Gujarat High Court
Thankys Exports Pvt. Ltd vs Union Of India on 8 April, 2022
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 15275 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA Sd/-
and
HONOURABLE MS. JUSTICE NISHA M. THAKORE Sd/-
================================================================
1 Whether Reporters of Local Papers may be allowed YES
to see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy NO
of the judgment ?
4 Whether this case involves a substantial question NO
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
================================================================
THANKYS EXPORTS PVT. LTD.
Versus
UNION OF INDIA
================================================================
Appearance:
MR UCHIT N SHETH, ADVOCATE for the Petitioner(s) No. 1,2
MR UTKARSH R.SHARMA, AGP for the Respondent(s) No. 2,3
NOTICE SERVED for the Respondent(s) No. 1
================================================================
CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 08/04/2022
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1. By this writ-application under Article 226 of the Constitution of India, the writ-applicant has prayed for the following reliefs:
Page 1 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 "
A. This Hon'ble Court may be pleased to strike down and declare impugned clause 3(g) of Notification No. 41/2012- ST dated 29.6.2012 along with Explanation thereto as being ultra-vires Section 83 of the Finance Act read with Section 11B of the Excise Act;
B. This Hon'ble Court may be pleased to declare that the period of limitation for the purpose of filing refund application under the Finance Act in case of export of goods through air or sea commences from the date on which the vessel or aircraft leaves the country;
C. This Hon'ble Court may be pleased to issue writ of certiorari or writ in the nature of certiorari or any other appropriate writ or order quashing and setting aside impugned order dated 10.2.2021 passed by the Government of India (annexed at Annexure B) as well as the orders passed by the lower authorities as confirmed by the said order;
D. This Hon'ble Court may be pleased to issue writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the Respondents to grant refund of Rs. 42,47,429 under the Finance Act along with appropriate interest on such refund;
E. Pending notice, admission and final hearing of this petition, this Hon'ble Court may be pleased to direct the Respondents to grant refund of Rs. 42,47,429 under the Page 2 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022 C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 Finance Act along with appropriate interest on such refund;
F. Ex parte ad interim relief in terms of prayer E may kindly be granted;
G. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray."
2. The facts giving rise to the present writ-application may be summarised as under :
(1) The writ-applicant no.1 is a private limited company having its place of business at Porbandar. The writ-
applicant no.2 is a Director of the private limited company.
(2) The writ-applicants are engaged in the business of trading of Bauxite. The writ-applicants, inter alia, are also engaged in the business of export of goods outside the country.
(3) The writ-applicants exported 54,200 metric tonnes of Metallurgical Bauxite of Indian origin through the vessel M.V. Diamond Star. The shipping bill was filed at the office of the Superintendent of Customs House, Okha, on 12.2.2013.
(4) The Customs House issued a "Let Export" order under the Customs Act, 1961, on 15.2.2013. Such order permitting Page 3 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022 C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 to export was issued under Section 51 of the Customs Act, 1961 (for short, the 'Customs Act').
(5) While the "Let Export" order was issued on 15.2.2013, it is not in dispute that the goods were loaded onto the vessel on 19.2.2013 and the vessel actually started its journey for sailing outside the country on 20.2.2013. The bill of lading was issued to the writ-applicants by the shipping company on 20.2.2013.
(6) The writ-applicants believed that since the goods actually left the country on 20.2.2013, the time limit available for claiming the refund was upto 19.2.2014. It appears that the writ-applicants sent their accountant one Mr.Amubhai Joshi for filing the refund claim to the office of the respondent no.3 on 10.2.2014. The application for refund was presented before the Superintendent, viz. Mr.V.M.Morabia. The refund was claimed in respect of the service tax paid under the Finance Act, 1994 (for short, the 'Finance Act') on the input services which were attributable to the exports made by the writ-applicants.
(7) It is the case of the writ-applicants that the authority informed the accountant that few more documents would be required and, therefore, the application for refund was returned to such person and he was directed to come with the documents as required. No inward stamp was affixed on the refund application on such date, even though, as per the say of the writ-applicants, the accountant requested for the same.
Page 4 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 (8) It is the case of the writ-applicants that the representative thereafter visited the office of the respondent no.3 on 14.2.2014. However, no one was available in the office on the said date and, ultimately, the inward stamp on the refund application along with the necessary documents could be affixed only on 18.2.2014.
(9) The writ-applicants continued to believe that the refund application had been filed within the stipulated time limit as per the statute, which was one year from the expiry of the date the goods left the country.
(10) The respondent no.3, however, proceeded to issue show cause notice to the writ-applicants proposing to reject the refund on the ground that the refund application had been filed after the expiry of one year from the date of let export order and was time barred as per the impugned clause 3(g) of the Notification No. 41/2021-ST dated 29.6.2012.
(11) The writ-applicants filed their reply to the show cause notice submitting that the refund application was filed within the statutory time limit. The writ-applicants further submitted affidavit of Mr.Amubhai Joshi, i.e. the accountant of the writ-applicants, narrating the factual sequence of the events.
(12) During the course of the adjudication of the show cause notice, the Superintendent of Central Excise, Division Junagadh, submitted an affidavit, wherein it was accepted Page 5 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022 C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 that the accountant of the writ-applicants did visit him on 10.2.2014 along with the refund claim documents and that he had asked him to come with further documents which were found to be required. The officer, however, denied in the affidavit that he did not agree to give acknowledgment on the refund application.
(13) The respondent no.3, by order dated 27.8.2014, rejected the refund claim of the writ-applicants as being time- barred. Insofar as the limitation period was concerned, it was held that once the Explanation to the Notification provided for time limit of one year from the date of 'let export' order, then Section 11B could not be taken into consideration. Insofar as the facts of the writ-applicants are concerned, while it was recorded that it is an admitted position that the writ-applicants did approach the Superintendent with the refund claim on 10.2.2014, since acknowledgment on the claim was obtained only on 18.2.2014, it was held that that the refund claim was time- barred.
(14) The writ-applicants filed statutory appeal for challenging the order in original. The appellate authority, however, dismissed the appeal and affirmed the order rejecting the refund.
(15) The writ-applicants filed revision application before the Government of India under Section 83 of the Finance Act read with Section 35EE of the Central Excise Act, 1944 (for short, the 'Excise Act') for challenging the appellate order.
Page 6 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 The Government of India has, however, by the impugned order dated 10.2.2021, upheld the orders rejecting the refund claim of the writ-applicants by relying upon the impugned clause 3(g) of the Notification.
3. In such circumstances referred to above, the writ- applicants are here before this Court with the present writ- application.
SUBMISSIONS ON BEHALF OF THE WRIT-APPLICANTS :
4. Mr.Uchit Sheth, the learned counsel appearing on behalf of the writ-applicants has made the following submissions :
(a) The impugned clause 3(b) of the Notification No.41/2012-ST dated 29.6.2012 along with the Explanation thereto is ultra-vires Section 83 of the Finance Act read with Section 11B of the Excise Act.
Section 83 of the Finance Act borrows multiple provisions of the Excise Act specifically including Section 11B of the Excise Act. The time limit for claiming refund is stipulated under Section 11B of the Excise Act. Sub-section (1) of Section 11B of the Excise Act provides that refund application is to be filed within one year from the 'relevant date'. The phrase 'relevant date' is defined in clause (B) of the Explanation to Section 11B of the Excise Act. Insofar as the exports are concerned, it is provided that if the goods are exported by sea or air, then the relevant date will be the date on which the ship or aircraft leaves India. Despite such Page 7 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022 C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 clear statutory provision, the impugned clause 3(b) of the Notification No.41/2012-ST dated 29.6.2012 provides that the refund application is to be filed within one year from the let export order passed under Section 51 of the Customs Act. Such clause, which is a part of the delegated legislation, is ultra vires Section 83 of the Finance Act read with Section 11B of the Excise Act.
(b) It is a settled position of law that if the delegated legislation is in conflict with any statutory provision, then the statutory provision would prevail. Reliance is placed on the following judgments of the Supreme Court:
(i) ITW Signode India Ltd. vs. Collector of Central Excise, (2004) 3 SCC 48;
(ii) Laghu Udyog Bharti vs. Union of India, 115 STC 616 (SC);
(iii) Deputy Commercial Tax Officer vs. Sha Sukraj Peerajee, AIR 1968 SC 67.
(c) In the alternative, it was submitted that it is not disputed by the respondents that the representative of the writ-applicants did visit the office of the respondent no.3 with the refund claim on 10.2.2014. In fact, this is admitted by the Superintendent in the affidavit filed during the course of the adjudication. However, since the refund claim was allegedly short of the documents, Page 8 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022 C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 the representative was sent back and, ultimately, the refund application was acknowledged on 18.2.2014. The acknowledgment of the refund application will relate back to 10.2.2014, which is the date on which the writ- applicants first approached the respondents along with the refund claim and, therefore also, the refund application can be said to be within the statutory period of limitation.
SUBMISSIONS ON BEHALF OF THE RESPONDENTS :
5. Mr.Utkarsh Sharma, the learned standing counsel appearing on behalf of the respondents has made the following submissions :
(a) Since the refund application is filed under the Notification No.41/2012-ST dated 29.6.2012, the period of limitation as stipulated under such notification in clause 3(b) thereof will apply and, hence, the refund application has been rightly rejected as being time-
barred.
(b) While the representative of the writ-applicants may have approached the authority with the refund claim on 10.2.2014, the fact is that the application was short of the requisite documents and the same was actually acknowledged only on 18.2.2014 and, therefore, such application is barred by limitation.
Page 9 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 ANALYSIS :
6. The entitlement of the writ-applicants to refund on merits is not in dispute. It is also not in dispute that the goods were exported by the writ-applicants, the refund has been rejected and such rejection has been confirmed in appeal and revision on the ground that the claim was delayed by a period of 4 days.
7. The only question that arises for the consideration by this Court is, whether the refund application filed by the writ-
applicants could have been rejected as being barred by limitation?
8. The refund claimed was of service tax paid under the Finance Act. Section 83 of the Finance Act reads as under :
"Section 83. Application of certain provisions of Act 1 of 1944.-- The provisions of the following sections of the Central Excise Act, 1944, as in force from time to time, shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise:-
Sub-section (2A) of section 5A, sub-section(2) of section 9A, 9AA, 9B, 9C, 9D, 9E, 11B, 11BB, 11C, 12, 12A, 12B, 12C, 12D, 12E, 14, 15, 15A, 15B, 31, 32, 32A to 32P, 33A, 35EE, 34A, 35F, 35FF, to 35O (both inclusive), 35Q, 35R, 36, 36A, 36B, 37A, 37B, 37C, 37D, 38A and 40."Page 10 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022
C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022
9. Thus, Section 11B of the Excise Act has been expressly borrowed for the purpose of the Finance Act. The relevant extract of Section 11B of the Excise Act is as under:
"11B (1).- Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person :
**** **** **** Explanation. - For the purposes of this section, -
(A) "refund" includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India;Page 11 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022
C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 (B) 'relevant date' means, -
(a) in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods, -
(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India,"
10. It can be seen from the aforesaid that the refund application is to be filed within one year from the 'relevant date' and the expression 'relevant date' in the context of export by sea or air is defined as the date on which the ship or the aircraft in which the goods are loaded leaves India. It is to be further noted that as per clause (A) of the Explanation, refund includes rebate.
11. In the case of the writ-applicants, while the 'let export' order under the Customs Act was passed on 15.2.2013, the goods were loaded onto the ship on 19.2.2013 and the ship left India on 20.2.2013. These dates are not disputed even by the respondents. If that be so, then the limitation for filing the refund application in respect of such export transaction will be one year from 20.2.2013 and, therefore, the refund application acknowledged on 18.2.2014 will be within the period of limitation.
Page 12 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022
12. The only reason given by the respondents for rejection of the refund is the impugned clause 3(g) of the Notification No.41/2012-ST dated 29.6.2012, which reads thus:
"3(g) the claim for rebate of service tax paid on the specified services used for export of goods shall be filed within one year from the date of export of the said goods.
Explanation.- For the purposes of this clause the date of export shall be the date on which the proper officer of Customs makes an order permitting clearance and loading of the said goods for exportation under section 51 of the Customs Act, 1962 (52 of 1962);"
13. Explanation to clause 3(g) of the Notification states that the date of export shall be the date on which the proper officer of the Customs makes an order permitting the clearance and loading of the goods for exportation under Section 51 of the Customs Act. Hence, as per the Notification, the refund claim is to be filed within one year from passing of the order permitting the clearance and loading of the goods for exportation under Section 51 of the Customs Act. Such prescription of limitation is in direct conflict with the statutory provision, i.e. Section 11B of the Excise Act, which provides for limitation to commence from the date when the ship leaves India.
14. It is a well-established legal position that in case of conflict between the statutory provision and the delegated legislation, the former would prevail. A reference may be made in this regard to Page 13 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022 C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 the judgement of the Supreme Court in the case of ITW Signode India Ltd. vs. Collector of Central Excise, (2004) 3 SCC 48 wherein it is observed as under:
"56. It is true that Rule 173-B has not been amended. But even if the same has not been done, it would not make a material difference as now a comprehensive provision has been made in the primary Act, and, thus, a rule framed thereunder even in case of conflict must give way to the substantive statute. It is a well- settled principle of law that in case of a conflict between a substantive Act and delegated legislation, the former shall prevail inasmuch as delegated legislation must be read in the context of the primary/legislative Act and not vice versa."
15. Similar observations were made by the Supreme Court in the case of Deputy Commercial Tax Officer vs. Sha Sukraj Peerajee, AIR 1968 SC 67, which read thus :
"5. The first question to be considered in this appeal is whether Rule 21-A is intra vires of the power of the State Government under Sections 19(1) and (2) of the Act. Section 3(1) of the Act is the charging section. It imposes a liability to pay Sales Tax on every dealer for each year, and the tax is to be calculated on his total turnover for that year. Section 2(b) of the Act defines a 'dealer' as "a person who carries on the business of buying, selling ... goods". The word 'turnover' is defined in Section 2(i) of the Act to mean "the Page 14 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022 C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 aggregate amount for which goods are either bought or sold by a dealer, whether for cash or for deferred payment or other valuable consideration...". It is manifest that a person who purchases a business as a 'dealer' can be assessed to Sales Tax only in respect of his turnover and under the scheme of the charging provision of the Act the purchaser of the business has nothing to do with the sales effected by the seller of the business. The turnover in respect of such sales remains therefore the turnover of the transferor and not of the transferee. By the amending Act of 1959 (Act 1 of 1959) an express provision was inserted by which the transferee of the business was made liable for the arrears of Sales Tax due from the transferor. But there is no such provision in the Act for the period with which we are concerned in the present case. The question is whether the State Government has authority under its rule-making power under Section 19 of the Act to create a legal fiction by which the transferee of the business is constituted as the dealer liable to pay the tax in respect of the turnover of the transferor. On behalf of the appellants Mr Ram Reddy suggested that the State Government has power under Section 19(1) and 19(2)(c) of the Act to frame the impugned rule. We are unable to accept this argument as correct. Section 19(1) of the Act empowers the State Government to make rules to carry out the purposes of the Act, but the section cannot be utilised to enlarge the scope of Section 10 regarding recovery and payment of tax from some other person other than a Page 15 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022 C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 'dealer' under the Act..."
16. Applying such principle to the present case, the period of limitation cannot be stipulated by the delegated legislation, which is contrary to the period stipulated by the statutory provision. The statutory provision would prevail over the delegated legislation. Hence, the impugned clause 3(g) of Notification No.41/2012-ST dated 29.6.2012 and the Explanation thereto which provides that the period of limitation for claiming refund will commence from the date of passing of the order permitting the clearance by the Customs officer is ultra vires Section 11B of the Excise Act which clearly provides that the period of limitation will commence from the date when the ship leaves India.
17. In the affidavit-in-reply filed by the respondents, it is sought to be averred that the impugned clause 3(g) and the Explanation thereto only clarify the provision contained in clause (B) of Explanation to Section 11B of the Excise Act. However, clause (B) of Explanation to Section 11B of the Excise Act is by itself very clear. The period of limitation is to commence from the date when the ship leaves India. The impugned clause of the Notification is thus not in the nature of clarification but in fact is in direct conflict with the statutory provision and, therefore, the same is ultra vires.
18. Since the acknowledgment of the refund application was given on 18.2.2014, i.e. within one year from the date when the ship left India, i.e. on 20.2.2013, such refund application being Page 16 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022 C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022 within the period of limitation as stipulated under Section 11B of the Excise Act could not have been rejected as being barred by limitation.
19. Even the alternative contention of the writ-applicants merits acceptance. The 'Let Export' order was passed under the Customs Act on 15.2.2013 and, therefore, as per the say of the respondents, the time limit for filing the refund application would expire on 14.2.2014. It is not disputed by the respondents that the representative of the writ-applicants went to the concerned officer along with the refund claim on 10.2.2014. However, since the refund claim was short of the documents, the representative was sent back and thereafter, ultimately, the refund application was inwarded on 18.2.2014. An affidavit filed by the Superintendent at the time of the adjudication to this effect is a part of the record. When it is not disputed that the writ-applicants had approached the authority with the refund application even within the period of limitation as stipulated under the Notification, the same ought not to have been rejected as being time-barred merely on the basis that acknowledgment of the refund application was subsequently given.
20. In any case, once it is held that the impugned clause 3(g) and the Explanation thereto of the Notification No.41/2012-ST dated 29.6.2012 is ultra vires Section 83 of the Finance Act read with Section 11B of the Excise Act, the impugned orders rejecting the refund on the ground of limitation cannot be sustained.
Page 17 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022C/SCA/15275/2021 JUDGMENT DATED: 08/04/2022
21. In the result, the impugned clause 3(g) of the Notification No.41/2012-ST dated 29.6.2012 along with the Explanation is declared as being ultra vires Section 83 of the Finance Act read with Section 11B of the Excise Act. It is further declared that the period of limitation for the purpose of filing the refund application under the Finance Act in case of the export of goods through air or sea commences from the date on which the vessel or aircraft leaves the country. The impugned order dated 10.2.2021 passed by the Government of India (annexed at Annexure B) as well as the orders passed by the subordinate authorities as confirmed by the said order are hereby quashed and set aside. The respondents are directed to grant refund of Rs.42,47,429=00 under the Finance Act along with a simple interest at the rate of 6% per annum within a period of four weeks from the date of receipt of the order of this Court. The interest may be calculated from the date of the refund application till the date of actual payment of the refund.
22. With the above, this writ-application is disposed of.
(J. B. PARDIWALA, J.) (NISHA M. THAKORE, J.) /MOINUDDIN Page 18 of 18 Downloaded on : Sat Dec 24 14:31:08 IST 2022