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]