jurisdiction of Delhi alone.High Court has erred in allowing the application of the Respondent. Impugned orders are quashed and set aside. Appeals allowed.

Tags : Appointment Arbitrator Legality

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High Court of Delhi

S.P. Mediratta and Ors. Vs. Union of India and Ors. (Neutral Citation: 2024:DHC:2181-DB)

MANU/DE/2035/2024

19.03.2024

Civil

Courts ought not to encroach upon the domain of the legislature or the executive and issue directions which impose financial burden on the State

The present appeal has been filed by the Appellants impugning an order passed by the learned Single Judge, whereby the Petition filed by the Petitioners/Appellants praying that they should be granted benefits of the Central Government Health Scheme, 1954 ["CGH Scheme"], was dismissed by the learned Single Judge.

The Court cannot interfere with policy decisions taken by the Government merely because it feels that a different decision would have been more fair or wiser. The assessment and evaluation of policies fall outside the purview of judicial review, unless those policies contravene statutory or constitutional provisions or are deemed arbitrary. It is trite that, where the government possesses the competence to formulate policies, it can only be challenged when such policies are arbitrary. Therefore, the legitimacy of a public policy can only be contested if it transgresses specific legal frameworks.

Thus, the decision to not extend the benefits of the CGH Scheme to the Appellants is a policy decision keeping in mind various factors including economic ones. Due to resource constraints including financial and logistical, the Respondents have been unable to extend benefits under the CGH Scheme to the Appellants. From an examination of the record, this does not appear to be arbitrary. Thus warrants no interference by this Court.

It is settled law that, Courts ought not to encroach upon the domain of the legislature or the executive and issue directions which impose financial burden on the State. There is no infirmity with the view taken by the learned Single Judge in the Impugned Order. Appeal dismissed.

Tags : Scheme Benefit Entitlement

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High Court of Bombay

Satish and Ors. Vs. The State of Maharashtra (Neutral Citation: 2024:BHC-AUG:5953)

MANU/MH/1811/2024

18.03.2024

Criminal

Sole admission under Section 313 of CrPC in absence other corroborative piece of evidence, cannot be made basis of conviction

Judgment and order passed by Additional Sessions Judge, thereby convicting husband and in-laws (Appellants) for offence punishable under Section 498A read with section 34 and recording guilt of husband accused no.1 alone for offence punishable under section 494 of Indian Penal Code, 1860 (IPC), is assailed by filing instant appeal. Appellants submits that, prosecution failed to establish the charges beyond reasonable doubt. Secondly, there is no independent evidence and only interested witnesses are examined. That, testimonies of witnesses are full of inconsistencies, variances, material omissions and contradictions.

On taking overall survey of prosecution witnesses on the point of 498A of IPC, apparently witnesses are not consistent about since exactly when ill treatment began. Evidence on the point of cruelty and ill treatment is weak or fragile. It has also come in the evidence that some of the accused are residing separately. Therefore, it was expected of prosecution to give specific instances, but evidence to that extent is missing.

There is no distinct evidence regarding performance of second marriage. For such charge, independent evidence could have been readily available, if there had been second marriage being performed. Law is fairly settled that, sole admission under Section 313 of Code of Criminal Procedure, 1973 (CrPC) in absence other corroborative piece of evidence, cannot be made basis of conviction.

There is little, weak or no evidence on the point of ill treatment. Learned trial court has already acquitted accused for 306 of IPC. There is no iota of evidence whatsoever in support of charge of 494 of IPC. Therefore, as none of the charges are cogently proved, case of prosecution cannot stand.

Learned trial court has not properly appreciated the evidence as well as law. Therefore, interference is called for. The conviction awarded to appellantsfor the offences punishable under Sections 498A read with 34 and section 494 of Indian Penal Code is set aside. Appeal allowed.

Tags : Conviction Evidence Credibility

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Customs, Excise and Service Tax Appellate Tribunal

Commissioner of Central Excise vs Viraj Industries

MANU/CJ/0036/2024

18.03.2024

Excise

Clandestine removal is a charge and has to be proved with all other concerned activities

In facts of present case, the Appellants are engaged in the manufacture of copper ingots and are availing the exemption under Notification No. 56/2002-CE dated 14th November, 2002 as amended. After conducting an audit of the records of the Appellant, Revenue was of the opinion that, the Appellants have shown production in excess of the capacity or actual production with a view to avail refund of the duty paid. A show cause notice was issued to the Appellant seeking the demand of wrongfully availed self credit. The show cause notice was adjudicated by the impugned order vide which the proposal in the show cause notice was dropped. Committee of Chief Commissioners having review the order have directed the commissioner to file an appeal against the same. Hence, present appeal by Revenue.

The case of the Revenue is that, the Respondents have shown excess manufacture in order to avail excess refund to the tune of Rs. 60 lakhs. All that the Revenue could show as evidence is the consumption of LDO per heat on the basis of test heat conducted by the officers during the course of the audit. Revenue has missed out the fact that consumption of fuel depends on the atmospheric temperature, quality of raw material, condition of the furnace, initial temperature of furnace, per day frequency of the heats and the skill of the labourers.

The consumption of raw material i.e. copper scrap was not analyzed. Even the stock of fuel, raw material and final product was not taken at the time of audit so as to ascertain where the records maintained by the respondents were correct or otherwise. It is very surprising that the clearance of, allegedly excess produced, goods to different parties was not established; not even statement of a single buyer has been recorded; no verification at the transporter's to falsify the claim of the appellants that they have supplied the ingots manufactured by them to others.

Without conducting any such investigation, department cannot establish claim of excess manufacture just by extrapolating the results of study of a single heat or a few heats. Present Tribunal appreciate the department's contention that clandestine removal or removal of excess production cannot be proved with mathematical precision. At the same time, allegations cannot be sustained merely on the basis of a mathematical formula.

The charge levelled against the Respondents is a serious charge. A charge of this nature cannot be summarily proved without conducting any commensurate investigation. It is now a settled principle that, clandestine removal is a charge and has to be proved with all other concerned activities. The arguments of the Revenue are not acceptable and the ratio of the case laws relied upon by the Revenue are not applicable. Appeal dismissed.

Tags : SCN Proposal Dropping of

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