Customs - Neither assessee can seek refund nor Revenue can proceed to recover refund already sanctioned without challenging the earlier order by way of remedy provided in Section 128 of Customs Act: CESTAT (See 'TOG Latest')Service Tax - Assessee must exhaust appellate remedy before invoking writ remedy - Issues of facts cannot be adjudicated by writ court, where such issues can be raised before appellate authorities: HC (See 'TOG Latest')I-T - Any expenditure that does not bring any additional advantage to assessee's business is revenue expenditure: ITAT (See 'TOG Latest')DTAA - When agent is paid an arm's length remuneration for the services rendered, nothing survives for taxation in the hands of dependent agency PE: ITAT (See 'TOG Latest')Post-COVID, N-E States to script Indian economic growth: MoS (See 'TOG News')FCI distributes 76.62 LMT of food grains in May-June 2021 (See 'TOG News')India, Fiji ink MoU for cooperation in agricultural R&D (See 'TOG News')DTAA - The expression 'depository' & 'domestic depository' are expressions with distinct connotations and requirements of 'depository' cannot be read into requirements of 'domestic depository': ITAT (See 'TOG Latest')I-T - For purposes of TDS deduction, when estimate made by assessee is held to be honest and bona fide, assessee cannot be treated as assessee in default: ITAT (See 'TOG Latest')VAT - Where an assessee transfers goods to own registered premises in one State & thereafter makes an inter-State sale to a buyer in another State, the assessee is liable to pay tax u/s 8 of CST Act 1956: HC (See 'TOG Latest')Sales Tax - A subordinate authority is not empowered to supersede the orders passed by appellate authority & administrative discipline requires that subordinate authorities should follow orders of appellate authority: HC (See 'TOG Latest')Comfortable with colonial legacy of DM but uneasy with Britishers-designed Parliament (See 'taxindiaonline')A Divided Opinion by Bombay High Court on Levy of GST on Intermediary Services (See 'THE INSIGHT')Human capital holds key to create manufacturing ecosystem in Eastern India: Pradhan (See 'TOG News')Govt scotches news reports of hike in Indian deposits in Swiss banks (See 'TOG News')Interplay between CA, 1962 and the GST Laws r/w Maritime Zones Act, 1976 (See 'THE INSIGHT')COVID - CSIR, Tata join hands for wider case detection (See 'TOG News')
Tax on Go


Justice must not only be done but it must also be seen to be done
By Makarand P. S. Joshi, MAX Legal, Advocates
Jun 10, 2021

THE Hon'ble Supreme Court, in case of Sikkim Organics V. UOI ( TOG-883-SC-CE-2021), came out with an excellent and completely justice-oriented view.

The Petitioners, Sikkim Organics, were issued a Demand Notice,in 2016, for differential Central Excise Duty of Rs. 33 Crores approx., for the proposed change in classification of Industrial Chemical manufacture by them. The demand of Central Excise Duty was confirmed by the Adjudication Order, in 2017. Sikkim Organics filed an Appeal before the Hon'ble Tribunal which came to be dismissed for non-compliance of pre-deposit of 7.5% of the duty demanded.

In terms of Section 35F of the Central Excise Act, 1944, every assessee is mandatorily required to deposit 7.5% / 10% of the duty demanded for an Appeal to be entertained by the Hon'ble Tribunal. The Hon'ble Tribunal is not permitted to entertain an Appeal unless such amount is deposited.It is interesting to note that Title of Section 35F uses words "before filing Appeal" and curiously these words "before filing Appeal" do not appear in the body of the Section.

"SECTION 35F. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal . — The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal —

(i) under sub-section (1) of section 35, unless the appellant has deposited seven and a half per cent. of the duty …"

(Emphasis Supplied)

Sikkim Organics challenged the Order of the Hon'ble Tribunal before the High Court which came to be dismissed. Hence, Sikkim Organics filed SLP before the Hon'ble Supreme Court.

Meanwhile, in October 2020, Sikkim Organics deposited an amount of Rs. 2.53 Crores. Thereafter, in February 2021, recovery proceedings were initiated and raw material, finished goods, plant and machinery were attached by the Revenue Authorities.

Final hearing was held before the Hon'ble Supreme Court wherein, the Petitioners submitted that the Appeal before the Hon'ble Tribunal may please by restored subject to imposition of certain terms and the delay in depositing the amount may please be condoned.

The Hon'ble Supreme Court held that, in the interest of justice the Appeal be restored before the Tribunal which shall be decided on its own merits. The Hon'ble Supreme Court further held that the Petitioners shall neither alienate movable or immovable property nor create third party right and further ordered the Respondent Revenue to de-freeze bank accounts so as to allow the Petitioners to utilize the same for the purpose of business only.

With this approach taken by the Hon'ble Supreme Court, Revenue stands protected so does the right of Sikkim Organics to litigate, which they had lost. Sikkim Organics will be able to conduct their business, which in turn, will be advantage in more than one way, contribution to Tax Collection, creation of employment, etc. to name a few.

Justice is defined as the constant and perpetual will to render to each his due. An approach of this sort to do complete justice is something for the Quasi-judicial Authorities to take note of and try to follow it in spirit. I am conscious of the legal position that there is a vast difference between the powers that a Court can exercise in equity and to do justice,and that a Quasi-judicial Authority may not possess. A point that requires consideration is the intent to do the justice must exist. Justice must not only be done but it must also be seen to be done.

Worthwhile,it would be here, to note a provision of mandatory pre-deposit for filing of an Appeal, in Section 112(8) of the Central Goods and Services Tax Act, 2017:

"SECTION 112. Appeals to Appellate Tribunal.


(8) No appeal shall be filed under sub-section (1), unless the appellant has paid —" (Emphasis Supplied)

Similar is the provision of Section 107(6) of the Central Goods and Service Tax Act, 2017 which deals with Appeals to Appellate Authority.

The difference in the two provisions of Section 35F of the Central Excise Act, 1944 and 112(8) of the Central Goods and Services Tax Act, 2017 is that under Central Excise regime, an assessee could file an Appeal and mandatory deposit could be made subsequently, as permitted by the Hon'ble Supreme Court in Sikkim Organics; on the contrary in GST regime, an Appeal cannot be filed unless mandatory pre-deposit has been made and the Appeal would eventually be time barred.

With this provision, even the Hon'ble Supreme Court may not be able to help an assessee in a similar situation that of Sikkim Organics, in the GST era, as the court would be bound by the Statutory Provisions of Section 112(8) of the Central Goods and Service Tax Act, 2017.

May God Help Assessees …

[The views expressed are strictly personal.]