The Commissioner,GST Delhi (East) vs. Unitech Containers PVT. LTD.

Held

The Court held that the appeal filed by the Department had no legal infirmity in the CESTAT's impugned order. The Court found the decision in Diwan Sahib Fashions Pvt. Ltd. v. CCE, Delhi-I 2013 (288) ELT 529 (Tri-Del), relied upon by the Department, to be distinguishable. In the cited case, SCNs were issued to both units whose turnover was sought to be clubbed. However, in the present case, the four units whose turnover was clubbed with the respondent's were not issued any SCN. Therefore, the CESTAT's reasoning that the turnover of these units could not be clubbed without issuing them SCNs was upheld. The Court concluded that no substantial question of law arose for consideration. The appeal was dismissed.

Facts

The Commissioner, GST (East), New Delhi, the appellant, filed an appeal against an order dated February 17, 2017, by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT). The CESTAT had quashed a demand confirmed by an order dated February 27, 2009, passed by the Commissioner Central Excise, Delhi-2. Investigations in July 2005 revealed that the respondent, M/s Unitech Containers Pvt. Ltd., engaged in manufacturing cardboard cartons, was allegedly using dummy units to evade registration. The Show Cause Notice (SCN) was issued to the respondent and its directors, but not to the dummy units. The respondent argued before the CESTAT that the turnover of these four dummy units could not be clubbed with its own turnover for SSI exemption purposes without issuing them SCNs, as they had independent legal existence.

Key Issues

1. Whether the turnover of four alleged dummy units could be clubbed with the turnover of the respondent for the purpose of determining eligibility for Small Scale Industry (SSI) exemption, when no Show Cause Notice (SCN) was issued to these dummy units? (Question of law, turning on principles of natural justice and proper adjudication). Arguments: Petitioner (Department): Relied on the decision in Diwan Sahib Fashions Pvt. Ltd. v. CCE, Delhi-I 2013 (288) ELT 529 (Tri-Del) to support the clubbing of turnover. Respondent (Unitech Containers Pvt. Ltd.): Argued that since the four units had independent legal existence (as private limited companies or partnerships) and two existed prior to the respondent's incorporation, their turnover could not be clubbed with the respondent's without issuing them SCNs. The CESTAT allowed this plea.