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TMI Blog2023 (2) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... e Notifications under which the officials of the DGGI have assumed jurisdiction have not been expressly saved under Section 174(2) of the CGST Act and hence the impugned orders/notice are non-est in law. Whether, the Notifications under which the DGGI/officials of the Intelligence Department have drawn sustenance to issue show cause notices for assessment under the Finance Act 1994, survive the transition from the erstwhile regime of taxation (Service tax) to the new regime of Goods and Service tax (GST), effective from 01.07.2017? - whether the assumption of jurisdiction by the DGGI for issuance of show cause notice under Finance Act 1994 read with Section 174(2) of the CGST Act, is proper in law? HELD THAT:- In the case of Sheen Golden Jewels (I) P. Ltd. [[ 2019 (2) TMI 300 - KERALA HIGH COURT] ] and Prosper Jewel Arcade LLP [[ 2018 (10) TMI 1527 - KARNATAKA HIGH COURT] ], the Kerala and Karnataka High Courts held adverse to those petitioners rejecting their arguments that with the shift to the GST regime, all levies under the erstwhile service law regime had lapsed. The conclusion arrived at was that Section 174 of the respective State GST enactments saved all the right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each of Section 174, this Court does not wish to loose sight of the necessity to ensure a seamless application of the levy following the consistent procedure followed under the old and new enactments - Section 174(2) states that repeal as per subsection (1) shall not affect any rights, privileges or obligations or liability acquired, accrued or incurred under the old Act and the proviso carves out an exception in regard to tax exemption granted as an investment against investment through ' Notification' . In such cases, such exemptions shall continue until rescinded. What I gather by implication, is that Notifications in other situations continue. The assumption of jurisdiction by the officials of the DGGI is valid. These writ petitions are dismissed. - Honourable D R. Justice Anita Sumanth For the Petitioner (In both WPs) : Ms.Radhika Chandrasekhar, Mr.Joseph Prabakar For the Respondents (In WP.12291 of 2019) : Mr.R.Sankara Narayanan (for R1), Additional Solicitor General For Mrs.HemaMuralikrishnan, Senior Standing Counsel For the Respondents (In WP.3354 of 2020) : Mr.RajnishPathiyil (for R1) Senior Central Government Standing Counsel For the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The notice proceeds on the basis that the impugned proceedings are saved in terms of Section 174(2) of the Central Goods and Service Tax Act, 2017 (in short Act/CGST Act). The petitioner has been directed by the DGGI who has issued notice, to appear before the Principal Commissioner of Central Tax and Central Excise, North Commissionerate. Thus the argument that the authority issuing the show cause notice cannot direct adjudication by another authority and since the two authorities, notice issuing authority and the adjudicating authority, are different, the proceedings are vitiated. 7. The petitioner argues that the proceedings are without jurisdiction as there is no provision under which the DGGI could have drawn power to have issued the show cause notice, legitimately. The source of power emanates from Notifications issued in the era prior to GST that have not been expressly saved under the new regime. Hence, since the source of power is in itself, invalid in law, the power assumed by the DGGI falls foul of statutory mandate. 8. The delegation of the power of adjudication by one authority to another is not a situation that has been saved under Section 174 of the CGST Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In fact, on and post 14.05.2016 the exemption that was hitherto available to the negative list came to be extended by way of Notification bearing No.25 of 2012 dated 20.06.2012. 12. The petitioner is a member of an Association of Universities, and this entitled successful students to join higher education courses in India. Thus, it is entitled to such a course being recognised by law for the time being in force. This submission was rejected by the respondents stating that such entitlement is not equitable, but has to flow from a satisfaction of the statutory conditions. 13. According to the petitioner, this conclusion of the authority is contrary to the decision of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) in the case of ITM International Pvt. Ltd. v. Commissioner of Service Tax, Delhi [2017 (7) G.S.T.L. 448 (Tri. Del.)]. 14. The authority was also was not right in concluding that non-affiliation with either the National Skill Development Council or National Council for Vocational Training or State Council for Vocational Training was fatal to its case. 15. In fact, such affiliation is not necessary and ought not to have weighed with the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f clause (15) of Notification No.25 of 2012. 21. The petitioner draws attention to Section 65B(44) of Finance Act, 1994 that defines service and specifically excludes transfer of title in goods by way of sale, gift or in any other manner. He would claim the benefit of exemption under Clause (a) of the above Notification, extracted below: Services provided by way of temporary transfer or permitting the use or an enjoyment of a copyright:- (a)Covered under clause (a) of sub-section (1) of Section 13 of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic work; or (b) of cinematograph films for exhibition in a cinema hall or cinema theatre. 22. Section 13 of the Copyright Act, 1957 reads as follows: 13. Works in which copyright subsists.- (1) Subject to the provisions of this section and the other provisions of this Act, copyright shall subsist throughout India in the following classes of works, that is to say,- (a) original literary, dramatic, musical and artistic works; (b) cinematograph films; and (c) sound recording. . . . . 23. The petitioner reiterates that he is the sole and absolute owner of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghts like right to live performance of such works, right to Publishing Royalties etc. b) Composing music for advertisement and Promotional activities for the cinematographic film for which he had composed Music. 26. After extracting various provisions of the Service Tax Act, Rules and Copyright Act, the authority proceeds to prima facie conclude that the petitioner has imported taxable services from outside India remitting consideration and foreign exchange. He thus fastens liability on the receipts from such services under Section 68(2) of the Act read with relevant Service tax and Point of Taxation Rules as well as Notification 30/2012 ST dated 20.06.2012. 27. He thereafter proceeds to quantify the tax, penalty and interest and in doing so, invokes the extended period on the ground that there has been a suppression of facts by the petitioner. A detailed response was filed on 09.02.2019, wherein the petitioner has raised objections on maintainability as well as on the merits of the matter. By and large, the submissions echo those made by the other petitioners whose cases are dealt with under this order and I hence do not reproduce the same in the interests of brevity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the GC Act since Chapter-V of the Finance Act, 1994 that had been omitted by virtue of Section 173 of the CGST Act, had been saved by operation of Section 174(2). As far as the judgment in Kolahpur Cane Sugar Works Limited is concerned that was a situation where a new provision had been introduced without the old provision having been saved. Such a situation does not arise in the present case as Chapter-V has been duly saved. 33. Reliance is placed on Rule 3 of the Service Tax Rules whereunder the Central Government was conferred powers on the Central Board of Excise and Customs (in short 'Board'/'CBEC') to issue notifications. This power has been saved and there is thus no infirmity in the present impugned proceedings as they have drawn their powers from such validly issued notification. 34. Respondents rely on the judgment in the case of Shree Bhagwati Steel Rolling Mills v. Commissioner of Central Excise and another [2015 (326) ELT 209], Fibre Boards v. Commissioner of Income Tax [376 ITR 596] and State of Rajasthan v. Harnik Singh [2002 (3) SCC 481]. 35. In these judgments, the Hon ble Supreme Court has held that where statutory provisions were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of Scotland N.V. V. Commissioner of Customs and Central Excise, Noida (2014 (35) STR 68 (All.)) is cited. That case dealt with a challenge to an order of the CESTAT. In that context, the Bench held that the Writ Petition was not maintainable as the issue regarding the rate of tax/duty in regard to a service, or whether at all the service would be liable to tax, could be decided only by the Hon ble Supreme Court in an appeal under Section 35 L of the Central Excise Act, 1944. 41. A Division Bench of the Madras High Court has in the case of Thiruchitrambablam Projects Ltd. V. Customs, Excise and Service Tax Appellate Tribunal (2016 (43) STR 531), has decided likewise holding that, as against an order of the CESTAT, a Writ Petition would not lie and it would remain for the aggrieved party to challenge the same by way of statutory appeal. To similar effect is the decision in the case of TT Krishnamachari and Company V. Union of India (W.P.No.1276 of 2010 dated 17.11.2014). 42. The submission is that since the impugned orders-in-original dated 07.02.2019 (W.P.No.12291 of 2019), 17.10.2019 (W.P.No.3354 of 2020) and 30.08.2022 (W.P.No.29286 of 2022) and show cause notice date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 3354, 5098 of 2020 and 29286 of 2022, relies upon the judgement of the Supreme Court in Sushilaben Indravadan Gandhi and another v. New India Assurance Company Limited and others [(2021) 7 SCC 151] touching upon the aspect of control as an aid to differentiate between a contract of service and one for service. 49. It would not, in my opinion, appropriate to refer to the factual nature of the agreements qua these petitioners and third parties including film producers in writ proceedings. In any event, no agreements or other documents have been placed before this Court for appreciation, and rightly so. The nature of the Intellectual Property Right (IPR) vesting in the music composers, the terms inter se the composers and film producers/third parties, whether there has been an assignment of the IPR, the terms of the assignment, if at all, are all questions of fact that would have a bearing upon the intrinsic question, relating to the applicability of the Exemption Notification to these petitioners. 50. It is best that such issues be decided by the authorities who can call for relevant information from the petitioners for their appreciation, including the agreements. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for exemption is misplaced. 55. Exemption requires, as a pre-requisite, for the courses conducted to be duly accredited by the statutory authorities and recognised under law. As a consequence the Universities are themselves to hold such accreditation. However the list of UGC approved universities in India as on 07.08.2018 does not include either the foreign Universities or BSS. Hence, the conditions under the Exemption Notification are not satisfied and the activity and receipts from the activity carried on are liable to tax. 56. The respondents also distinguish the decisions of the CESTAT upon which reliance has been placed by the petitioner as well as the decisions of the Delhi High Court in Ashu Exports Private Limited and Wigan and Leigh College (India) Limited . 57. On limitation, they point out that the petitioner had been regularly remitting tax for the period 01.04.2011 to 31.03.2012, but had stopped thereafter. This factor indicates a concerted and conscious effort by the petitioner to wriggle out of its statutory commitment. The extended period of limitation is thus well available to the respondent in such a situation. Respondents have relied upon the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter V of the Finance Act, 1994 (32 of 1994) shall be omitted'. 63. The GST enactments provide for sunset clauses and under the CGST Act, the relevant provision is Section 174. It is the scope and ambit of Section 174 that is under consideration in this order, in the context of Notifications issued under the repealed regime. 64. Some of the petitioners have raised an issue, albeit tentatively, in regard to the avowed distinction between omission and repeal and the impact of such differences on the legal issue, relying upon the judgement in Rayala Corporation . The Hon ble Supreme Court had, therein, rendered observations in regard to Section 6-A of the General Causes Act to the effect that reference to omission therein, was only in the context of an amendment and not repeal . 65. These observations was interpreted to mean that Section 6-A did not apply to a repeal. This interpretation was rejected as fallacious in a later judgment of the Supreme Court in Fibre Boards (supra). The Court held that the term repeal is a wide term, far wider than omission , of far larger import, and would include several situations of amendment, including omission . The obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercised (1) (2) (3) 1. Principal Director General, Central Excise Intelligence or Principal Director General, Service Tax Principal Chief Commissioner 2. Director General, Audit Chief Commissioner 3. Principal Additional Director General, Central Excise Intelligence, Principal Additional Director General, Service Tax or Principal Additional Director General, Audit Principal Commissioner 4. Additional Director General, Central Excise Intelligence, Additional Director General, Service Tax or Additional Director General, Audit Commissioner 5. Additional Director, Central Excise Intelligence, Additional Director, Service Tax or Additional Director, Audit Additional Commissioner 6. Joint Director, Central Excise Intelligence, Joint Director, Service Tax or Joint Director, Audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g show cause notices issued by the Directorate General of Central Excise Intelligence, for adjudication, by such Principal Commissioners of Service Tax or the Principal Commissioners of Central Excise or the Commissioners of Service Tax or the Commissioners of Central Excise, as the case may be. [F.No.137/29/2014-Service Tax] (HimaniBhayana) Under Secretary to the Government of India 69. Vide Notification 14 of 2017 dated 09.06.2017, the Central Government has directed that the powers exercisable by the Central Board of Excise and Customs under Rule 3 of the Central Excise Rules, 2002 and Rule 3 of the Service Tax Rules, 1994 may be exercised by the Principal Chief Commissioner of Central Excise and Service Tax or the Chief Commissioner of Central Excise and Service Tax for the purpose of assignment of adjudication of notices to show cause issued under the provisions of the Central Excise Act, 1944 or Finance Act, 1994 to Central Excise Officer subordinate to them. This Notification has been issued in supersession of notices issued in 2007 and 2009 only. Notification No.14/2017 reads as follows: Notification No. 14 /2017-C. E. ( N.T ) dated 09-Jun-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Textiles and Textile Articles) Act, 1978, and the Central Excise Tariff Act, 1985 (hereafter referred to as the repealed Acts) are hereby repealed. (2) The repeal of the said Acts and the amendment of the Finance Act, 1994 (hereafter referred to as such amendment or amended Act , as the case may be) to the extent mentioned in the sub-section (1) or section 173 shall not - (a) revive anything not in force or existing at the time of such amendment or repeal; or (b) affect the previous operation of the amended Act or repealed Acts and orders or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts: Provided that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded on or after the appointed day; or (d) affect any duty, tax, surcharge, fine, penalty, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cifying their continuance in the following terms- 24. Continuation of orders, etc, issued under enactments repealed and re-enacted - Where any Central Act or Regulation, is, after the commencement of this Act, repealed and re-enacted with or without modification, then, unless it is otherwise expressly provided any appointment notification, order, scheme, rule, form or bye-law, made or issued under the repealed Act or Regulation, shall, so far as it is not inconsistent with the provisions re-enacted, continue in force, and be deemed to have been made or issued under the provisions so re-enacted, unless and until it is superseded by any appointment notification order, scheme, rule, form or byelaw, made or issued under the provisions so re-enacted and when any Central Act or Regulation, which, by a notification under section 5 or 5A of the 8 Scheduled Districts Act, 1874, (14 of 1874) or any like law, has been extended to any local area, has, by a subsequent notification, been withdrawn from the re-extended to such area or any part thereof, the provisions of such Act or Regulation shall be deemed to have been repealed and re-enacted in such area or part within the meaning of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Aargus Global Logistics Pvt. Limited V. Union of India ((2020) 116 Taxmann.com 381) and had rejected the same. 78. Since the assessee (Viannar Homes), had urged that the matter requires re-consideration, their submissions were heard and reappraised by the Bench. The main plank of the argument related to whether Rule 5A of the Service Tax Rules had been saved with the transition to GST regime. According to those petitioners, the saving clause did not specifically use the term Rules but had saved only the Finance Act, 1994. They were thus of the view that with the lapsing of the Rules, Notifications that had been issued under the erstwhile Rules no longer held any force. 79. That apart, it was their specific submission that jurisdiction could be assumed only by a proper officer under the CGST Act. Notwithstanding that the proviso to Section 3 of the CGST Act stipulated that officers appointed under the Central Excise Act, 1944 would be officers under the CGST Act, the officers appointed under the CGST Act cannot be assumed to be proper officers under the erstwhile Rules. 80. Reference was made inter alia to the judgments in Kolhapur Cane Sugar Works a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except if the situation so warrants. The judgment in Canon has been followed by this Court in the case of Redington (India) Limited and Thangamayil Jewellery Ltd . 86. Incidentally, respondents point out that a Review Petition has been filed in re. the judgment in Canon India that is pending before the Hon'ble Supreme Court. That apart, the aforesaid decisions of the learned single Judge of this Court have not attained finality and are pending in appeal and there is an interim stay granted in some instances. 87. In Sri Ishar Alloy Steels , three Judges of the Hon ble Supreme Court interpreted the expression the bank under the Negotiable Instruments Act,1881 to mean the specific drawee bank and not the collecting bank of the payee. Thus the presentation of the instruments must be before the drawee bank within the statutory period of 90 days in order to trigger the proceedings under the Negotiable Instruments Act. Presentation elsewhere would be no consequence in this regard. 88. The above judgments are relied upon in furtherance of the argument that when there the reference made by Legislature is specific, in this case to the Finance Act 1994 alone, then such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the same fate. The aforesaid orders were reversed by the Hon ble Supreme Court which opined that Section 6 of the GC Act would save the situation. The repeals and savings clause being Section 658 in the 1956 Companies Act, provided for the application of Section 6 of the GC Act with respect to the effect of repeal. The Court thus held that reference to Section 6 would suffice to continue the proceedings and the District Judge would be competent to hear the application despite the repeal of the 1913 Act. 95. The above conclusion support the view expressed above, though I am conscious of the fact that the application in that case had been filed under the old regime. In State of Punjab V. Mohar Singh (AIR 1955 SC 84), the Hon ble Supreme Court held that the effect of repeals and savings must be arrived at in a wholistic fashion by deciding whether there was a contrary intention that is manifest in the new enactment to confirm that rights under the old enactment were destroyed. 96. The case of Air India (supra) turns on different factual and legal matrices. The subject of interpretation there, was Section 8 of the Air Corporations (Transfer of Undertakings and Repeal) Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation has vested. (5) The trusts of the Provident Fund or Pilots Group Insurance and Superannuation Scheme of the corporation and any other bodies created for the welfare of the officers or employees would continue to discharge their function in the company as was being done hitherto in the corporation. Tax exemption granted to Provident Fund or Pilots Group Insurance and Superannuation Scheme would continue to be applied to the company. (6) Notwithstanding anything contained in this Act or in the companies Act, 1956 (1 of 1956) or in any other law for the time being in force or in the regulations of a corporation. no Director of the Board, Chairman, Managing Director or any other person entitled to manage the whole or a substantial part of the business and affairs of that corporation shall be entitled to any compensation against that corporation or against the company, as the case may be, for the loss of office or for the premature termination of any contract of management entered into by him with that corporation. 97. Upon a perusal thereof, it is clear that the saving envisaged in regard to the erstwhile Air Corporation Act, 1953 is pointed and specific. This i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Tax or Assistant Directors of Central Tax, and (i) any other class of officers as it may deem fit. 101. Thereafter, Notifications/Circulars have been issued in F.No349/75/2017 GST Circular No. 31/05/2018 dated 09.02.2018 on the subject of designation of Proper Officer under Sections 73 and 74 of the CGST and IGST Acts 2017. The Circular reads thus: Circular No. 31/05/2018 - GST F. No. 349/75/2017-GST Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs GST Policy Wing *** New Delhi, 9th February 2018 .. 2. It has now been decided by the Board that Superintendents of Central Tax shall also be empowered to issue show cause notices and orders under section 74 of the CGST Act. Accordingly, the following entry is hereby being added to the item at Sl. No. 4 of the Table on page number 3 of Circular No. 3/3/2017-GST dated 5th July, 2017, namely:- 6. The central tax officers of Audit Commissionerates and Directorate General of Goods and Services Tax Intelligence (hereinafter referred to as DGGSTI ) shall exercise the powers only to issue show cause noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Services Tax Intelligence. Consequently, para 6 and 7 of the Circular No. 31/05/2018-GST, dated 9th February, 2018 are hereby amended as below: 6. The Central Tax officers of Audit Commissionerates and Directorate General of Goods and Services Tax Intelligence (hereinafter referred to as DGGI ) shall exercise the powers only to issue show cause notices. A show cause notice issued by them shall be adjudicated by the competent Central Tax officer of the executive Commissionerate in whose jurisdiction the notice is registered when such cases pertain to jurisdiction of one executive Commissionerate of Central Tax only. 7.1 In respect of show cause notices issued by officers of DGGI, there may be cases where the principal place of business of noticees fall under the jurisdiction of multiple Central Tax Commissionerates or where multiple show cause notices are issued on the same issue to different noticees, including the persons having the same PAN but different GSTINs, having principal place of business falling under jurisdiction of multiple Central Tax Commissionerates. For the purpose of adjudication of such show cause notices, Additional/Joint Commissioners of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision the intention of which is to narrow the effect of the enactment to which it refers so as to preserve some existing legal rule or right from its operation'. Paragraph 7 of the SCC Report then states, Very often a saving is unnecessary, but is put in ex abundanti cautela to quieten doubts . The updated text of the Interpretation Act, 1978, (set out in Bennion's book at page 897) puts into statutory form in Section 15what is otherwise recognised in law, namely, that the repeal of an enactment does not, unless the contrary intention appears, affects any right or privilege accrued under that enactment. The practice and procedure, both pre and post GST are consistent and involve participation of the officer of the DGGI in issuance of show cause notices. 104. The expansive constitution of Section 88 of the Tamil Nadu Value Added Tax Act that specifically includes subordinate legislation has been cited by the petitioners as a counter to the move restricted construction of Section 174. Notwithstanding this difference, I would reiterate that in interpreting the reach of Section 174, this Court does not wish to loose sight of the necessity to ensure a seamless applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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