Bombay High Court
Rajasthan Crane Service vs Union Of India And 3 Ors on 15 June, 2018
Equivalent citations: AIRONLINE 2018 BOM 643
Author: Prakash D. Naik
Bench: S.C. Dharmadhikari, Prakash D. Naik
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.245 OF 2018
M/s.Rajasthan Crane Service ]
C-13, Nansi Munsi Quary ]
Near Ansa Industrial Estate, ]
D Building, Saki Naka, ]
Andheri (East), ]
Maharashtra - 400 072. ] .. Petitioner
Vs.
1) The Union of India, ]
Through the Secretary, ]
Ministry of Finance, ]
North Block, ]
New Delhi - 110 001. ]
2) The Settlement Commission ]
Customs, Excise & Service ]
Tax, Additional Bench, ]
6th Floor, Plot No.C-24, ]
Utpad Shulk Bhavan, ]
Bandra - Kurla Complex, ]
Bandra (East), ]
Mumbai - 400 012. ]
3) The Commissioner of CGST ]
& Central Excise, 9th Floor, ]
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Lotus Info Centre, ]
Near Parel Station, ]
Mumbai - 400 012. ]
4) The Additional Commissioner]
of CGST & Central Excise, ]
9th Floor, Lotus Info Centre, ]
Near Parel Station, ]
Parel, Mumbai - 400 012. ] .. Respondents
......
Mr.Prakash Shah a/w. M/s. Pooja Reddy i/b. Dubey Vinit Prabhat,
Advocate for the Petitioner.
Mr.Pradeep S. Jetly a/w. Mr.Jitendra B. Mishra, Advocate for the
Respondents.
......
CORAM : S.C. DHARMADHIKARI AND
PRAKASH D. NAIK, JJ.
RESERVED ON : MARCH 26 , 2018.
DELIVERED ON : JUNE 15, 2018.
JUDGMENT (Per PRAKASH D. NAIK, J. ) :
Rule. Rule made returnable forthwith.
2 By consent of the parties, the petition was heard for final disposal.
3 The petitioner has invoked writ jurisdiction of this Court under Article 226 of the Constitution of India and ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 3/16 wp-245-18.doc questioned the legality of the order dated 21 st August, 2017, passed by the Settlement Commission rejecting the application filed by the petitioner as not maintainable under Section 32E (1) of the Central Excise Act, 1944.
4 The petitioner is the proprietary concern engaged in the business of providing hydraulic cranes on hire basis for construction activities to various clients such as M/s.Larsen and Toubro, M/s.HCC, M/s.Michigan Engineering etc. 5 The petitioner were served with show-cause notice dated 19th October, 2013 demanding service tax amounting to Rs.1,88,23,722/-, for the period of 2008-09 to 2012-13, alongwith interest, proposing to appropriate 1,03,88,821/-, already paid by the petitioner and proposing imposition of penalty for alleged willful suppression of material facts.
6 According to the petitioner, the amount stood paid and ST-3 returns were filed even prior to the issuance of show- cause notice, and the fact that CENVAT Credit is available to the petitioner which was already verified by the department in the show-cause notice. However, the Adjudicating Authority was not ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 4/16 wp-245-18.doc inclined to accept the said submission and hence the petitioner sought to take recourse to the option of settlement before the Settlement Commission.
7 The petitioner filed an application before the Settlement Commission under the provisions of Section 32E of the Central Excise Act, 1944, on 21 st March, 2017. The calculation sheets as well as copies of challans evidencing payment of service tax with interest as well as invoices on which CENVAT Credit was availed, as well as copies of ST-3 Returns filed by the petitioner were enclosed along with the said application. According to the petitioner, there was an error in the amounts shown as paid in cash and through availment and utilization of CENVAT Credit in ST-3 Returns filed by the petitioner, which was brought to the notice of respondent no.3. The amounts were shown due to error. Thereafter, the petitioner received notice dated 27th March, 2017, wherein certain discrepancies were noted in the application preferred by the petitioner and one of the objection was that the petitioner had not filed ST-3 Return for the financial year 2008-09 and they have not paid late fee for the ST-3 Returns filed belatedly. The petitioner forwarded his reply to the notice dated 27 th March, 2017, and, tendered explanation.
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8 The application came up for hearing on 19 th May,
2017, before respondent no.2. It was pointed out that after the period of show-cause notice, there is no further demand made against the petitioner. It was prayed that penalty and prosecution may be waived. The petitioner was called upon to submit documents to the Jurisdictional Revenue Authorities for verification of availability of CENVAT Credit. The petitioner submitted all the required documents vide letter dated 19 th May, 2017. No response was received from the office of the Jurisdictional Revenue Authorities till the reminder dated 9 th June, 2017, was received requesting for certain documents. Thereafter, the petitioner received another letter dated 14 th June, 2017, enclosing the copy of the earlier letter. That was followed by letter dated 20th June, 2017, wherein the Interim Report dated 19th June, 2017, forwarded to respondent no.2 was enclosed by the Commissioner of Service Tax-VII, Mumbai. In the said Report, certain discrepancies were pointed out and also stated that the eligibility of CENVAT Credit could not be verified in the absence of CENVAT register. The petitioner forwarded reply dated 30 th June, 2017, to respondent no.2 in response to the Interim Report of Jurisdictional Revenue Authority and explained all the discrepancies mentioned in the Report, and, it was also pointed ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 6/16 wp-245-18.doc out that all the documents were provided except the CENVAT Register. According to petitioner, the Interim Report was sent to respondent no.2 without providing an opportunity to the petitioner to submit any documents. Whereas, all the discrepancies mentioned in the Report were adequately explained. It is contended that despite the submissions of the petitioner, respondent no.2 relied upon erroneous Report of the Jurisdictional Revenue Authorities and rejected the Settlement Application vide order dated 21st August, 2017, on the ground that the same is not maintainable.
9 Mr.Prakash Shah, learned counsel for the petitioner assailed the impugned order on several grounds and submitted that the order suffers from vice of non-application of mind. He submits that respondent no.2 has committed an error in holding that the petitioner has not submitted documents, as directed. It is submitted that letter dated 25th May, 2017, which was purportedly issued to the petitioner was not received by them and, thereafter, a reminder was sent to the petitioner on 9 th July, 2017. They were directed to submit the documents referred to in the letter dated 25th May, 2017. The petitioner forwarded their response on 12th June, 2017. The Jurisdictional Authority, issued ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 7/16 wp-245-18.doc letter dated 14th June, 2017, seeking all documents mentioned therein within two days. The letter was received on 16th June, 2017, which was a Friday and the next working day was 19th June, 2017, on which date the Interim Report was already sent to respondent no.2. It is submitted that whatever available was submitted vide letter dated 19th May, 2017. However, the petitioner were not provided with sufficient opportunity to submit relevant documents. As per the show-cause notice, all CENVAT details were available with the Department before the show- cause notice was issued. The documents were sufficient for the purpose of settlement of the case and in the absence of any specific directions to produce original of the documents, the finding in the impugned order that the petitioner had violated a specific direction of respondent no.2, is not correct. He further submitted that the show-cause notice mentions that CENVAT Credit available to the petitioner were verified during investigation and the petitioner had availed CENVAT Credit on that basis. The petitioner had complied with all the directions and submitted all relevant documents vide letter dated 19 th May, 2017. The Interim Report of the Jurisdictional Revenue Authority suffers from serious infirmities. The petitioner had forwarded reply dated 30th June, 2017, which speaks otherwise. The ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 8/16 wp-245-18.doc impugned order erroneously states that the petitioner has failed to comply with the order and had not provided with documents to the Jurisdictional Revenue Authority despite repeated reminders. Mr.Shah, relied upon the decision of this Court in the case of Poona Tools Pvt. Ltd. Vs. Union of India1.
10 Mr.Jetly, learned counsel for the respondents submitted that the submissions of the petitioner are devoid of merits. Respondent no.2 has taken into consideration all material aspects and rejected the Settlement Application. He submitted that sufficient opportunity was given to the petitioner to produce requisite documents, but, the petitioner have not responded. The grievance of the petitioner is afterthought. He submitted that the assessee was requested to file the CENVAT Register and relevant documents vide letter dated 26th May, 2017, and reminder was issued to them vide letter dated 9th June, 2017. However, the assessee did not respond to the said letters. The Service Tax liability of Rs.1,88,23,722/- said to be paid through CENVAT Credit could not be verified in the absence of CENVAT Register. However, the availment and utilization of the said CENVAT Credit has been made by the petitioner in ST-3 Returns filed by them 1 2015(323) E.L.T. 572 (Bom.) ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 9/16 wp-245-18.doc subsequently. Mr.Jetly, further submitted that the Bench has considered the application, relevant records and submissions advanced while rejecting the application for settlement. In the records and proceedings dated 19th May, 2017, the petitioner was specifically directed to submit all the documents of service tax payment on the basis of which CENVAT Credit is claimed and relevant records regarding availment and debit of the said CENVAT Credit to the Jurisdictional Revenue Authority for verification. It was obligatory on the part of the petitioner to submit records and excuses were made vide letter dated 30 th June, 2017. In this case, neither ST-3 Returns were filed at the relevant time nor the petitioner provided the CENVAT Credit Register evidencing the CENVAT Credit. They did not produce original invoice before the Revenue Authority despite directions from the Bench. It is, thus, submitted that no fault can be noted in the impugned order since the Settlement Commission has taken into consideration facts and circumstances of the case and did not find it to be a fit case for settlement under Section 32F(5) of the Central excise Act.
11 We have gone though the documents annexed to the petition. The petitioner has prayed that the order passed by the ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 10/16 wp-245-18.doc Settlement Commission be set aside and respondent no.2 be direccted to reconsider the Settlement Application after proper consideration of the facts of the matter and the submissions made by the petitioner. The impugned order is primarily passed on the basis of the fact that there was no proper explanation from the petitioner qua his claims. They did not produce requisite documents in support of settlement inspite of requisition being sent to them. The factual aspects indicate that show-cause notice dated 19th October, 2013, was issued to the petitioner demanding service tax for the period 2008-09 to 2012-13. The petitioner's contention is that the amounts stood paid as the said fact is fortified by the documents evidencing it. The petitioner filed an application before the Settlement Commission on 21st March, 2017, by invoking Section 32E of Central Excise Act, 1944. Thereafter, there is exchange of correspondence from both the sides. They were also served with notice dated 27 th March, 2017, which was replied by the petitioner stating that ST-3 Returns for the year 2008-09 were not available as they were filed by their Chartered Accountant, who is no more. The petitioner received letter dated 13th April, 2017, stating that the case under reference is allowed to be proceeded with vide order dated 7 th April, 2017 of the Bench. Apparently, respondent no.2 has relied ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 11/16 wp-245-18.doc upon the report of the Jurisdictional Revenue Authority. The petitioner had dealt with the Interim Report vide reply dated 30 th June, 2017, contending that the documents were provided except CENVAT Credit Register, which was maintained by the Chartered Accountant, who was travelling abroad at the relevant time. The grievance of the petitioner is that the Interim Report was sent to respondent no.2 without providing the petitioner an opportunity to submit any documents. Apart from that, the discrepancies in the Report were explained and the amount not paid due to an inadvertent error and the challan showing the same were annexed to the reply. It appears that the reply dated 30 th June, 2017, forwarded by the petitioner was not taken into consideration in proper perspective. The impugned order indicates that specific direction was given to the petitioner to produce original record for verification, but, he has only supplied copies. The record of proceedings of hearing dated 19 th May, 2017, does not indicate that there was any such direction to the petitioner. The petitioner contends that as per show-cause notice, all CENVAT details were available with the officers of the Department, even before the issuance of show-cause notice. There was no specific direction to produce specified documents. The petitioner's case is that show-cause notice specifically ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 12/16 wp-245-18.doc mentions that CENVAT Credits available to the petitioner were verified during the investigation and the petitioner has availed CENVAT Credit on the said basis, which fact is brought up in reply dated 30th June, 2017. The petitioner has submitted that even though all documents, as required, was provided barring CENVAT Credit Register, the request for which was only brought to the attention of the petitioner by letter dated 14 th June, 2017, received on 16th June, 2017. Respondent no.2 has recorded an adverse finding that no documents, as required were submitted by the petitioner and whereas, it is their case that all relevant documents were forwarded under covering letter dated 19 th May, 2017, wherein it was specifically mentioned that any further clarification required may be requested and would be duly provided in the interest of settlement of the matter. 12 The impugned order also mentions that no one from the Revenue had appeared during the hearing on 19th May, 2017, and no Final Report of the Jurisdictional Revenue Authority was forthcoming despite awaiting the same. However, in the reply, the petitioner have stated that certain letters addressed to them were omitted in the Report of the Jurisdictional Revenue Authority. The said report was accepted. The impugned order records that the ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 13/16 wp-245-18.doc petitioner has failed to comply with the order and not provided documents to the Jurisdictional Revenue Authority, despite reminders.
13 The impugned order mentions that the Revenue Report dated 19th June, 2017 was sent to the petitioner in their counter reply and vide letter dated 30th June, 2017, the petitioner's have made certain submissions. It is stated that the Revenue was asked to submit Final Verification Report and file their comments with reference to petitioner's letter dated 30 th June, 2017, but, no Report is filed by the Revenue and, thereby, the Revenue has failed to file their Final Report within the stipulated time. The Bench, has thus, proceeded on the basis of available record. Inspite of directions issued to the petitioner to submit all relevant documents of service tax on the basis of which CENVAT Credit is claimed and relevant record regarding availment and debit of said CENVAT Credit to the Jurisdictional Revenue Authority for verification within three days, the petitioner failed to submit records and it was obligatory on their part to submit original record which they failed to do so. The petitioner also did not produce original invoices before the Revenue Authority. On these grounds, the application was rejected. It is apparent that the application was basically rejected ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 14/16 wp-245-18.doc on the ground of non-production of documents. The contention of the petitioner that all the documents was on record and in the event there was any specific requisition from the respondent no.2 to file certain documents, he was ready to produce the same. For all these reasons stated above, it appears that respondent no.2 has hurriedly rejected the application for Settlement without giving sufficient opportunity to the petitioner. In the decision of this Court in the case of Poona Tools Pvt. Ltd. (Supra) relied upon by the petitioner the order of the Settlement Commission was challenged on the ground that it is in violation of principles of natural justice. It was contended that the procedure contemplated under Section 32E and 32F of the Central Excise Act was scrupulously followed and on being satisfied that the petitioner therein have fulfilled all the norms prescribed for settlement, the application was directed to be proceeded with and the said decision cannot be reviewed. In the facts of that case, this Court set aside the order of settlement Commission and remanded the matter for reconsideration by the Commission. In the present case, respondent no.2 proceeded on interim report of revenue and before receipt of final report, the impugned order was passed. In pursuant to order dated 13th April, 2017, passed by Settlement Commission allowing application under Section ::: Uploaded on - 15/06/2018 ::: Downloaded on - 16/06/2018 01:35:17 ::: rpa 15/16 wp-245-18.doc 32E to be proceeded with, it was expected that respondent no.2 would look into all material aspects by giving sufficient opportunity to assessee to establish his claim in the application. For any inaction on the part of Revenue to submit Final Verification Report, the petitioners cannot be made to suffer. To ascertain the correct position in the matter, respondent no.2 could have granted the petitioner and the Jurisdictional Revenue Authority further hearing. The impugned order makes the note that no one from Revenue had appeared for hearing on 19 th May, 2017 and the final report of the said Authority was not forthcoming. The Interim Report was faulted vide reply filed by petitioner. It appears that the order was passed without appreciation of facts of the matter.
14 In the light of the aforesaid circumstances, it would be appropriate to remand the proceedings back to respondent no.2 for fresh consideration by setting aside the impugned order: 15 In view of the above, we pass the following order:
:: O R D E R ::
(i) Rule is made absolute in terms of prayer clause
(a);
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(ii) The impugned order dated 21st August, 2017,
passed by respondent no.2 is set aside and the
respondent no.2 is directed to reconsider the Settlement Application after giving opportunity to the parties concerned and after hearing them and to decide the application in accordance with law;
(iii) It is clarified that we have not expressed any views on the merits of the Settlement Application and the same shall be decided by respondent no.2 without being influenced by this order or its earlier order dated 21 st August, 2017, and in accordance with law;
(iv) It would be open to the parties to call upon or reply upon any documents in connection with Settlement Application;
(v) Writ Petition stands disposed of.
(PRAKASH D. NAIK, J.) (S.C. DHARMADHIKARI, J.)
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