Case BriefsHigh Courts

Bombay High Court: S.C. Dharamadhikari and M.S. Karnik, JJ., dismissed an appeal filed against the order passed by Central Excise and Service Tax Appellate Tribunal, Mumbai (West Zone Bench) whereby it had allowed the respondent’s appeal against the order of the Commissioner of Central Excise and Service Tax confirming the demand of service tax of Rs 10,21,11,359.

The respondent had provided services for construction and upgradation of facilities at Shiv Chatrapati Sports Complex, Pune. According to the appellant, the services were covered under the category of “commercial or industrial services” defined under Section 65 (20 b) of the Finance Act, 1994 (prior to amendment vide Act 14 of 2010) as the said stadium was used for commercial purposes. A demand for payment of service tax was raised on the respondent but no payment was made. Representations were exchanged, and by order dated 15-9-2011, the demand of service tax was confirmed. As against this, the respondent approached CESTAT and the said order dated 15-9-2011 was set aside. Aggrieved thereby, the appellant filed the present appeal.

It was not even the case of the appellant that the stadium was exclusively used for commercial purpose. The relevant agreement itself permitted the Committee to use 1/3rd of the total area for commercial purpose. The question before the High Court was whether the user of stadium area to the extent of 1/3rd of the total area for a commercial purpose would tantamount to “commercial or industrial construction service”?

Perusing Section 65 (25-b), the Court observed, “The language employed in the definition clause is clear and unambiguous. The plain meaning as can be understood from the definition clause, more particularly, the clarification contained in clauses (i), (ii), (iii) is that the construction ipso facto is not leviable to service tax, but it is only when it is used, or to be used, primarily for “commerce” or “industry” or work intended for “commerce” or “industry” that service tax can be levied. Thus, it is only that construction which is to be used or primarily to be used for commerce that is subject to levy of service tax.”

Finding that in the present case, the dominant user of the stadium was non-commercial, the Court held that no service tax was attracted. Therefore, upholding the impugned order, the court dismissed the present appeals. [CCE v. B.J. Shirke Construction Technology (P) Ltd., 2019 SCC OnLine Bom 477, decided on 15-03-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Green Tribunal (NGT): The Bench comprising of A.K. Goel Chairperson, S.P. Wangdi JM, and Nagin Nanda EM, reiterated its earlier order in regard to Petroleum and Explosives Safety Organisation (PESO) being the competent authority to issue licenses and to ensure that no industry producing absolute alcohol functions without such license.”

In the present application, the issue is primarily in regard to enforcement of regulatory mechanism for handling absolute Alcohol or Ethanol. It has been stated that the distilleries which carry on the business of Ethanol production, they only require the approval of Petroleum and Explosive Safety Organisation (PESO). In an earlier order by the tribunal, it had shut down 5 industries in U.P for the same reason of non-attainment of license through PESO.

The tribunal in accordance of its earlier order dated 30-08-2018 gave clarity and stated that industries producing absolute Alcohol are required to comply with the Manufacture, Storage and Import of Hazardous Chemical Rules, 1989 along with obtaining license through PESO and till the time the industry doesn’t attain the said license it is prohibited to manufacture absolute Alcohol.[Social Action for Forest & Environment (SAFE) v. Union of India,2018 SCC OnLine NGT 275, order dated 24-07-2018]

Case BriefsHigh Courts

Madras High Court: While deciding upon the issues involving the constitutionality of Section 18 of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 vis-à-vis Article 14 of the Constitution and whether the Parliament can legislate in respect of Micro, Small and Medium Scale industries as the subject falls within the scope of Entry 24 of List II of the 7th Schedule of the Constitution, the Division Bench of S.K. Kaul, C.J., and R. Mahadevan, J., dismissing the petition, held that Section 18 of the MSMED Act does not violate Article 14 with respect to the right to approach the courts for dispute settlement. The Court further held that the present case falls within the purview of Entry 52 of List I of the 7th Schedule of the Constitution by way of which the Parliament can legislate in respect of the industries in the manufacturing or production sector, as well as the industries engaged in the service sector.

The petitioner’s company placed with the respondent for the supply of Galvanized Steel Structures/Solar Module Mounting Structures. However disputes arose between them due to the respondent making further demands, without making any correlative supplies. According to the petitioner the respondent filed a claim petition under Section 18 of the MSMED Act, 2006, before the Micro Small Medium Enterprises Facilitation Council and the facilitation council, despite the objections from the petitioner, referred the matter to arbitration. While the arbitration is still pending, the petitioner has filed the present petition questioning the validity of Section 18. The petitioner contended that Section 18 is ultravires Article 14 of the Constitution as it takes away the right to approach the Courts for dispute resolution. It was further contended that ‘industry’ is a subject of the State List upon which the Parliament cannot legislate.

Perusing the contentions, the Court examined the provisions of the MSMED Act. Accordingly the Court observed that the definition of ‘enterprise’ as provided in Section 2(e) of the Act includes industrial undertaking or a business concern or any other establishment, engaged in the manufacture or production of goods or engaged in providing or rendering of any service or services. Therefore the definition is wide enough for it to be interpreted as a subject matter of Entry 52 of List I of the 7th Schedule, upon which the Parliament has the right to legislate. The Court further observed that the petitioner’s contention of the impugned Section violating Article 14 of the Constitution is factually erroneous as Section 19 of the 2006 Act provides for the remedy to the person aggrieved by the award or decree to approach the Court. [Refex Energy Ltd. v. Union of India, 2016 SCC OnLine Mad 4912, decided on 02.06.2016]