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2018 (10) TMI 904 - HC - Service TaxValidity of demand of service tax after migration to GST Regime - Proceedings initiated u/s 73(i) of the Finance Act of 1994 - Applicability of Section 6 of the General Clauses Act - whether omission of the provisions of a statue render any proceeding initiated under it to be not maintainable any further? - Scope of Section 173 of the Central Goods and Service Tax Act, 2017 Held that - From the propositions laid down in Fibre Board Pvt. Ltd. 2015 (8) TMI 482 - SUPREME COURT it is discernible that the earlier propositions laid down Rayala Corporaion (P) Ltd 1969 (7) TMI 109 - SUPREME COURT OF INDIA and in Kolhapur Canesugar Works Ltd. 2000 (2) TMI 823 - SUPREME COURT OF INDIA , to the extent that Section 6 of the General Clauses Act applies only in respect of a repeal and not to omission of an enactment is an obiter dicta, which is not binding. Secondly, it also cannot be said that the repeal of an enactment does not include the omission and to that extent, the law that is applicable to the repeal of an enactment would also be applicable to that of an omission and no distinction can be made between the two. Thirdly, the proposition as regards inapplicability of Section 6 of the General Clauses Act in respect of an omission of an enactment resulting in an impermissibility to continue further a proceeding that had been initiated under omitted enactment, merely based upon the proposition laid down in Rayala Corporaion (P) Ltd. and in Kolhapur Canesugar Works Ltd. would also have to be looked from the perspective of the provisions of Section 6-A of the General Clauses Act. It is the contention of Mr. KN Choudhury, learned Senior counsel that the pronouncement in Rayala and Kolhapur being a decision by the Constitution Bench would prevail over the pronouncement in FibreBoard Pvt. Ltd. - The said contention of the learned Senior Counsel for the petitioner would have to be looked into from the point of view as to whether the decision rendered in Fibre Board Pvt. Ltd. is a decision which is in conflict with the view expressed in Rayala Corporation (P) Ltd and in Kolhapur Canesugar Works Ltd. We take note of paragraph 30 of FibreBoard Pvt. Ltd, wherein the Supreme Court was conscious of the fact that in the event, a conflicting view is to be taken to an earlier pronouncement by a larger bench, it requires a reference to a larger bench. While dealing with the proposition laid down in Rayala Corporation (P) Ltd (supra) and in Kolhapur Canesugar Works Ltd., the Supreme Court was conscious of the aspect of referring the matter to a larger bench, but thought it to be not required in view of what had been laid down in the said decision. - it is apparent that the propositions of law laid down in Rayala Corporation (P) Ltd (supra) and in Kolhapur Canesugar Works Ltd. had in fact been clarified and therefore it cannot be a pronouncement in conflict that the pronouncement in Rayala Corporation (P) Ltd and in Kolhapur Canesugar Works Ltd. The Division Bench of the Supreme Court in Fibre Board Pvt. Ltd., had deliberated, discussed and explained the proposition laid down in Rayala Corporation (P) Ltd (supra) and in Kolhapur Canesugar Works Ltd. and it is not a case where a contrary view had been taken by remaining oblivious to the proposition laid down in Rayala Corporation (P) Ltd and in Kolhapur Canesugar Works Ltd. The view expressed in Fibre Board Pvt. Ltd., are also views under Article 141 of the Constitution of India and are binding on the High Court. Paragraph 37 of Kolhapur Canesugar Works Ltd. provides that if a statute stood omitted with a savings clause, the savings clause would not render it impermissible for the proceedings initiated/to be initiated under Chapter V of the Finance Act of 1994, which stood omitted by Section 173 of the CGST Act of 2017 to be continued - A conjoint reading of the provisions laid down in paragraph 37 of Kolhapur Canesugar Works Ltd. and Section 173 and 174(2)(e) would lead to a conclusion that although Chapter V of the Finance Act of 1994 stood omitted under Section 173, but the savings clause provided under Section 174(2)(e) will enable the continuation of the investigation, enquiry, verification etc., that were made/to be made under Chapter V of the Finance Act of 1994. The writ petition to be devoid of any merit and the relief sought for interfering with the demand-cum-show cause notices of various dates issued by the Assistant Commissioner Central Goods and Service Tax of the different districts would have to stand rejected - petition dismissed.
Issues Involved:
1. Validity of demand-cum-show cause notices issued under the Finance Act of 1994 after the enactment of the CGST Act of 2017. 2. Applicability of Section 6 of the General Clauses Act to omissions in statutes. 3. Interpretation of Section 173 and Section 174 of the CGST Act of 2017 in relation to the continuation of proceedings under the repealed Finance Act of 1994. Issue-wise Detailed Analysis: 1. Validity of demand-cum-show cause notices issued under the Finance Act of 1994 after the enactment of the CGST Act of 2017: The petitioners challenged the demand-cum-show cause notices issued under Sections 75, 76, and 78 of the Finance Act of 1994, arguing that these notices were unsustainable due to the omission of Chapter V of the Finance Act of 1994 by Section 173 of the CGST Act of 2017. They relied on the Supreme Court's decisions in Rayala Corporation (P) Ltd. and Kolhapur Canesugar Works Ltd., which held that Section 6 of the General Clauses Act does not apply to omissions but only to repeals. The respondents countered by citing the Supreme Court's decision in Fibre Board Pvt. Ltd., which clarified that the omission of a statute does not necessarily render ongoing proceedings invalid, especially in light of Section 6-A of the General Clauses Act. 2. Applicability of Section 6 of the General Clauses Act to omissions in statutes: The petitioners argued that Section 6 of the General Clauses Act, which saves pending proceedings from being affected by the repeal of a statute, does not apply to omissions. This argument was based on the Supreme Court's observations in Rayala Corporation (P) Ltd. and Kolhapur Canesugar Works Ltd. However, the respondents contended that the Supreme Court in Fibre Board Pvt. Ltd. had clarified that the principles underlying Section 6 could also apply to omissions, especially when considering Section 6-A of the General Clauses Act, which deals with the repeal of statutes by express omission. 3. Interpretation of Section 173 and Section 174 of the CGST Act of 2017 in relation to the continuation of proceedings under the repealed Finance Act of 1994: The court examined Section 173 of the CGST Act, which omitted Chapter V of the Finance Act of 1994, and Section 174, which contains saving provisions. Section 174(2)(e) explicitly states that the repeal of the Finance Act of 1994 does not affect any investigation, enquiry, verification, assessment proceedings, adjudication, or recovery of arrears initiated under the repealed Act. The court concluded that the saving clause in Section 174(2)(e) allowed for the continuation of proceedings initiated under the Finance Act of 1994, despite its omission by the CGST Act of 2017. Conclusion: The court dismissed the writ petitions, holding that the demand-cum-show cause notices issued under the Finance Act of 1994 were valid and could be continued under the saving provisions of Section 174(2)(e) of the CGST Act of 2017. The court clarified that the respondents could proceed with the demand-cum-show cause notices strictly in accordance with the law, with the notices taking effect from the date of the judgment.
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