M/S Ferra Tech vs The Union Of India And 2 Ors
2021 Latest Caselaw 3389 Gua

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GAHC010205342021




                              THE GAUHATI HIGH COURT
   (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                                 Case No. : WP(C)/6613/2021

            M/S FERRA TECH
            A PARTNERSHIP FIRM REGISTERED UNDER THE INDIAN PARTNERSHIP
            ACT, 1932 AND HAVING THEIR REGISTERED OFFICE AT BHIMPARA GAON,
            P.O. PAKARIJAN, TINSUKIA-786125, ASSAM AND REPRESENTED THROUGH
            THEIR AUTHORIZED PARTNER MR UMESH PATWARI, AGED ABOUT 54
            YEARS, SON OF GOVINDLAL PATWARI.



            VERSUS

            THE UNION OF INDIA AND 2 ORS.
            REP. BY THE SECRETARY TO THE GOVT. OF INDIA MINISRY OF FINANCE,
            DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI-110001.

            2:THE PRINCIPAL COMMISSIONER

             CGST COMMISSIONERATE
             DIBRUGARH
             GUWAHATI
             MILAN NAGAR 'F' LANE
             P.O. C.R. BUILDING
             DIBRUGARH-786003
             ASSAM

            3:THE ASSISTANT COMMISSIONER OF SERVICE TAX

             CENTRAL GST DIVISION
             TINSUKIA DIBRUGARH ROAD
             TINSUKIA-786123
             ASSA

Advocate for the Petitioner   : MR. D SARAF
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Advocate for the Respondent : ASSTT.S.G.I.




                                  BEFORE
                  HONOURABLE MR. JUSTICE KALYAN RAI SURANA

                                             ORDER

Date : 10.12.2021

Heard Mr. D. Saraf, learned counsel for the petitioner. Also heard Mr. H. Gupta, learned CGC, appearing for the respondent no. 1 and Mr. S.C. Keyal, learned standing counsel for the respondent nos. 2 and 3.

2) By filing this writ petition, the petitioner has assailed the impugned order- in- original dated 05.11.2021, demand-cum-show cause notice dated 20.11.2020 and for directing the respondent authorities to decide the application for fixation of special rate of excise duty before initiating any process for recovery of excise duty, penalty, etc. from the petitioner.

3) Issue notice returnable on 10.01.2022. The learned counsel for the petitioner shall serve requisite extra copies of the writ petition to the learned CGC and learned departmental counsel in course within 2 days.

4)                Heard both sides on the prayer for interim relief.



5)                 The case of the petitioner is that their partnership firm is a

manufacturing concern and it is claimed that it had commenced commercial production from 06.02.2009. It is projected that the petitioner was availing Page No.# 3/10

excise duty exemption in terms of notification dated 25.04.2007. However, the said notification was amended vide notification dated 27.03.2008, whereby the value addition undertaken in the manufacture of goods under Area Based Exemption had been introduced and it is projected that in connection with goods covered by Chapter 72, the petitioner became entitled to refund of central excise duty paid on value addition, which was 39% as per serial no. 8 instead of 100% was hitherto available under notification dated 25.04.2007. Thereafter, notification no. 20/2008, 38/2008 and 56/2008 were issued to amend notification dated 25.04.2007. An aggrieved manufacturer assailed the notifications dated 27.03.2008 and 10.06.2008 and this Court by judgment and order dated 24.06.2009 allowed W.P.(C) No. 2718/2008, thereby setting aside the said two notifications, holding that the writ petitioner therein was entitled to 100% exemption from payment of excise duty as per notification dated 08.07.1999 and 25.04.2007. W.A. No. 243/2009 filed to challenge the judgment was dismissed on 20.11.2014. The Revenue filed SLP before the Supreme Court of India and the said Hon'ble Court by order dated 07.12.2015 in IA No. 3/2015 in SLP(C) No.11878/2015, stayed the operation of the impugned judgment dated 20.11.2014 in WA No. 243/2009, inter alia, directing the authorities to release 50% of the amount due to the respondents therein in terms of the judgment, subject to furnishing solvent surety to the satisfaction of the jurisdictional Commissioner and on such condition, the contempt proceedings initiated against the concerned Excise officials was also stayed. It is projected that thereafter the respondent authorities had released to the petitioner the refund of Rs.1,52,55,181/-.

6) The Civil Appeal No. 2256-2263/2020 filed by the Revenue was Page No.# 4/10

allowed by the Supreme Court of India by order dated 22.04.2020. Thereafter, the respondent no. 3 had served to the petitioner reminder letters dated 28.05.2020, 22.06.2020, 16.07.2020 and 18.09.2020 for refund of excess of eligible amount so paid to the petitioner. The petitioner by reply dated 12.10.2020 and 13.10.2020, expressed their incapacity to return the amount as their business and liquidity was bad due to Covid-19 pandemic, as such, request was made to grant some more time to pay refund in installments. The respondent no. 3 had issued a show cause notice dated 20.11.2020 against which a reply dated 01.01.2021 was submitted by the petitioner. By a notice dated 14.09.2021, the respondent no. 3 had called the petitioner for a personal hearing. In course of personal hearing, the petitioner had submitted a written statement.

7) The learned counsel for the petitioner has submitted that in the meanwhile, the petitioner had come to learn that this Court by order dated 24.03.2021 in W.P.(C) 1644/2021 ( M/s. Jyothy Labs Ltd. v. The Union of India and 2 others) and judgment and order dated 12.08.2021 in W.P.(C) 3569/2021 (M/s. Jyothy Labs Ltd. v. The Union of India & 2 others ), petitioner had taken a plea that as an interim order by the Supreme Court of India was in favour of the petitioner till 22.04.2020 and therefore, they had no occasion to file application for special rate of value addition as such it was impossible to file application for fixation of special rate with the timeline and prayed that till disposal of the application for special rate, the proceeding under show cause notice be kept in abeyance.

8) The learned counsel for the petitioner has submitted that the Page No.# 5/10

time limit to file such application was not later than 30 th of September of the relevant financial year, but during the said period, due to Covid-19 pandemic, the petitioner could not take appropriate steps. Nonetheless, by virtue of orders passed by the Supreme Court of India in Suo Motu W.P.(C) No.3/2020 and MA. No. 665/2021 arising out of the said case, the period of limitation, whether condonable or not stood extended from 15.03.2020 till 02.10.2021. Accordingly, it is submitted that the application dated 20.10.2021 is required to be considered and disposed of before realizing refund. In support of his submissions, the learned counsel for the petitioner has placed reliance on (i) order dated 24.03.2021 passed by this Court in W.P.(C) 1644/2021 ( M/s. Jyothy Labs Ltd. v. The Union of India and 2 others ), (ii) judgment and order dated 12.08.2021 passed by this Court in W.P.(C) 3569/2021 ( M/s. Jyothy Labs Ltd. v. The Union of India & 2 others ), (iii) orders passed from time to time by Supreme Court of India in Re: Cognizance for Extension of Limitation, SMW(C) No. 3/2020, and (iv) orders passed from time to time by Supreme Court of India in Re: Cognizance for Extension of Limitation, M.A. No. 665/2021 in SMW(C) No. 3/2020.

9) Per contra, the learned standing counsel for the respondent nos. 2 and 3 has submitted that the demand for refund was occasioned because by virtue of the conditional interim order passed by the Supreme Court of India, the Central Excise Department had made conditional refund of 50% of excise duty paid. It is also submitted that due to the terms imposed by the Supreme Court of India in the said order, the petitioner had submitted solvent surety. Accordingly, it is submitted that the petitioner was required to refund the excise duty assessed with interest and penalty immediately after the appeal of the Page No.# 6/10

respondent herein was allowed. It is submitted that the time-lines given in the Excise notification cannot be interpreted so as to give it a meaning that the time was extended by virtue of orders passed by the Supreme Court of India. It is also submitted that in the cited case of Jyothy Labs Ltd. (supra), was not applicable on facts because the said case the judgment of the Supreme Court of India was passed on 22.04.2020 and the application had been made on 18.05.2020, i.e. within one month and in the said context, it is submitted that the petitioner herein had submitted its application only on 20.10.2021. In support of his submission, the learned standing counsel for the respondent nos. 2 and 3 has placed reliance on the following cases, (i) Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company & Ors., (2018) 9 SCC 1 , and (ii) Commissioner of Central Excise, Shillong v. Woodcraft Products Ltd., (2002) 10 SCC 734.

10) It is seen that this Court in judgment and order dated 12.08.2021 in the case of M/s. Jyothy Labs Ltd. (supra), had considered similarly situated factual situation, save and except that while in the present case, the application for fixing a special rate was submitted on 20.10.2021, but in the cited case, such application was made on 18.05.2020. However, this Court had given its final verdict in favour of the assessee. The operative part of the said judgment is quoted below:-

"17. Without going into the aspect whether the requirement to submit such

application within 30th September of the given financial year is a mandatory requirement or a directory requirement, what we take note of is that such a provision has been incorporated to streamline the process for submission of the application Page No.# 7/10

seeking for the fixation of a special rate to the value addition to manufactured goods.

18. We have to take note of that as long as there was a judgment of the Division Bench in WA No.243/2009 in favour of the petitioner interfering with the modification for exemption of excise duty and the matter thereafter was pending before the Supreme Court on an appeal with an interim order dated 07.12.2015 requiring a refund of the 50% of the amount of excise duty, the occasion had not arisen for the assessee to go further and seek for a fixation of a special rate in respect of the value addition to the manufactured goods and even if there would have been a determination of such special rate, the same would have remained ineffective and un-implementable till the Supreme Court had finally decided the issue which was done as per the judgment dated 20.04.2020 in Civil Appeal No.2256-2263 of 2020, and further the relevance of such determination would again depend on the outcome of the appeal that was pending before the Supreme Court. We have taken note of that immediately after the judgment dated 20.04.2020 in Civil Appeal No.2256-2263 of 2020, when the occasion had again arisen for the petitioner assessee to seek for fixation of a special rate in respect of the value addition to the manufactured goods for the purpose of payment of the excise duty, the application for such request was made within a period of one month, which is on 18.05.2020. From such point of view, it cannot be wholly said that the petitioner would now be prevented from claiming their legal right for fixation of a special rate to the value addition to the manufactured goods merely because such application was not made within 30th September of that given financial year to which the claim for fixation of the said rate pertains to.

19. In the peculiar facts and circumstances of the present case, where the necessity for making of a request for fixation of the special rate for the value addition to the manufactured goods may not have occasioned earlier, we deem it appropriate that the Principal Commissioner of GST, Guwahati decides the application of the petitioner dated 18.05.2020 on its own merit as regards the Page No.# 8/10

claim for fixation of a special rate to the value addition to the manufactured goods of the given financial year. We also take note of that in the earlier order dated 24.03.2021 in WP(C) No.1644/2021, it was an agreed stand of the respondent GST Department that the application of the petitioner requesting for fixation of a special rate on the value addition to the manufactured goods would be considered and the possibility that the application would be rejected on the ground of it having not been submitted prior to 30th September of that given financial year was not raised when the said order was passed by the Court.

20. 20. If any such apprehension would have been expressed, the matter possibly would have been decided in the earlier writ petition itself. From such point of view also, on the principle of constructive res-judicata, the ground for rejecting such application for the reason that it was not submitted within 30th September of the given financial year would perhaps be not available for the respondent authorities for rejecting the application.

21. In the circumstance, we direct the Principal Commissioner, GST, Guwahati to consider the application of the petitioner dated 18.05.2020 seeking for fixation of a special rate to the value addition to the manufactured goods of the given financial year and decide the same as per law."

11) For the purpose of considering the prayer for interim relief, the Court finds that in the herein before quoted paragraphs of the case of M/s. Jyothy Labs Ltd. (supra), this Court had categorically held that the requirement of requesting for fixation of a special rate in respect of value addition to the manufactured goods had arisen only after the final judgment of the Supreme Court of India on 22.04.2020. It is seen that by virtue of orders passed by the Supreme Court of India in Suo Motu W.P.(C) No.3/2020 and MA. No. 665/2021 arising out of the said case, the period of limitation, whether condonable or not stood extended from 15.03.2020 till 02.10.2021 and it was further provided in Page No.# 9/10

para-II of the order dated 23.09.2021 in M.A. No. 665/2021 as follows - " II. In cases where the limitation would have expired during the period between 15.03.2020 till 02.10.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 03.10.2021. In the event actual balance period of limitation remaining, with effect from 03.10.2021, is greater than 90 days, that longer period shall apply."

12) Therefore, it appears that the petitioner has been able to show a prima facie case for hearing because if the requirement of requesting for fixation of a special rate in respect of value addition to the manufactured goods had arisen only after the final judgment of the Supreme Court of India on 22.04.2020, the period of limitation would stand extended for a period of 90 days from 03.10.2021 and therefore, the application which was submitted on 20.10.2021 by the petitioner was well within the period of limitation. Therefore, the balance of convenience tilts in favour of interim protection to the petitioner.

13) In view of the discussions above and in light of the judgment dated 12.08.2021 by coordinate Bench of this Court in the case of M/s. Jyothy Labs Ltd. (supra), the Court is of the considered opinion that the petitioner is entitled to interim protection till disposal of the application dated 20.10.2021 by the competent authority of the respondent nos. 2 and 3. Accordingly, the respondent nos. 2 and 3 authority are restrained from coercive action against the petitioner for enforcing refund in terms of demand cum show cause notice bearing F.No. GEXCOM/ SCN/CE/44/2020-O/o DC/AC-CGST-DIV-TSK-COMMRTE- DIBRUGARH/3106 dated 20.11.2020 till disposal of the application dated 20.10.2021 submitted by the petitioner before the respondent no. 3 for fixation Page No.# 10/10

of a special rate. However, this interim protection hereby granted is subject to condition that till such time the application dated 20.10.2021 of the petitioner is decided, if the tenure or validity of the herein before referred solvency surety bond submitted by the petitioner in terms of interim order of the Supreme Court has lapsed, the petitioner shall extend the tenure/ term of the said solvency bond till further orders of this Court and furnish the same to the respondent no.

3. Such exercise is not required if the tenure or validity of the said solvency bond is otherwise valid in all respect.

14) None of the observations made herein is intended to be construed as final opinion of the Court as such none of the parties shall be prejudiced by this order when the matter is finally heard on merit.

15)             List on 10.01.2022.




                                                            JUDGE



Comparing Assistant