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TMI Blog2024 (8) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the provisions of the Finance Act, 1954 and the Rules made thereunder. In our view, if Respondents were aggrieved by order dated 20th December 2013 approving the scheme of arrangement then they ought to have challenged the same. However, it is undisputed that the order sanctioning the scheme has not been challenged by any authority and has attained finality. Therefore on this basis itself the show cause notice falls to ground. This very issue had come up for consideration under the excise law before the Gujarat High Court in the case of this very Petitioner in Special Civil Application No. 11308 of 2019 [ 2022 (4) TMI 70 - GUJARAT HIGH COURT] and the Gujarat High Court by order and judgment dated 3rd February 2022 (said judgment) entertained the writ and quashed the show cause notice under the excise law. The basis of show cause notice before Gujarat High Court is similar to that which is impugned in the present petition. The Gujarat High Court after considering the scheme approved by this Court under the Companies Act quashed the show cause notice. Since show cause notice has been issued without jurisdiction discretion under Article 226 of the Constitution of India is exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... telligence, Chennai initiated investigation against Petitioner on the ground that Petitioner-LTHE, as a legal entity had not paid service tax for the financial year 2013-14. Petitioner has stated in paragraphs 46 to 73 that they have given all the details called for in support of its contention that service tax on forward basis and reverse charge basis on domestic as well as import of service has been discharged by L T, the transferor company on behalf of Petitioner-LTHE for the financial year 2013-14. Various statements of the officers of Petitioner were also recorded. Based on the investigation by Chennai Officer, the information was transferred to Gujarat Excise Officials who issued show cause notice for recovery of excise duty and Bombay Officers-Respondent Nos.3 and 4, issued show cause notice for recovery of service tax for the period of 2013-14. 5. On 23rd October 2018, the impugned show cause notice dated 23rd October 2018 was issued by Respondent No. 2-Chennai Officer calling upon Petitioners to show cause to Respondent Nos.3 and 4 for recovery of service tax for the period 2013-14. The impugned show cause notice also refers to the show cause notice issued by Respondent No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw was the common investigation initiated by Chennai Officer. Learned counsel further submitted that Petitioners have not given the details as more particularly referred to in paragraph 7.9 of the show cause notice and, therefore, the present impugned show cause notice was issued. He further submitted that the petition involves disputed questions of fact and, therefore, this Court should not entertain the present petition and should relegate Petitioners to answer the show cause notice. 8. On a perusal of the show cause notice and more particularly paragraphs 7.14 to 7.16, it is clear that the whole basis of issuing show cause notice is that High Court has approved the scheme of arrangement without considering that the scheme is in contravention to the provisions of the Finance Act, 1954 and the Rules made thereunder. In our view, if Respondents were aggrieved by order dated 20th December 2013 approving the scheme of arrangement then they ought to have challenged the same. However, it is undisputed that the order sanctioning the scheme has not been challenged by any authority and has attained finality. Therefore on this basis itself the show cause notice falls to ground. 9. It is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise under the GST laws also, which is the current indirect tax law in force in the country. The legal position needs to be settled by the High Court. The issue has general application across the country as this is applicable to every scheme of demerger. 78. The relevant portion of order dated 20th December 2013 of High Court approving the scheme reads as under:- 11. From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. None of the parties concerned has come forward to oppose the Scheme. 12. Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No. 651 of 2013 and 652 of 2013 filed by the Petitioner Companies are made absolute in terms of prayer clause (a) of the Petition. 79. Then the relevant portion of impugned show cause notice reads as under: 7. On examination of the operative portion of the order dated 20.12.2013 of the Hon ble High Court of Bombay (RUD-I I), it appears that the proposed scheme of arrangement was endorsed by the Hon'ble High Court only because it appeared fair and reasonable and was not violate of any provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f all statutory and regulatory permissions, environmental approvals and consents, registration or other licenses, and consents shall vest in and become available to the Transferee Company as if they were originally obtained by the Transferee Company. In so far as the various Incentives, subsidies, rehabilitation schemes, special status and other benefits or privileges enjoyed, granted by any Governmental Authority or by any other person, or availed of by the Transferor Company relating to the Transferred Undertaking, are concerned, the same shall vest with and be available (of the Transferee Company on the same terms and conditions as applicable to the Transferor Company, as if the same had been allotted and/or granted and/or sanctioned and/or allowed to the Transferee Company. 10.4 All compliances with respect to advance tax, withholding taxes or tax deduction at source, service tax, VAT, other indirect taxes, etc. to be done or done by the Transferor Company in relation to the Transferred Undertaking shall for all purposes be treated as compliances to be done or done by the Transferee Company. 12. SAVING OF CONCLUDED TRANSACTIONS The transfer and vesting of the assets, liabilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not taken a registration in its name prior to 1st April 2014 is also invalid. .. 127. Our final conclusions may be summarized as under: [a] The Revenue is not correct in its stance that in the case on hand, the pre-show cause notice consultation was not necessary as the impugned show cause notice is for preventive / related to an offence. Just because, the origin of the show cause notice is the intelligence gathered from the Additional Director General, the same by itself would not bring the show cause notice within the ambit of preventive / offence. [b] The extended period of limitation under Section 11A (4) of the Act, 1944 is not applicable in the case on hand as it is the case of the Revenue that the goods were removed illicitly without a statutory invoice. The failure to follow any procedure may be an error or omission on the part of the assessee, but the same by itself would not amount to suppression. The question of suppression would arise only when an assessee makes an attempt to obtain a benefit not available to him under the law. [c] The amalgamation has its origin in the statute and is statutory in character, the transfer and vesting is by operation of law and not an act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early demonstrates that all the details which in paragraph 7.9 of the show cause notice is alleged to have not been submitted were infact submitted vide these letters. Respondents have rightly not disputed what was filed and submitted in these letters. Therefore, the allegation made in paragraph 7.9 of the show cause notice is without basis. Therefore, in our view even on this ground, we cannot sustain the show cause notice. 13. Respondents have filed an affidavit of one M. R. Mohanty affirmed on 20th February 2023, wherein he has accepted that Gujarat High Court has rightly set aside the show cause notice. We have already observed that the basis of show cause notice issued and which was subject matter before Gujarat High Court is similar to what is impugned in the present petition. Insofar as, the discharge of service tax liability in respect of expenditure to the tune of Rs.5921.33 crore is concerned, we have already observed above that Respondents have not rebutted the averments made by Petitioners from paragraphs 43 to 73, wherein it is stated all the details were filed with Respondents qua the expenditure and a positive statement was made that the transferor company L T has di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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