Shree Shakambari Ferro Alloys vs . Union Of India & Ors
2022 Latest Caselaw 183 Meg

      Serial No. 1
      Regular List
                      HIGH COURT OF MEGHALAYA
                          AT SHILLONG
WP (C) No.264/2021
                                                Date of Order: 28.04.2022
Shree Shakambari Ferro Alloys            Vs.         Union of India & ors
Pvt. Ltd.
Coram:
          Hon'ble Mr. Justice Sanjib Banerjee, Chief Justice
          Hon'ble Mr. Justice W. Diengdoh, Judge

Appearance:
For the Petitioner             : Mr. D. Sahu, Adv with
                                 Ms. M. Gogoi, Adv
For the Respondents            : Dr. N. Mozika, ASG with

Ms. S. Rumthao, Adv

i) Whether approved for reporting in Yes Law journals etc.:

ii) Whether approved for publication in press: Yes/No

JUDGMENT: (per the Hon'ble, the Chief Justice) (Oral) The present petition falls within a narrow compass.

Notwithstanding the several grounds urged on behalf of the respondent

Goods and Services Tax Authorities, the real answer to the issue raised

depends on the interpretation of a previous order of this Court of February

26, 2021 between the same parties.

2. Prior to the issuance of notification No.30/2008-C.E. of June 10,

2008, manufacturers of goods and service providers in the North-East were

governed by notification No.20/2007-C.E. In effect, the previous

notification exempted the Central excise component for the manufacturers

of goods and service providers in the North-East region. This total

exemption regime was altered by the notification of June 10, 2008 that, in

effect, exempted the value added component and not the entirety of the

Central excise component.

3. The relevant notification described the goods in one of the

columns and provided a flat rate of deemed value addition in respect of

such goods. However, the relevant notification also permitted a

manufacturer to not avail of the rate specified in the table set out in the

notification and to apply to the jurisdictional Commissioner for fixation of

a special rate representing the actual value addition in respect of any goods

manufactured and cleared under the notification, if the manufacturer found

that the actual value addition in the production or manufacture of the said

goods was at least 115 per cent of the rate specified in the table. For such

purpose, the notification stipulated that the manufacturer had to make an

application in writing to the jurisdictional Commissioner not later than

September, 30 of the financial year for determination of such special rate,

stating all the relevant facts including the proportion in which the material

or components were used in the production or manufacture of the relevant

goods. A proviso to the relevant paragraph in the notification permitted the

jurisdictional Commissioner to extend the time for making the application

by a period of 30 days.

4. The notification of June 10, 2008 was challenged in various High

Courts and, by an order dated November 20, 2014, the High Court of

Gauhati set aside the same. The relevant order of November 20, 2014 was

carried by way of a petition for special leave to appeal to the Supreme

Court. On December 7, 2015, on an interim application in SLP (C)

No.11878/2015, the Supreme Court stayed the operation of the impugned

judgment and made some order pertaining to the refund to be made by the

Department to the petitioner before the Supreme Court. What is of

relevance in the order is that the operation of the judgment of the High

Court of Gauhati of November 20, 2014 invalidating the notification of

June 10, 2008 was stayed.

5. The respondents contend that as a consequence of such stay

granted by the Supreme Court, the legal effect was that the relevant

notification revived. The respondents maintain that as a result of such

order of the Supreme Court, the application for special rate of value

addition had to be made in terms of the notification; and, upon the extended

time as per the notification of June 10, 2008 elapsing, a request for a

special rate of value addition for any particular product could no longer be

made or entertained.

6. In the light of a subsequent event and an order inter partes that

binds the respondents herein, it is not necessary to go into the effect of the

order of the Supreme Court passed on December 7, 2015 as contended by

the Department. However, it may only be recorded that when an order is

stayed by a superior forum, the legal effect is that the relevant order

impugned before the superior forum remains in suspended animation. A

mere stay of an order does not imply that the order impugned is obliterated.

It is only upon the order impugned being set aside would that order be

obliterated and it will be deemed as if the order had never been passed.

Further, certain practical difficulties arise in such a scenario. If a particular

notification provides for certain steps to be taken within a specified time

and such notification is assailed and the same is stayed or set aside, persons

entitled to make the application may not have had the opportunity to apply

thereunder before the notification may have been stayed or set aside. If,

after a lapse of a long period of time, the final order invalidating the

notification is passed and such order is stayed by a superior forum, some

provision has to be made for applicants entitled to apply under the

notification but who had missed the bus because of the pending

proceedings, to avail of the opportunity. Be that as it may.

7. The order of the High Court of Gauhati of November 20, 2014

invalidating the notification of June 10, 2008 was set aside by the Supreme

Court by an order dated April 22, 2020.

8. Subsequent to such order of the Supreme Court, the writ

petitioner herein instituted WP (C) No. 32 of 2021 in this Court which was

disposed of on the basis of the submission made on behalf of the

respondents herein as will be evident from the relevant order:

"Dr. N. Mozika, learned ASG for the respondents at the outset having taken instruction from his client makes a statement that within 3 (three) months from today respondents No.2 & 3 shall settle the account of the petitioner with regard to special rate of value addition admissible to the petitioner and that money will be adjusted towards the demand notice issued to the petitioner which is impugned in the present petition. Statement accepted.

In the light of the statement, Mr. D. Sahu, learned senior counsel for the petitioner fairly concedes that petitioner's grievance stands redressed.

Petition accordingly disposed of with direction to the respondents that till the decision by the respondents regarding special rate of value addition due to the petitioner is calculated and adjusted, no coercive action shall be taken against the petitioner."

9. The present petition has been instituted since the respondents

herein have not settled the accounts of the petitioning assessee in terms of

the submission recorded in the order dated February 26, 2021 and in the

light of the respondents now seeking to assert that the petitioning assessee

applied for determination of the special rate of the value addition at a time

long after the period therefor under the notification of June 10, 2008.

Indeed, an additional affidavit has been filed on behalf of the respondent

authorities focusing on the order of February 26, 2021 and trying to

wriggle out of the respondents' obligation in terms thereof.

10. In view of the submission of the Department as recorded in the

order dated February 26, 2021 which has attained finality and which has

not sought to be assailed by the Department, the issue as to whether the

application was made by the petitioning assessee for determination of a

special rate of value addition within the permissible time or not cannot be

reopened. Implicit in the submission of the Department as recorded in the

order of February 26, 2021 is the acceptance that the matter would be

considered on merits. If the Department wanted to assert that the belated

application of the petitioning assessee could not be entertained in terms of

the relevant notification, the issue would have called for an answer in

course of the proceedings. It was open to the Department to canvass such

ground. However, upon the Department not raising such objection and

making a submission that implied and was reasonably understood to imply

that the matter would be considered on merits, the petitioner herein was

induced by the submission to accept the same in the hope that the

determination as sought would be conducted in accordance with law. The

Department is now estopped from urging the objection of limitation and

the respondents are bound by the submission attributed to them in the order

of February 26, 2021 to consider the application for determination of the

special rate of value addition in accordance with law, irrespective of when

the application therefor may have been made by the petitioning assessee.

11. At this stage, it is pointed out on behalf of the petitioner that by

a communication in writing dated June 1, 2021, the Commissioner of

Goods and Services Tax, Shillong had indicated at paragraph 3 of the

relevant document that the rate of value addition in respect of the goods

manufactured by the petitioning assessee was determinable at the rate of

81.9 per cent. Full particulars of the determination were indicated.

12. Accordingly, WP(C) No. 264 of 2021 is disposed of by affording

the respondents a period of four weeks from date to affirm or alter the

determination indicated in the letter of June 1, 2021 in accordance with

law so that appropriate steps consequent thereupon can be taken by the

parties thereafter.

13. There will be no order as to costs.

       (W. Diengdoh)                                  (Sanjib Banerjee)
           Judge                                        Chief Justice


Meghalaya
28.04.2022
"Lam DR-PS"