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2023 DIGILAW 65 (GUJ)

AIA Engineering Ltd. v. Union Of India

2023-01-07

SANDEEP N.BHATT, SONIA GOKANI

body2023
ORDER : [SONIA GOKANI, J.] 1. This petition is preferred seeking the refund of Krishi Kalyan Cess (‘the KKC’ hereinafter) levied under the Finance Act, 2016 where essential grievance on the part of the petitioner is of the Tribunal not deciding the matter itself and remanding it to the Assessing Officer with the further grievance that the pending matter before the Apex Court being a case of M/s.Bombay Dyeing and Manufacturing Company Limited vs. Commissioner of Central Excise has no applicability. 2. This Court while issuing the notice on 13.01.2021 passed the following order: “1. The petitioner company is engaged in the business of manufacture of machinery and parts thereof which were excisable goods prior to 01.07.2017, and hence, chargeable to central excise duty. That the company was paying excise duty on such goods and it had discharged the liability of service tax on taxable services. The Cenvat credit of duties paid on inputs and capital goods and that of the service tax paid on input services were also availed and utilised by the petitioner. 1.1 A notification in the month of March, 2016 of the Central Government provided Cenvat credit of Krishi Kalyan Cess ('KKC' for short) which was imposed under Section 161 of the Finance Act which could be utilised only for paying KKC on service tax payable by an assessee on the taxable services provided by him. The unutilised Cenvat credit of KKC aggregating Rs.43,61,383/- (Rupees Forty Three Lakh Sixty One Thousand Three Hundred Eighty Three Only) was recorded in the Cenvat register and the returns. 1.2 It emerges that the Central Government discontinued levies of central excise duty and service tax and provisions of the Goods and Services Tax (GST) have been brought into the operation. In wake of these changes the levy of KKC has been deleted and accordingly, the petitioner was not liable to pay KKC on taxable services; however, a refund was needed of Cenvat credit of KKC of Rs.43,61,383/(Rupees Forty Three Lakh Sixty One Thousand Three Hundred Eighty Three Only) which was lying unutilised. 2. The Assistant Commissioner rejected the refund claim on the ground that refund of unutilised Cenvat credit of KKC was not admissible under the Cenvat Credit Rules. 2.1 The Commissioner (Appeals) also rejected the appeal of the petitioner and held that such refund claim was inadmissible. 3. 2. The Assistant Commissioner rejected the refund claim on the ground that refund of unutilised Cenvat credit of KKC was not admissible under the Cenvat Credit Rules. 2.1 The Commissioner (Appeals) also rejected the appeal of the petitioner and held that such refund claim was inadmissible. 3. A Substantive Appeal before the Appellate Tribunal at Ahmedabad for refund of the said credit has been moved where an application for early hearing was also preferred. The order passed by the Tribunal on 21.10.2020 has aggrieved the petitioner since it decided to remand the matter to the adjudicating authority for passing denovo order. After the outcome of the matter in case of Commissioner of Central Excise vs. Bombay Dyeing and Manufacturing Company Ltd. the grievance on the part of the petitioner is that the oral and written submissions made by the petitioner have not been regarded, much less the authorities on the subject. 4. The prayers, therefore, sought for in this petition are as follow: “22… (A) That Your Lordships may be pleased to issue a Writ of Certiorari or any other appropriate writ, direction or order, quashing and setting aside final order No.a/11275/2020 dated 21.10.2020 (Annexure- “G”) with a direction to CESTAT, Ahmedabad to decided Appeal No.E/12588/2018 on merits; (B) That Your Lordships may be pleased to issue a writ of Mandamus or any other appropriate writ, direction or order, thereby directing the Respondent Nos.2 and 3 to pay to the Petitioner, refund of unutilized Cenvat Credit of Krishi Kalyan Cess aggregating to Rs.43,61,383/- with interest under Section 11BB of the Central Excise Act; (C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to direct the Respondent Nos.2 and 3 forth pay to the Petitioner refund of unutilized Cenvat Credit of Krishi Kalyan Cess aggregating to Rs.43,61,383/- on the terms and conditions that may be deemed fit by this Hon’ble Court; (E) Any other further relief that may be deemed fit in the facts and circumstances of the case may also please be granted.” 5. We have heard the learned advocate, Mr.Paresh Dave appearing with learned advocate, Mr.Amal Dave, who has taken us through the entire record and also has relied upon the various decisions to urge that this shortcut on the part of the CESTAT is impermissible under the law, which ought to have considered the matter on the merits. We have heard the learned advocate, Mr.Paresh Dave appearing with learned advocate, Mr.Amal Dave, who has taken us through the entire record and also has relied upon the various decisions to urge that this shortcut on the part of the CESTAT is impermissible under the law, which ought to have considered the matter on the merits. If at all it was not agreeable, it could have decided in accordance with law, but, remanding the matter to the original authority, is not contemplated under the law. Moreover, he has pointed out as to how the case of the petitioner is different with the detailed factual matrix and the same cannot have the applicability of the decision of the Bomaby High Court rendered in case of Commissioner of Central Excise vs. Bombay Dyeing and Manufacturing Company Ltd. 6. Let Notice be issued, returnable on 02.02.2021.” 3. Affidavit-in-reply is filed on behalf of the respondent Nos.1 to 3 challenging the claim of refund on merit in detail. However, on the issue of the Tribunal not deciding, it is contended that this order is passed by the Tribunal after hearing both the sides and if, the Tribunal has remanded the matter back to the Adjudicating Authority for passing de novo order, it is just and proper order. In short, it has defended the action of the authority concerned of not granting the refund of the KKC and also further defended the action of the CESTAT. 4. We have heard the learned advocate, Mr.Paresh Dave assisted by the learned advocate, Mr.Sudhanshu Mishra for the petitioner and learned senior standing counsel, Mr.Utkarsh Sharma for the respondents. 5. The order of the Tribunal which is impugned in the present petition as per its own order involves the question as to whether the present petitioner is entitled for the refund of accumulated unutilized Cenvat Credit of the KKC lying in the Cenvat Account of the petitioner as on 30.06.2018 due to the reason or implementation of the GST from 01.07.2017. The Tribunal chose to remand the matter by passing the following order: “4. I have heard both the sides and perused the records. I find on the subject issue much water flown and this tribunal’s two larger bench judgments one in the case of M/s.Gauri Plasticulture Pvt. Ltd. and in case of M/s.Steel Strips (supra) are contradictory. The Tribunal chose to remand the matter by passing the following order: “4. I have heard both the sides and perused the records. I find on the subject issue much water flown and this tribunal’s two larger bench judgments one in the case of M/s.Gauri Plasticulture Pvt. Ltd. and in case of M/s.Steel Strips (supra) are contradictory. There are various high courts judgments such as UNION OF INDIA VS. SLOVAK INDIA TRADING CO. PVT. LTd.(supra) from Karnataka High Court, M/S.WELCURE DRUGS AND PHARMACEUTICALS LTD. of Hon’ble Rajasthan High Court and M/S.JAIN VANGUARD POLYBUTLENE LTD from Bombay High Court. Now the larger bench of the Bombay High COurt in the case of M/S.GAURI PLASTICULTURE PVT. LTD. though after considering the SLOVAK INDIA Trading Co.PVT.LTD of Karnataka High Court which was upheld by the Hon’ble Supreme Court taken a view that accumulated unutilized Cenvat Credit cannot be refunded. 4.1 I find that the Larger Bench judgment of the Bombay High Court has been challenged before the Hon’ble Supreme Court in SLP(C) No.007390/2020 registered on 09.06.2020 which is pending at present. In this position of law I am of the view that no purpose will be served if any order is passed by this tribunal when the matter is seized with the Hon’ble Supreme Court. 5. Accordingly, I set aside the impugned order and remand the matter to the Adjudicating Authority for passing the de novo order after the outcome of Hon’ble Supreme Court in the case of BOMBAY DYEING AND MANUFACTURING CO.LTD. V/S. CCE in the aforementioned SLP. Appeal is allowed by way of remand to the adjudicating authority.” 6. We notice that the chief reason for remanding the matter for adjudicating it de novo by the adjudicating authority is the pendency of the matter in case of M/s. M/s.Bombay Dyeing and Manufacturing Company Limited (supra) before the Apex Court. It is a Larger Bench’s judgment of the Bombay High Court challenged before the Apex Court in Special Leave Petition No.007390 of 2020 on 09.06.2020. We are given to understand that the same is still pending before the Apex Court and has not been finally decided. If the matter is still pending before the Apex Court, nobody can make a guess as to in what way it is going to result. We are given to understand that the same is still pending before the Apex Court and has not been finally decided. If the matter is still pending before the Apex Court, nobody can make a guess as to in what way it is going to result. The least the Tribunal could have done was of deciding the matter on merit as per the prevalent law or to keep the matter back. However, it has chosen to remand the matter to the adjudicating authority which is impermissible. 7. This Court in case of Commissioner of Central GST vs. Jay Chemical Industries Ltd., reported in 2018 (19) GSTL 459(Guj.) the question which was pending before the Tribunal was at large before the High Court. The Court held that in such a situation, the appeal ought to have been kept pending till the decision of the High Court with a liberty to both the sides to approach the Tribunal after the decision of the High Court. The approach of the Tribunal is held to have harassed both the Assessee and the Department, the matter was remanded with a direction to keep it pending and decide after the decision of the High Court in Tax Appeal pending before it on the same issue. 7.1 Relevant findings and observations of the Court are as follow: “6.Having heard learned Advocates appearing on behalf of the respective parties and considering the impugned common order passed by the learned Tribunal, we, as such disapprove the manner in which the learned Tribunal has disposed of the appeals. As such, the learned Tribunal ought to have decided the appeals on merits in view of the binding decisions of this Court in the case of Cadila Healthcare Ltd. (supra) and Astik Dyestuff Pvt. Ltd. (supra). However, if the learned Tribunal was of the opinion that in view of subsequent notification No.2/16 dated 03.02.2016, by which explanation has been inserted to the definition of ‘input service’ and the question whether such notification shall be applicable retrospectively or not is at large before this Court in the case of Essar Steel India Ltd., being Tax Appeal No.444 of 2016 and it is not appropriate to decide the appeals on merits, in that case, the learned Tribunal ought to have kept the appeals pending till decision of this Court in the case of Essar Steel India Ltd., being Tax Appeal No.444 of 2016. Instead, the learned Tribunal has disposed of the appeals even without deciding the appeals on merits with liberty to both sides to approach the Tribunal after decision of this Court in the pending appeal in the case of Essar Steel India Ltd., being Tax Appeal No.444 of 2016. Such an order would not help either the Revenue /Department and even the assessee. Such a procedure adopted by the learned Tribunal would cause harassment to the assessee as well as inconvenience to the Department. Therefore, we are of the opinion that the procedure adopted by the learned Tribunal disposing of the appeals without deciding the same on merits with liberty approach the Tribunal after decision of this Court in the pending appeal is neither correct not proper and the same deserves to be quashed and set aside. 7. As recorded hereinabove, even learned Advocate appearing on behalf of the assessee in Tax Appeal Nos.814 and 815 of 2018 has also stated and submitted that the learned Tribunal ought to have kept appeals pending rather than disposing the appeals with above liberty. 8. In view of the above and for the reasons stated hereinabove, all these appeals succeed. The impugned common order passed by the learned Tribunal is hereby quashed and set aside and the appeals are restored to the file of the learned Tribunal and to avoid any further multiplicity of proceedings /appeals before this Court, it is directed that the appeals on remand be kept pending till the decision of this Court in the case of Essar Steel India Ltd., being Tax Appeal No.444 of 2016. 9. The appeals are partly allowed to the aforesaid extent.” 7. In Tax Appeal No.1043 of 2018 decided in case of Commissioner, Central GST and Central Excise Vadodara-II vs. M/s.Meghmani Finchem Ltd., this very issue was decided by this Court by strongly disapproving this approach on the part of the Tribunal. One particular appeal was pending before this Court and the large number of appeals came up for consideration before the Tribunal on the very issue, the Department had placed heavy reliance on the judgment of the High Court and the Assessee relied on the amendment to the definition of the “input credit service” and argued that in all pending cases irrespective of the date of amendment, the same would apply. The Tribunal had option to wait for the outcome of Department’s appeal in case of the pending appeal of the Essar Steel if, the decision in such appeal was likely to be rendered in a foreseeable future. However, if it was of the opinion that the judgment would not be available in the near future, it could have awaited till the outcome. The approach of the Tribunal was not at all approved by the Court in the following words: “4. In view of such facts, the options before the Tribunal were either to await the outcome of the department's appeal in case of Essar Steel India Ltd (supra) if the decision in such appeal was likely to be rendered in near foreseeable future which would in addition to reducing the effort of both sides would also in many cases eliminate one stage of litigation. However, if the Tribunal was of the opinion that the judgement of the High Court may not be available in near future or for any such other good reason, it would not possible or advisable to await the outcome, the option with the Tribunal was to decide the appeals on merits after hearing both sides and as may be advised. Strangely, the Tribunal adopted the third mode. The Tribunal disposed of all appeals “with liberty to both sides to approach the Tribunal soon after the verdict of the Hon'ble High Court in the pending appeal against the Division Bench judgement of this Tribunal in case of Essar Steel India Limited (supra) filed by the Revenue”. While doing so, the Tribunal also added “needless to mention no recovery nor refund would be processed during the period”. 5. For multiple reasons, we do not approve the approach adopted by the Tribunal. Dispensation of justice is not number games and should not be brought down to mere statistics. Through the mode adopted by the Tribunal all that has been achieved is to show disposal of large number of appeals and cross-objections without resolution of the disputes between the parties. This disposal is also not final and is open to reopening of all the issues. This would lead to multiplicity of proceedings. Through the mode adopted by the Tribunal all that has been achieved is to show disposal of large number of appeals and cross-objections without resolution of the disputes between the parties. This disposal is also not final and is open to reopening of all the issues. This would lead to multiplicity of proceedings. The parties, i.e. the department or the assessee, as the case may be, would have to file fresh proceedings once the High Court disposes of the appeal in case of Essar Steel India Ltd. In the mechanism provided, the Tribunal has also left many gaps. For example, there is no clarity as to what time limit within which the parties would have to file fresh proceedings. The Tribunal merely stated that soon after the verdict either side can approach. This term “soon after the verdict” is not possible of any clear application. Further, we wonder what would happen if no appeal is filed as per the liberty granted by the Tribunal. Whether the decision against the losing party would achieve finality; in which case what would happen to the tax or the refund is not clear. At which point of time such finality would be presumed is not specified. All in all, this is the most unsatisfactory manner in which, such large number of proceedings should have been eliminated from the record of the Tribunal which can achieve only statistical purpose. The order passed by the Tribunal serves no other purpose. 6. The Tribunal is a creation of statute. Section 35C(1) of the the Central Excise Act, mandates the Tribunal to dispose of the appeals on merits. It was simply not open for the Tribunal to jettison the litigation in this manner.” 8. In the instant case also, we notice that the approach of the Tribunal is to abdicate its duty of deciding the matter on the merits or to retain the matter till the outcome of the pending matter before the Apex Court. Since this is not permissible, we deem it appropriate that the Tribunal, which is otherwise required to decide the matter on merit, shall decide the same keeping all contentions raised by both the sides before this Court and before the Tribunal open for them to agitate, let the same be decided without further loss of time. 9. With the above direction, this petition is disposed of accordingly.