M/S.Diamond Shipping Agency Pvt. Ltd., v. The Commissioner Of Gst And Central Excise

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 16.07.2024

CORAM:

THE HONOURABLE MR.JUSTICE C.SARAVANAN and W.M.P.(MD)No.1555 of 2020 M/s.Diamond Shipping Agency Private Limited, Represented by its Joint Managing Director P.Sivakumar. ... Petitioner Vs.

1.The Commissioner of GST & Central Excise, Central Revenue Buildings, Bibikulam, Madurai - 625 002.

2.The Union of India, Represented by the Secretary to Government of India, Ministry of Finance, Department of Revenue, North Block, New Delhi.

... Respondents PRAYER: Writ Petition filed under Article 226 of the Constitution of India for issuance of Writ of Certiorari to call for the records pertaining to order in original No.05/2019 dated 18.09.2019 passed by the first respondent herein and quash the same holding the same to have been passed without jurisdiction, contrary to law and violative of the principles of law.

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For petitioner : Mr.N.Viswanathan For respondent : Mr.N.Dilip Kumar Senior Standing Counsel *****

ORDER

The petitioner is before this Court against the impugned Order-in-Original No.MDU-ST-COM-05-2019 dated 18.09.2019.

2. By the impugned order, the first respondent has confirmed the demand proposed in show cause notice bearing reference in SCN Sl.No.01/2019 STCOMMR-TVL dated 03.01.2019. The operative portion of the impugned order reads as under:

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3. The demand pertains to the following issues:

4. The learned Senior Standing Counsel for the respondents, submits that this Writ Petition is devoid of merits as the petitioner has an alternative remedy. It is submitted that even if the law has been settled and nothing precluded, the petitioner for working out the remedy before the Appellate Forum. 4/10

5. That apart, it is submitted that there is no scope of interference and Article 226 of the Constitution of India as Court is concerned only the decision making process and not to the decision made in the impugned order. Hence, prays for dismissal of this Writ Petition.

6. It is noticed that as far as the demand Nos.1 and 2 are concerned, the issues have now been answered in favour of the petitioner by the Hon'ble Supreme Court in the case of State of West Bengal vs. Culcutta Club Limited reported in 2019 (29) GSTL 545 (SC) and in terms of the decision of the Hon'ble Division Bench of this Court in the case of M/s.KTV Health Food Private Limited vs. Union of India rendered in W.P.Nos.10330 of 2020 and batch, dated 29.09.2022. Therefore, prima facie, the demand at serial Nos. 1 and 2 are not sustainable.

7. As far as the demand No.3 is concerned, it is noticed that the demand has been made on the service provided by the man power recruitment/security agencies.

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8. The learned counsel for the petitioner submits that there is no proper discussion in the impugned order. According to the petitioner, to the extent that the service was provided by the Company, the service tax had been paid by the service provider and in so far as the service received from the proprietary-cumpartnership concern, the petitioner has paid the same on the reverse charges in terms of the Notification No.30/2012-ST dated 20.06.2012.

9. The petitioner appears to have a reasonable case. Therefore, this aspect would require re-verification.

10. Similarly, the demand No.4 regarding the non payment of amount on account of the common inputs under Section 6(3) of Cenvat Credit Rules, 2004 is concerned, it is noticed that the petitioner has availed Input Tax Credit of Rs.18,41,719/- for rendering service which are liable to be taxable and exempted. It appears that the petitioner has not maintained separate account as is contemplated under Rule 6(3) of the Cenvat Credit Rules, 2004. However, there is a concession that is available to the petitioner in terms of Rule 6(3AA) of the Cenvat Credit Rules, 2004. The first respondent has denied the same on the ground that the petitioner has not followed the procedure. This aspect can be re6/10

examined as the impugned order does not give a clear reasoning. If the denial of the benefit of Rule 6(3AA) of the Cenvat Credit Rules, 2004 are purely on account of procedural irregularity, same can be condoned.

11. As far as the demand Nos.5 and 8 is concerned, the petitioner is not contesting the dispute and has paid the claim amount. However, there is no clear indication as to whether the amount paid by the petitioner has been appropriated in the impugned order. This also needs a verification.

12. As far as the demand No.6 is concerned, the Court is of the view that the matter can be remitted back for re-verification for passing fresh orders.

13. As far as the demand No.7 regarding the non-payment of service tax for the insurance claim is concerned, it appears that the petitioner had engaged the service of Surveyor for surveying the damaged goods, which were lost during the flood in 2015. The petitioner has, thereafter, received insurance claim from the insurance company.

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14. Prima facie, the petitioner cannot be said to have been provided service for processing. It is a compensation paid by the insurance company for the loss suffered by the petitioner due to flood during November 2015. The conclusion in the impugned order therefore appears to be flawed and therefore, this aspect also would require re-examination.

15. That apart, it is noticed that the impugned order also appropriated and a sum of Rs.7,80,465/-, which was paid by the petitioner over the demand No.1, which issue now stands covered in favour of the petitioner. There are several appropriations made in the impugned order. Since the demand as far as the payment of service tax on club membership fee and the Ocean freight charges for import of goods are not sustainable. The appropriation made by the first respondent also require refund or adjustment towards other tax liabilities after verification.

16. Heard learned counsel for the petitioner and learned Senior Standing Counsel for the respondents.

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17. Considering the fact that the petitioner may have a case on merits, the Court is of the view that the impugned order is set aside and the matter is remitted back to the first respondent. The first respondent shall also examine in the light of the development whether any case was made out against the petitioner for invoking extended period of limitation.

This Writ Petition is disposed of, with above directions. No costs. Consequently, connected miscellaneous petition is closed. Index : Yes / No 16.07.2024 Internet : Yes / No apd 9/10

C.SARAVANAN, J.

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