Case Briefs

Customs, Excise & Service Tax Appellate Tribunal (CESTAT): Anil Choudhary (Judicial Member) allowed an appeal which was filed on the ground that in the facts and circumstances and the documents produced, there could not be any doubt about export of finished goods which were lying in stock on the date of debonding.

The counsel submitted that appellant had submitted complete documents for verification namely – copy of ER-I, copy of shipping bill, copy of export promotion invoice, copy of bill of lading. Further, the goods were exported soon after debonding and admittedly duty have been paid on such goods at the time of debonding.

The Tribunal found that the appellant had exported 448 units of handicraft on 30-07-2015, within a week after the date of debonding being 27-07-2015 when only 153 units were lying in stock. Thus, the refund claim have been rejected on presumptions and assumptions that such 153 units may not have been included in the exported units as there has been further production of 448 units on 28 and 29-07-2015. Such presumption was drawn without any adverse finding or any adverse material on record. It was held that the appellant had exported 153 units lying in stock on the date of debonding. Accordingly, the impugned order was set aside. It was further held that appellant was entitled to refund of the duty of Rs.7,22,290/- relying on the Division Bench of this Tribunal in Parle Agro (P) Ltd. v. Commissioner –CGST-2021-TIOL-306-CESTAT-All. It cannot be conclusively proved that they have exported the goods which were lying in stock, at the time of debonding.[Sun Art Exporter v. Commr. Of CGST, 2021 SCC OnLine CESTAT 347, decided on 01-07-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): P.K. Choudhary (Judicial Member) partly allowed an appeal which was filed against the Order-in-Appeal whereby two separate appeals of the appellant against two Orders-in-Original had been dismissed. The basic issue recorded by the Commissioner (Appeals) was whether confiscation of goods and imposition of fine and penalty by the Lower Authority in absence of valid PSI certificate was maintainable.

It was contended on behalf of the appellant that the imported goods were declared as Tin Waste and Scrap (Light Melting Scrap) in accordance with the import documents provided by the foreign supplier. Only during 100% examination after import, a Chartered Engineer was appointed who opined on visual examination that the goods are Tin Plated Steel Scrap as steel predominates by weight. It was contended that prior to such inspection, it was not possible for the appellant to verify the actual nature of goods being supplied by the foreign supplier. The counsel for the appellant further submitted that there was neither any knowledge nor reason to believe on the part of the appellant herein w.r.t. the alleged mis-declaration of the goods so imported. He further submitted that the goods imported during January, 2013 were of no material value as on date and as such, the appellant was no more interested in getting release of the goods against the redemption fine as imposed by the Adjudicating Authority.

The Tribunal after perusing the records found that the goods declared as Tin Waste and Scrap (Light Melting Scrap) were on verification by the qualified Chartered Engineer certified as Tin Plated Steel Scrap since steel predominates by weight. The appellant had not asked for any re-test or alike at the relevant point of time. On the contrary the appellant/ importer had waived his right of show cause notice and/or hearing at the stage of adjudication and hence, the contention on behalf of the appellant before me that the certificate was issued by the Chartered Engineer on visual examination, cannot come to rescue of the appellant with regard to the proper description of the goods. The Tribunal reminded that importation was permitted only against Pre Shipment Inspection

Certificates and it was settled position of law that conditions for import, if not fulfilled, the importation was not permitted. The Tribunal further explained that when goods imported or exported without complying with the conditions subject to which such goods are permitted for export and import, the goods shall be rendered as ‘Prohibited Goods’.

The Tribunal while partly allowing the appeal explained that at the time of importation of the goods, admittedly, Pre Shipment Inspection Certificates were not available and the goods were wrongly described as scrap of tin instead of scrap of steel. The appellant could not even produce such certificates prior to adjudication and thus the order of confiscation of the imported goods was proper and correct under Section 111(d) of the Customs Act, 1962 and thus upheld on the other hand the law requires existence of mens rea and maintenance of balance of convenience prior to imposition of penalty upon any person and in the present case there was no existence of ingredient of section 112 of the Customs Act, 1962 nor any mens rea and hence, the imposition of penalty upon the appellant was bad in law and liable to be quashed.[Sanjay Kumar Agarwal v. Commr. Of Customs, 2020 SCC OnLine CESTAT 397 ; decided on 23-12-2020]


Suchita Shukla, Editorial Assistant has put this story together

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): The Bench of Dinesh Singh (Presiding Member) observed that:

“Consumer has the right to know, before he exercises his choice to patronize a particular retail outlet, and before he makes his selection of goods for purchase, that additional cost will be charged for carry bags, and also the right to know the salient specifications and price of the carry bags.”

In the present matter, petitioner, Big Bazaar (Future Retail Ltd.) was the Opposite Party before the District Forum.

Condonation of Delay

The petition was filed with self-admitted delay of 60 days and the reasons laid down for condonation of delay were with regard to the managerial inefficiency and perfunctory and casual attitude to the law of limitation.

Though the above-stated reasons were illogical and unpersuasive, yet in the interest of justice, delay was condoned in light of providing fair opportunity.

Issue

Charging additional cost (Rs 18 in this case) for ‘carry bags’ to carry the goods purchased by the complainant was concluded as an unfair trade practice on the part of OP by the two Fora below.

hence, OP Co. was directed to refund the cost of ‘carry bags’ and pay compensation of Rs 100 along with the cost of litigation which was Rs 1100 and Rs 5000 to be deposited in the Consumer Legal Aid Account.

Revision Petition

The instant revision petition was filed by the OP Co. under Section 58(1)(b) of the Consumer Protection Act, 2019 before this Commission.

[The jurisdiction of this Commission under both sections i.e. Section 21(b) of the Act 1986 and Section 58(1)(b) of the Act 2019 is the same (the articulation in both is identical)]

Bench noted the fact that earlier OP was providing ‘carry bags’ made of polythene without charging additional costs and later when it started providing cloth carry bags it started charging additional cost.

In light of the above, the Commission expressed that:

Prominent prior notice / signs / announcement / advertisement / warning to the consumers, before the consumers exercised their choice to make their purchases from the outlets of the Opposite Party Co., that additional cost will be charged for carry bags, was not there.

In the present case, the consumers were not allowed/were not in a position to/did not have prior notice or information to take their own ‘carry bags’. In fact, after the purchase was completed and at the time of making the payment, they were being charged additionally for the cost of ‘carry bags’.

Fora Below

The Forums below appraised the case and returned with concurrent findings of deficiency and unfair trade practice.

Notice issued by Co-Ordinate Benches

The argument made by Senior Counsel, in the hearing on admission on 01-12-2020, that in “similar” cases of other traders notice has been issued by co-ordinate benches of this Commission, is not tenable.

Mere issuance of notice by a co-ordinate bench in “similar” cases of other traders is not a binding precedent.

Cloth Carry Bags

Carry bags of undisclosed specifications were forced on the consumers at the price as fixed by the Opposite Party Co., the consumers were forced to accept the carry bags, of undisclosed specifications, at the price fixed.

Adding to the above, Bench stated that a mere notice at the payment counter or consumer being informed at the payment counter that additional cost will be charged for ‘carry bags’ after the purchase from the store concerned has been made, should not be the case.

“It also cannot be that carry bags of (undisclosed) specifications and of price as fixed by the Opposite Party Co. are so forced on the consumer.

Such notice or information at the time of making payment not only causes embarrassment and harassment to the consumer and burdens him with additional cost but also affects his unfettered right to make an informed choice of patronizing or not patronizing a particular outlet at the initial stage itself and before making his selection of goods for purchase.”

Therefore, the Commission found such practice of disclosing the price of carry bags at the payment counter to be unquestionably ‘unfair trade practice’ under Section 2(1)(r) of the Act 1986 [corresponding Section 2(47) of the Act 2019].

Right to Know

As a matter of Consumer rights, the consumer has the right to know that there will be an additional cost for ‘carry bags’ and also to know the salient specifications and price of the carry bags, before he exercises his choice of patronizing a particular retail outlet and before he makes his selection of goods for purchase from the said retail outlet.

Commission in very clear words expressed that:

“…arbitrarily and highhandedly deviating from its past practice, deviating from the normal, not giving adequate prominent prior notice or information to the consumer before he makes his choice of patronizing the retail outlet, and before he makes his selection for purchase, imposing the additional cost of ‘carry bags’ at the time of making payment, after the selection has been made, forcing carry bags without disclosing their salient specifications at price as fixed by the Opposite Party Co., putting the consumer to embarrassment and harassment, burdening the consumer with additional cost, in such way and manner, is decidedly unfair and deceptive.”

Hence, the Commission directed OP to discontinue its unfair trade practice of arbitrarily and highhandedly imposing an additional cost of carry bags on the consumer at the time of making payment, without prominent prior notice and information before the consumer makes his choice of patronizing its retail outlets and before the consumer makes his selection of goods for purchase, as also without disclosing the salient specifications and price of ‘carry bags’.

The above order is made under Section 39(1)(g) of the 2019 Act.  However, the Commission made it explicitly clear that:
“It is made explicit that the critique apropos the Opposite Party Co. and the order under Section 39(1)(g) of the Act 2019 to the Opposite Party Co. have been made inter alia considering that it is a company with the wherewithal and inter alia considering the way and manner in which it conducts its business of retail. As such, nothing in the critique and in the order made under Section 39(1)(g) of the Act 2019 can be (mis) construed to be made applicable to differently / lesser placed traders, the applicability can only be made on similarly / better-placed traders, similarly / better situate, having similar way and manner of conducting their business.” [Big Bazaar (Future Retail Ltd.) v. Ashok Kumar, 2020 SCC OnLine NCDRC 495, decided on 22-12-2020]


Advocates who appeared before the Commission:

For the Petitioner: Sudhir K. Makkar, Senior Advocate along with Saumya Gupta, Advocate and Yogita Rathore, Advocate.

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of Ashok Bhushan*, R. Subhash Reddy and MR Shah, JJ has held that while determining the taxable value of lottery the prize money is not to be excluded for the purpose of levy of GST.

The Court explained that for determining the value of the lottery, there is statutory provision contained in Section 15 read with Rule 31A. Section 15 of the Central Goods and Services Tax Act, 2017 by sub-section (2) provides what shall be included in the value of supply. What can be included in the value is enumerated in sub-clause (a) to (e) of sub-section (2) of Section 15. Further, subsection (3) of Section 15 provides that what shall not be included in the value of the supply.

“What is the value of taxable supply is subject to the statutory provision which clearly regulates, which provision has to be given its full effect and something which is not required to be excluded in the value of taxable supply cannot be added by judicial interpretation.”

Further, Rule 31A as noted above, sub-rule (2) as amended clearly provides that value of supply shall be deemed to be 100/128 of the face value of ticket or of the prize as notified in the Official Gazette by the Organising State, whichever is higher.

The Court said that the value of taxable supply is a matter of statutory regulation and when the value is to be transaction value which is to be determined as per Section 15 it is not permissible to compute the value of taxable supply by excluding prize which has been contemplated in the statutory scheme. It was hence, held that

“When prize paid by the distributor/agent is not contemplated to be excluded from the value of taxable supply, we are not persuaded to accept the submission of the petitioner that prize money should be excluded for computing the taxable value of supply.”

[Skill Lotto Solutions v. Union of India, 2020 SCC OnLine SC 990, decided on 03.12.2020]


*Justice Ashok Bhushan has penned this judgment

For petitioner: Senior Advocate Ravindra Shrivastava,

For Union of India: Additional Solicitor General Vikramjit Banerjee

For Intervenor: Senior Advocate C.A. Sundaram

Also read: Supreme Court upholds constitutionality of imposition of GST on lotteries, betting and gambling 

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of Ashok Bhushan, R. Subhash Reddy and MR Shah, JJ has upheld the constitutionality of imposition of GST on lotteries, betting and gambling.

Here are the key takeaways from the judgment: 

Whether the inclusion of actionable claim in the definition of goods as given in Section 2(52) of Central Goods and Services Tax Act, 2017 is contrary to the legal meaning of goods and unconstitutional?

The inclusion of actionable claim in definition “goods” as given in Section 2(52) of Central Goods and Services Tax Act, 2017 is not contrary to the legal meaning of goods nor it is in conflict with the definition of goods given under Article 366(12).

“The Constitution framers were well aware of the definition of goods as occurring in the Sale of Goods Act, 1930 when the Constitution was enforced. By providing an inclusive definition of goods in Article 366(12), the Constitution framers never intended to give any restrictive meaning of goods.”

Parliament by the  Constitution (One Hundred and First Amendment) Act, 2016 inserted Article 246A, a special provision with respect to goods and services tax in which special power has to be liberally construed empowering the Parliament to make laws with respect to goods and services tax. Article 246A begins with non obstante clause that is “Notwithstanding anything contained in Articles 246 and 254”, which confers very wide power to make laws. When the Parliament has been conferred power to make law with respect to goods and services, the legislative power of the Parliament is plenary.

“The power to make laws as conferred by Article 246A fully empowers the Parliament to make laws with respect to goods and services tax and expansive definition of goods given in Section 2(52) cannot be said to be not in accord with the constitutional provisions.”

Whether the Constitution Bench’s observation ‘lottery is an actionable claim’ in Sunrise Associates v. Govt. of NCT of Delhi, (2006) 5 SCC 603 a law or obiter dicta?

The definition of goods in Section 2(j) as noticed by the Constitution Bench states that ‘goods’ means all kinds of movable property (other than newspaper, actionable claims, stocks, shares and securities). The exclusion of the actionable claims from the goods as enumerated in the definition is also a part of the definition.

“If a particular item is covered by exclusion it is obvious that it does not fall in the definition of the goods. When the Constitution Bench came to the conclusion that the lottery is an actionable claim it was considering the definition of 2(j) itself and what has been held by the Constitution Bench cannot be held to be obiter dicta.”

The Constitution Bench in Sunrise Associates has categorically held that lottery is actionable claim after due consideration which is ratio of the judgment. The expansion of definition of goods under Section 2(52) of Act, 2017 by including actionable claim is in the line with the Constitution Bench pronouncement in Sunrise Associates and no exception can be taken to the definition of the goods as occurring in Section 2(52).

Whether exclusion of lottery, betting and gambling from Item No.6 Schedule III of Central Goods and Services Tax Act, 2017 is hostile discrimination and violative of Article 14 of the Constitution of India?

The Constitution Bench in State of Bombay Vs. R.M.D. Chamarbaugwala, AIR 1957 SC 699 has clearly stated that Constitution makers who set up an ideal welfare State have never intended to elevate betting and gambling on the level of country’s trade or business or commerce.

Lottery, betting and gambling are well known concepts and have been in practice in this country since before independence and were regulated and taxed by different legislations. When Act, 2017 defined the goods to include actionable claims and included only three categories of actionable claims, i.e., lottery, betting and gambling for purposes of levy of GST, it cannot be said that there was no rationale for including these three actionable claims for tax purposes.

“It is a duty of the State to strive to promote the welfare of the people by securing and protecting, as effectively as it may, a social order in which justice, social, economic and political, shall inform all the institutions of the national life.”

Hence, there is no violation of Article 14 in Item No. 6 of Schedule III of the Act, 2017.

Whether while determining the face value of the lottery tickets for levy of GST, prize money is to be excluded? 

Read here 

[Skill Lotto Solutions v. Union of India, 2020 SCC OnLine SC 990, decided on 03.12.2020]


*Justice Ashok Bhushan has penned this judgment

For petitioner: Senior Advocate Ravindra Shrivastava,

For Union of India: Additional Solicitor General Vikramjit Banerjee

For Intervenor: Senior Advocate C.A. Sundaram

 

Also read: GST on lotteries| Prize money not to be excluded for computing the taxable value of supply, holds SC

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): A Division Bench of R.K. Agrawal (President) and Dr S.M. Kantikar (Member), held that

“…for detrmining the pecuniary jurisdiction of the District Commission, State Commission or National Commission the value of goods or services paid as consideration alone has to be taken and not the value of the goods or services purchased.”

Complainant approached the Commission with regard to a complaint against National Insurance Company Limited, Kolkata.

Further, it was stated that the complainant had taken Insurance coverage from National Insurance Company Limited, Kolkata under its Standard Fire and Special Perils Policy initially for a total sum of Rupees Twenty eight crores and twenty thousand only by paying a premium of Rupees Three lac twenty thousand five hundred and twenty-five only.

An additional security coverage of Rupees Thirteen crores only on 25-08-2020 by paying a premium of Rupees One lac twenty-three thousand and thirty-seven only.

Due to heavy rainfall and flood water, factory premises of the Complainant got tilted and partial collapse of the building was caused with several other losses due to damage in the building.

Complainant informed the National Insurance Company Limited, Kolkata on 05-09-2020 about the loss sufferred and making the payment of the loss suffered by estimating it.

After exchange of correspondence and personal interaction the National Insurance Company Limited – OP-1 repudiated the claim of the Complainant.

Maintainability of the present complaint

In the present case a preliminary point arises as to how this Consumer Complaint is maintainable before the National Consumer Disputes Redressal Commission because the value of the consideration paid in the present case i.e. premium paid for taking the Insurance Policies was only Rs 3,20,525 and Rs 1,23,037 the total of which comes to Rs 4,43,562 (Rupees Four Lac forty three thousand five hundred and sixty two only), which is less than the consideration paid of more than Rs 10,00,00,000 (Rupees Ten crores) as provided under Section 58 (1) (a) (i) of the Act of 2019.

Parliament, while enacting the Act of 2019 was conscious of this fact and to ensure that Consumer should approach the appropriate Consumer Disputes Redressal Commission whether it is District, State or National only the value of the consideration paid should be taken into consideration while determining the pecuniary jurisdiction and not value of the goods or services and compensation, and that is why a specific provision has been made in Sections 34 (1), 47 (1) (a) (i) and 58 (1) (a) (i) providing for the pecuniary jurisdiction of the District Consumer Disputes Redressal Commission, State Consumer Disputes Redressal Commission and the National Commission respectively.

Hence, the bench stated that Sections 34 (1), 47 (1) (a) (i) and 58 (1) (a) (i) of the Act of 2019 make it clear that for detrmining the pecuniary jurisdiction of the District Commission, State Commission or National Commission the value of goods or services paid as consideration alone has to be taken and not the value of the goods or services purchased.

Therefore, we are of the view that the provision of Section 58 (1)(a)(i) of the Act 2019 are very clear and does not call for any two interpretations.

As the value of consideration paid by the Complainant is only Rs 4,43,562 (Rupees four lac forty three thousand five hundred and sixty two only), which is not above Rs 10,00,00,000 (Rupees Ten crore), the National Commission has no jurisdiction to entertain the present Consumer Complaint. [Pyaridevi Chabiraj Steels (P) Ltd. v. National Insurance Company Ltd., Consumer Case No. 833 of 2020, decided on 28-08-2020]

Case BriefsHigh Courts

Kerala High Court: A.K. Jayasankaran Nambiar, J. allowed the writ petition and quashed the series of detention notices issued against the petitioner.

The petitioner challenged a series of notices of detention, whereby a consignment of goods transported at the instance of the petitioner was detained by the respondent on the allegation that there was a discrepancy in the e-way bill that accompanied the transportation of the goods. The Court on reviewing the series of notices inferred that the reason for the detention was that, while the consignment was supported by an invoice which contained the details of the goods transported as also the tax paid in respect of the goods, there was no mention of the tax amounts separately in the e-way bill that accompanied the goods. The Court further inferred that the respondents, therefore, detained the goods on the ground that there was no valid e-way bill supporting the transportation in question.

Meera Menon and Harisankar Menon, counsel on behalf of the petitioner argued that the transportation was covered both by a tax invoice, as also an e-way bill in FORM GST EWB-01, and when both the documents are perused together, it was amply clear that the transportation was covered by documents that clearly indicated the fact of payment of tax on the goods that were being transported. Thus, the detention under Section 129 was unfounded and baseless.

Dr Tushara James, counsel appearing on behalf of the respondent contended that as per Section 33 of the GST Act, there is an obligation on every person, who makes supply for consideration and who is liable to pay tax for such supply, to prominently indicate in all documents relating to assessment, tax invoice and other like documents, the amount of tax which shall form part of the price at which such supply is made. Referring to the provisions of Section 129, the respondent further contended that the goods in question were being transported under cover of documents that had been raised in contravention of the provisions of Section 33. It was further argued that, the e-way bill being a document akin to a tax invoice, in relation to an assessment to tax, and not having carried the details regarding the tax amount, the transportation itself had to be viewed as in contravention of the Act and Rules for the purposes of Section 129.

As per the statutory provisions applicable to the instant case, a person transporting goods is obliged to carry only the documents enumerated in Rule 138(A) of GST Rules, during the course of transportation. The said documents are

  • the invoice or bill of supply or delivery challan, as the case may be and
  • the copy of e-way bill in physical form or e-way bill number in electronic form etc.

The Court pointed out that if a prescribed form under the GST Act does not contain a field for entering the details of the tax payable in the e-way bill, then the non-mentioning of the tax amount cannot be seen as an act in contravention of the GST Rules.

Nevertheless, the Court held that the e-way bill has to be in FORM GST EWB-01, and in that format, there is no field wherein the transporter is required to indicate the tax amount payable in respect of the goods transported and that the transpiration was covered by a valid tax invoice, which clearly showed the tax collected in respect of the goods and an e-way bill in the prescribed format.[M.S Steel and Pipes v. Asst. State Tax Officer, 2020 SCC OnLine Ker 3214, decided on 12-08-2020]

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of RF Nariman, Navin Sinha and Indira Banerjee, JJ has held that the expression “may” in sections 61 and 62 of the Major Ports Trust Act, 1963 (MPT Act) cannot be read as “shall”, subject  to the caveat that as the “State” under Article 12 of the Constitution, a Port Trust must act reasonably, and attempt to sell the goods within a reasonable period from the date on which it has assumed custody of them.

The Court was dealing with a reference made in Chairman, Board of Trustees Cochin v. Arebee Star Maritime Agencies Private Ltd., (2018) 4 SCC 592 wherein five issues were framed for larger bench’s consideration.

Issues referred:

  1. Whether in the interpretation of the provision of Section 2(o) of the MPT Act, the question of title of goods, and the point of time at which title passes to the consignee is relevant to determine the liability of the consignee or steamer agent in respect of charges to be paid to the Port Trust;
  2. Whether a consignor or a steamer agent is absolved of the responsibility to pay charges due to a Port Trust, for its services in respect of goods which are not cleared by the consignee, once the bill of lading is endorsed or the delivery order is issued;
  3. Whether a steamer agent can be made liable for payment of storage charges/demurrage, etc. in respect of goods which are not cleared by the consignee, where the steamer agent has not issued a delivery order; if so, to what extent;
  4. What are the principles which determine whether a Port Trust is entitled to recover its dues, from the steamer agent or the consignee;
  5. While the Port Trust does have certain statutory obligations with regard to the goods entrusted to it, whether there is any obligation, either statutory or contractual, that obliges the Port Trust to destuff every container that is entrusted to it and return the empty containers to the shipping agent.

Larger Bench’s answer to reference

The Court explained that when section 2(o) defines “owner”, it defines owner in relation to goods separately from owner in relation to any vessel. In sub-clause (i) of section 2(o), when owner is defined in relation to “goods”, the definition is an inclusive one. Secondly, it includes persons who are owners of the goods, or persons beneficially entitled to the goods, such as the consignor, consignee and the shipper and then also includes agents for sale, custody, loading or unloading of such goods.

Further, under section 42(2), a Board may, if so requested by the “owner”, take charge of the goods for the purpose of performing services, and shall give a receipt in such form as the Board may specify. It is obvious that if the ship-owner or its agent are not “owners”, the Board cannot take the charge of the goods from the ship-owner or its agent for the purpose of performing services, a result which would lead to startling consequences. Once goods have been taken charge of and a receipt given for them, no liability for any loss or damage which may occur to them shall attach to any person to whom a receipt has been given (this would include any of the persons mentioned in section 2(o)(i), including the vessel’s agents), or to the master or owner of the vessel from which the goods have been landed or transhipped.

“This would again make it clear that the master or owner of the vessel and their agents, from this point on, have been absolved from liability for loss or damage to the goods, as  the Board has now taken over the custody of the goods from such master or owner of the vessel.”

Answering the question number 1 in negative, the Court held that

“the point of time at which title to the goods passes to the consignee is not relevant to determine the liability of the consignee or steamer agent in respect of charges to be paid to the Port Trust.”

On question number 2 and 3 that dealt with the responsibility/liability of the consignor/streamer agents to pay charges/demurrage, the Court answered the questions together and said that the bill of lading being endorsed by the steamer agent is different from the bill of lading being endorsed by the owner of the goods. In the first case, the endorsement leads to delivery; in the second case, the endorsement leads to passing of title.

“… both stages are irrelevant in determining who is to pay storage charges – we have held that upto the point that the Port Trust takes charge of the goods, and gives receipt therefor, the steamer agent may be held liable for Port Trust dues in connection with services rendered qua unloading of goods, but that thereafter, the importer, owner, consignee or their agent is liable to pay demurrage charges for storage of goods.”

On question number 4 dealing with Port Trusts right to recover its dues, from the steamer agent or the consignee, the Court said that

Until the stage of landing and removal to a place of storage, the steamer’s agent or the vessel itself may be made liable for rates payable by the vessel for services performed to the vessel. Post landing and removal to a place of storage, detention charges for goods that are stored, and demurrage payable thereon from this point on, i.e. when the Port Trust takes charge of the goods from the vessel, or from any other person who can be said to be owner as defined under section 2(o), it is only the owner of the goods or other persons entitled to the goods (who may be beneficially entitled as well) that the Port Trust has to look to for payment of storage or demurrage charges.

The Court divided question number 5 into two parts:

whether carrying goods in a container would make any difference to the position that only the owner of the goods or person entitled to the goods is liable to pay for demurrage:

After referring to the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, the Court noticed that the value of imported goods shall be the transaction value of identical goods, as defined, or similar goods, as defined – whichever rule applies to the facts of each particular case. It is clear that whether identical goods or similar goods are taken into account, the price of the container never enters, as the only “goods” that are to be looked at are the goods that are “imported”, i.e. goods that are stuffed in the containers.

It further explained that for the purposes of customs valuation, addition to the transaction value of the imported goods is made only when the cost of containers is treated as being one with the goods in question. Even in such a situation, what is then imported is the “goods” and the container – the container not having to be destuffed, and therefore being cleared along with the goods contained therein for home consumption.

“In such a case, where containers do not have to be returned, but are imported along with the goods contained within it, after the Board takes custody of such container and the goods within it, the vessel or steamer agent is no longer liable – even containers that do not need to be destuffed will then incur demurrage along with the goods contained within it, which are then payable by the importer, owner, consignor or agent thereof.”

The Court also noticed that there is a difference between containers which go along with the goods contained therein “suitable for long-term use”, from containers “suitable for repetitive use”, hence, the containers of the latter type cannot be classified with the goods contained therein for payment of customs duty.

whether the Port Trust is obliged to destuff containers that are entrusted to it and return empty containers to the shipping agent:

a container which has to be returned is only a receptacle by which goods that are imported into India are transported. Considering that the container may belong either to the consignor, shipping agent, ship-owner, or to some person who has leased out the same, it would be the duty of the Port Trust to destuff every container that is entrusted to it, and return destuffed containers to any such person within as short a period as is feasible in cases where the owner/person entitled to the goods does not come forward to take delivery of the goods and destuff such containers. What should be this period is to be determined on the facts of each case, given the activities of the port, the number of vessels which berth at it, together with the volume of goods that are imported. This may lead to the “short period” in the facts of a particular case being slightly longer than in a case where a port is less frequented, and goods that are stored are lesser in number, given the amount of space in which the goods can be stored.

“While it does not lie in the mouth of the Port Trust to state that it has no place in which to keep goods after they are destuffed – as in the facts in the present case – yet a court may, in the facts of an individual case, look into practical difficulties faced by the Port Trust.”

[Chairman, Board of Trustees Cochin v. Arebee Star Maritime Agencies Private Ltd , 2020 SCC OnLine SC 622 , decided on 05.08.2020]

Case BriefsHigh Courts

Jharkhand High Court: A Division Bench of H.C Mishra and Deepak Roshan JJ., dismissed the present writ application as it had no merits in it.

The writ petitioner firm has a business of fireworks and its truck was apprehended by the Investigating Bureau Revenue, Jamshedpur Division, at Jamshedpur, while transporting crackers from Shivkashi in Tamil Nadu to the petitioner’s firm at Ranchi and produced an expiry road permit. It further revealed the transaction was entered into between the petitioner’s firm and the selling dealer at Shivkashi in Tamil Nadu on 03-12-2012 whereas the road permit expired much prior to the date of transaction between the petitioner firm and the selling dealer. In the aforesaid background, the Assessing Authority, vide order dated 14-12-2012 imposed the penalty to the tune of Rs 8,98,258.20 equal to three times the tax on the value of goods, i.e., Rs 21,38,710. The order passed by the Assessing Authority was affirmed by the Appellate Authority in appeal, as well as by the Tribunal in revision. 

Aggrieved by the order, hence the instant petition.

Advocates Sumeet Gadodia and Ritesh Kumar Gupta for the writ petitioner vehemently argued that the impugned orders passed by the Revenue Authorities as well as the Tribunal cannot be sustained in the eyes of law because the goods were being carried with a road permit but due to unforeseen circumstance that the fire had broken out in the premises of the selling dealer, the road permit had expired in the meantime, and there was no intention to evade the tax, as all the goods were duly accounted for in the books of accounts. 

Counsel for the State,  Atanu Banerjee and Pooja Kumari opposed the prayer submitting that the case is fully covered by the decision in Economic Transport Organisation Ltd. v. State of Jharkhand, 2020 SCC Online Jhar 145, wherein also in a similar manner when the road permit had already expired, it was deemed to be a case of no road permit. 

The Court held that in the instant case the ground of unforeseen circumstance is of no help and there is no merit in the writ application.

In view of the above, the writ petition stands dismissed and disposed of. [Trade Friends v. State of Jharkhand, 2020 SCC OnLine Jhar 214, decided on 27-02-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Justice V.K. Jain (Presiding Member) while dismissing the present revision petition, held that,

“If the goods in deliverable state are delivered by the seller to the purchaser, the property in the goods passes from the seller to the purchaser unless they have contracted otherwise.”

In the present matter, it has been noted that the petitioner obtained a Marine Transit Insurance Policy from the respondent company. The stated policy covered goods to the extent of Rs 2 crore against all risk of transit. Complainant sent 1009 TV Sets from Dehradun to East India Technology Pvt. Ltd. in Tamil Nadu. Further, the goods were to be supplied to the Government of Tamil Nadu, which on inspection rejected the said TV sets. Consequently, East India Technology Pvt. Ltd. transported the goods back to the complainant and on the way, the goods got damaged when the truck in which they were being carried met with an accident.

Thus in view of the stated, a claim was lodged for reimbursement in terms of the insurance policy.

On being aggrieved by the repudiation of the claim, the complainant approached the District Forum wherein the consumer complaint was allowed, the insured approached he concerned State Commission by way of an appeal. State Commission allowed the appeal and consequently dismissed the said consumer complaint on not having any insurable interest in the goods.

Further, the complainant reached before this Commission. The question that was raised was:

“Whether  the petitioner had any insurable interest in the goods, at the time when they were damaged while being transported from Tamil Nadu to Dehradun?”

Counsel for the petitioner/ complainant submitted that despite invoice raised in favour of East India Technology Pvt. Ltd., the ownership of the goods continued to vest with the complainant since the price of the goods was to be paid by the East India Technology Pvt. Ltd., within 60 days of inspection of the goods by ELCOT which is stated to be an agency of Government of Tamil Nadu and therefore, the complainant continued to have insurable interest in the goods by the time when they were damaged on account of road accident.

Commission rejected the above contention.

Further, the Commission referred to Sections, 20, 23(2) and 26 of the Sale of Goods Act, 1930 and stated that on a reading of all of these Sections, it shows that,

“If the goods in deliverable state are delivered by the seller to the purchaser, the property in the goods passes from the seller to the purchaser unless they have contracted otherwise.”

Commission stated that it would be difficult to say that the complainant continued to be the owner of the goods in question even after having sold and delivered the goods to East India Technology (P) Ltd. The commission while reaching the conclusion added that considering that the complainant had not only sold the goods but had also delivered the same to East India Technology (P) Ltd. without reserving any right for the disposal of goods, it cannot be said to have retained insurable interest in the said goods in term of Section 7 of the Indian Maritime Insurance Act, 1963.

Goods were returned by the purchaser to the complainant at the risk of the purchaser and therefore, at the time they were damaged/destroyed, the ownership of the goods vested in the purchaser. Therefore, the complainant would be entitled to have a valid claim against the purchaser to recover the price of the goods which it had sold and delivered to the purchaser.

The complainant was left with no insurable interest in the goods, once they were sold and delivered to the purchaser since the transaction of sale stood completed on the sale and delivery of the goods.

Thus, it was East India Technology Pvt. Ltd., which owned the goods at the time they were destroyed/damaged on account of being involved in a road accident.

Hence the revision petition is dismissed in view of the above reasons. [E-Durables v. Oriental Insurance Co. Ltd., 2019 SCC OnLine NCDRC 747, decided on 24-12-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Custom, Excise and Service Tax Appellant Tribunal (CESTAT), Chennai: Sulekha Beevi C.S. (Judicial Member) modified the order of the Commissioner (Appeals) in favor of the appellant.

The appellant had filed a bill of entry for the importation of Arecanuts and had declared its value as Rs 1,06,14,272. On verification, the department held that the goods did not conform to the Food Safety and Standards Act of India [FSSAI] standards. After due process of law, the original authority ordered confiscation of the goods and directed to re-export the goods. He also imposed redemption fine of Rs 20 lakhs and a separate penalty of Rs 10 lakhs. In the appeal, the Commissioner (Appeals) upheld the findings of the adjudicating authority but, reduced the redemption fine to Rs 5 lakhs and penalty to Rs 2 lakhs. The appellants were aggrieved by this order and filed an appeal.

The appellant challenged the redemption fine and penalty imposed, submitting before the Court that they were willing to re-export the goods. If the goods were re-exported, the redemption fine imposed would not have any basis. The Judgment in Sankar Pandi v. Union of India, 2001 SCC OnLine Mad 1240  was relied upon which was upheld by Supreme Court too. The Authorised Representative for the Revenue submitted that the appellants have imported goods violating the provisions of FSSAI regulations and, therefore, had been rightly confiscated by the department.

The Court reiterated that the appellant only contested the redemption fine and penalty imposed upon them. Since the appellant was willing to re-export the goods, the Court set aside the redemption fine imposed on them and further stated that with regard to the penalty imposed, the appellant had suffered huge container charges and their goods have been detained for nearly nine months. Since the goods have been ordered to be re-exported and also taking note of the fact that they are not prohibited goods, the Court was of the view that the penalty imposed was on the higher side. The same is reduced to Rs 25,000.

The appeal was partly allowed and the impugned order was modified by setting aside the redemption fine and upholding the direction to re-export the goods. The penalty was also reduced to Rs 25,000.[Arihant Groups v. Commissioner of Customs, 2019 SCC OnLine CESTAT 275, decided on 16-09-2019]

Case BriefsHigh Courts

Kerala High Court: Raja Vijayaraghavan V, J. allowed a civil writ petition filed by a company and directed release of its vehicles and goods that had been detained by the tax officer due to the expiry of its e-way bills.

Petitioner herein was a logistics company which was involved in the transportation of Maruti cars. Petitioner’s vehicle was obstructed, and on inspection, it was found that the validity of the e-way bills had expired. Hence, both – the vehicle and the goods – were detained. This had led to the filing of this writ petition seeking a certiorari quashing of notice issued under Section 129 of Goods and Services Tax Act, 2017 whereby his goods were seized; and sought a writ of mandamus directing the 1st respondent to release the goods by accepting a penalty of Rs 500.

The Court relied on the earlier judgment of a Division Bench  in Renji Lal Damodaran v. State Tax Officer (Order dated 06-08-2018 in WA No. 1640 of 2018) in which it was directed to release the goods of the appellant furnishing bank guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the Central Goods and Services Tax Rules, 2017. So, applying the ratio of that judgment, the Court directed the respondent authorities to release the petitioner’s goods and vehicle on the execution of a bank guarantee for tax and penalty found due, and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules.

This petition was disposed of in the above terms.[OSL Logistics Private Ltd. v. Assistant State Tax Officer, 2019 SCC OnLine Ker 1554, decided on 14-05-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Authority for Advance Ruling, Chhattisgarh: The Members comprising of Kalpana Tiwari, Joint Commissioner of State Tax and Rajesh Kumar Singh, Additional Commissioner of CGST and Central Excise, held that a supplier is required to charge GST upon service recipient on the total amount including cost of diesel provided by recipient company for transportation of its goods.

Applicant herein (supplier) had an agreement for transporting cement of a company named Shree Raipur Cement (service recipient). It was agreed that the diesel required for said transportation would be provided by the service recipient. The applicant sought clarification as to whether the supply of diesel by the service recipient would be included or excluded while charging GST on freight amount to be charged by the applicant.

The Authority noted that in the instant case, the service recipient, i.e., cement company was providing diesel to the vehicles used by the applicant for transporting cement/clinker in the course of business of cement by the service recipient. Diesel so provided by it to the applicant, was an important and integral component of this business process, without which the process of supply of cement could not be materialised.

It was opined that as per Sections 7(1) and 15(2)(b) of the Central Goods and Services Tax Act, 2017 which define ‘supply’ and ‘value of supply’ respectively, any amount that the supplier is liable to pay in respect of supply but which has been incurred by the recipient of supply and not included in the price actually paid or payable for the goods or services or both, is includible in value of supply of goods/ services.

Thus, the applicant was required to charge GST upon Shree Raipur Cement on the total amount including the cost of diesel, i.e., on the total freight amount inclusive of the cost of diesel so provided by the service recipient.[Advance Ruling No. STC/AAR/10 A/2018, In an application filed by M/s Shri Navodit Agarwal, Order dated 26-03-2019]

Case BriefsHigh Courts

Madras High Court: While setting aside the FIR registered against the officials of the Bank for an offence under Section 379 Penal Code, a bench of S. Vaidyanathan J ruled that no criminal action could be taken against the financier/ financial institution for repossessing the goods hypothecated with them in case of default in repayment of loan.

In the instant case, a loan agreement was signed between the petitioner and the 2nd respondent for a sum of Rs.9,00,000/- for purchase of a car. The petitioner seized the car on default in the repayment of loan and kept it in their custody. The 2nd respondent filed a case against the officials of the Bank for an offence under Section 379 IPC. After registering the case, the 1st respondent Police sent a communication to the bank, asking them to surrender the vehicle, as the same is required for investigation as well as for production before the Court. Aggrieved by the same, the petitioner filed the present petition under Section 482 of CrPC to quash the FIR pending on the file of the 1st respondent Police.

The Court referred K.A. Mathai  v. Kora Bibikutty, (1996) 7 SCC 212 where it was held that in case of default to make payment of installments financier had a right to resume possession even if the hire purchase agreement does not contain a clause of resumption of possession for the reason that such a condition is to be read in the Agreement. The Court also referred Anup Sarmah vs. Bhola Nath Sharma, (2013) 1 SCC 400 where it was held that in an Agreement of hire purchase, the purchaser remains merely a trustee/bailee on behalf of the financier / financial institution and ownership remains with the latter. Accordingly, the Court made it clear that in case vehicle is seized by the financier, no criminal action can be taken against him as he is repossessing the goods owned by him, and in such an eventuality, it cannot be held that the financier had committed an offence of theft and that too, with the requisite mens rea and requisite dishonest intention. [HDFC Bank Limited v. State, 2015 SCC Online Mad 10573, decided on 21.12.2015]