Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): A Division Bench of Anil Choudhary (Judicial Member) and P. Anjani Kumar (Technical Member), allowed an appeal in order to find out that whether the appellant were liable to pay Service Tax under the Head “Franchise Services” on their activity of granting license to third party-crane operators for providing their crane (wheel mounted) in the Port area for providing services of loading and unloading, etc. with the help of the crane have collected license fee from the crane operators.

Appellant being a statutory body, a Port Trust, operating in the major Port at Mangalore are registered with the Service Tax Department. Section 42 of the Major Port Trust Act, 1963 provides that the Board “Port Trust” shall have the power to undertake services including – notwithstanding anything contained in this section, Board may, with the sanction of the Central Government authorities engage any person to perform any of the services mentioned in sub-section 1, on such terms and conditions as may be agreed upon. It appeared to Revenue that this activity of the appellant- granting of license to operate the crane in the Port area to the licensee, such license fee is chargeable to Service Tax under the Head “Franchise Services”. Accordingly, SCN was issued invoking the extended period of limitation; penalties were imposed under Sections 78, 76 & 77 read with Rule 7(c). Thus, the instant petition was filed.

The Counsel for the appellant, Bhanu Murthy put forth the cases of Vishakhapatnam Port Trust v. CCE, 2019 (27) GSTL 244 (Tri. Hyd) where it was held that license fee and Royalty received by Port Trust towards licensing others to perform certain functions within port area is not liable to Service Tax under the Head “Franchise Services” and Cochin Port Trust v. CCE, 2011 SCC OnLine CESTAT 4248.

The Tribunal while allowing the appeal relied on the judgment of Cochin Port Trust and held that the matter was no longer res integra and the same had been decided in favour of the assessee in the mentioned case by Kerala High Court quoting that:

“The amounts paid by IGTPL to CPT is only in respect of the right conferred on the IGTPL to carry out the port services; for provision of which the users of the port would pay a fee. In such circumstances, definitely the Revenue earned by IGTPL will be taxed under the Finance Act, 1994 specifically under sub-clause (lxxxii) of Section 65. It is a percentage of that, which the IGTPL pays to CPT, in lieu of surrendering their rights to carry out and provide port services in the subject terminals. There is no port service by the CPT to IGTPL. We hence find the order of the Tribunal to be perfectly in order.”

[New Mangalore Port Trust v. C.C.E. & S.T., Service Tax Appeal No. 839 of 2009, decided on 31-08-2020]


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Case BriefsHigh Courts

Rajasthan High Court: A Division Bench of P.K. Lohra and Arun Bhansali, JJ. struck down the impugned University Service Regulations, 2001 by declaring them ultra vires.

The petitioners were initially appointed to their respective posts at NLU Jodhpur on a contractual basis. The petition was filed to categorize the impugned decision to discontinue B.SC. LL.B (Hons.) as arbitrary, unreasonable and discretionary. The petitioners also challenged the validity of the impugned University Service Regulations, 2001.

Learned Senior counsel for the petitioners, Rajesh Joshi, submitted that as the petitioners were selected as per Regulation 13(iv) of the Service Regulations in adherence of Articles 14 & 16 of the Constitution, treating their appointment as contractual or on ad-hoc terms was arbitrary and unreasonable. He further contended that the successful completion of probation by the petitioners showed that for all practical purposes they were regular employees. He also submitted that just because the University claimed to be autonomous, its policy decisions didn’t become immune from judicial review. Challenging impugned Service Regulations, it was submitted by the learned Senior Counsel that Regulation 5 & 6 were arbitrary, unreasonable and discriminatory. The same was reasoned about Regulation 2(1)(D) of the Provident Fund Regulations.

The learned counsel for the respondent, Kuldeep Mathur, while referring to the provisions of NLU Act, Statutes, Ordinances and the Regulations, strenuously urged that impugned decision was infallible as the same was based on objective consideration. He further argued that acceptance of the terms of employment by all the petitioners without any protest, in clear and unequivocal terms, was sufficient to invoke the doctrine of acquiescence against them and therefore solely on that count they were liable to be non-suited. Placing heavy reliance on the amended Statute 9 of the University Statutes, he also submitted that the University was enjoying autonomy and therefore it was not obligatory for it to follow the procedure for recruitment provided under the Act of 1974. It was argued by the learned counsel that the NLU Act of 1999, being a special Act and a later Act than the Act of 1974, would have an overriding effect on the earlier Act. The impugned Service Regulations were also argued to be not in violation of Article 14, 16, & 21 of the Constitution.

The Court decided to only examine vires of the impugned Service Regulation as all the other reliefs could be claimed by the petitioners before a Single Bench. The Court relied on State of T.N. v. P. Krishnamurthy, (2006) 4 SCC 517, in which the legitimate grounds to challenge subordinate legislation were laid down by the Supreme Court. It observed that the University Service Regulations were made effective more than two years before the amendment in the Statute 9 and hence the amended Statute 9 could not be treated as a source of the Service Regulations.

The Court held that right to life with human dignity with minimum sustenance and shelter, including all those rights and aspects of life which would go to make a man’s life complete and worth living, would form part of life. Therefore, on joining government service, a person does not mortgage or barter away his basic rights as a human being, including his fundamental right in favour of the Government. The University being a statutory body was not expected to employ teachers and other officials on contract/ ad hoc basis for years together, more particularly when the duties and functions discharged by them were of perennial nature. It was held that it is necessary to do away with total contractual appointment amongst teachers.

In view of the above, the Court held the impugned Service Regulations 5, 6 and amended Regulations 37 and 38 which allowed employment of teachers on a contractual basis, to be manifestly arbitrary and unreasonable. The Court further held that the impugned Service Regulations were in clear negation of Articles 14, 16 and 21 of the Indian Constitution. Service regulations 5, 6 and amended Regulations 37 and 38 were declared as ultra vires and the same were struck down.

However, the Court did not sustain the challenge laid down to Regulation 2(1)(d) of the PF Regulations as it lacked legal foothold. It was directed that the merits of the case and other reliefs were to be heard by appropriate Single Judge Bench.[Prashant Mehta v. National Law University, Jodhpur, 2019 SCC OnLine Raj 618, decided on 28-05-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Appellate Tribunal for Electricity, New Delhi: A Division bench comprising of N.K. Patil, J. and S.D. Dubey (Technical Member) allowed an appeal, filed against Central Electricity Regulatory Commission, holding that the order of Commission was a non-speaking order.

Appellant, a joint venture company between National Thermal Power Corporation Ltd. and Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd., was working on a project for development of a 1320 MW coal-based generating station at Meja in Uttar Pradesh. Respondent is the regulator which determines generation and transmission tariff for central government-owned or controlled companies including the appellant.

In a petition, the respondent passed an order directing appellant to pay Interest during Construction (IDC) and Incidental Expenditure during Construction (IEDC) for the period of delay in commissioning of Meja-Allahabad line and also for payment of transmission tariff. Aggrieved by the said order, the present appeal was preferred by the appellant under Section 111 of the Electricity Act, 2013. The sole point of challenge in the appeal was that the order passed by respondent is a non-speaking order bereft of any analysis or reasons, and while passing the impugned order, the respondent Commission had failed to consider the relevant material placed on record by the appellant.

After perusing the order passed by the respondent Commission, the Hon’ble Appellate Tribunal noted that there was no discussion, reasoning or finding therein in relation to the case of appellant. Relying on the judgment of Apex Court in Commissioner of Police, Bombay v Gordhandas Bhanji, 1952 SCR 135, the Tribunal observed that it is a settled principle of law that an order passed by a statutory body should speak for itself, and cannot be supplemented later with fresh reasons. Public orders, publicly made, in the exercise of statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order. Since such an order has a public effect and also affects the acts and conduct of those to whom it is addressed, it must be construed objectively with reference to the language used in the order itself.

On the aforesaid reasoning, finding that there was no reasoning or discussion in the respondent’s order, the Tribunal held that the said order being a non-speaking order was liable to be set aside. [Meja Urja Nigam Private Limited v. Central Electricity Regulatory Commission,2018 SCC OnLine APTEL 103, decided on 28-09-2018]