M/S Ferra Tech vs. The Union Of INDIA And 2 Ors.

Held

The Court held that the show cause notice dated 20.11.2020 and the consequential order in original dated 05.11.2021 could not coexist with the order dated 18.08.2022, which had fixed special rates for various financial years. The reasoning was that the fixation of special rates fundamentally altered the basis upon which the demand was raised. Consequently, the impugned notice and order were set aside and quashed. The Court noted that this setting aside would not preclude either party from taking appropriate steps in terms of the order dated 18.08.2022. Regarding the Petitioner's submission that the rejection of the special rate fixation for 2014-15 was without reasons, the Court observed that this constituted a separate cause of action and the Petitioner was at liberty to challenge it if advised. No other issues were expressly left undecided.

Facts

The Petitioner, M/s Ferra Tech, challenged a show cause notice dated 20.11.2020 and an order in original dated 05.11.2021 passed by the Assistant Commissioner of Central GST, Tinsukia. The show cause notice pertained to the period December 2009 to October 2015 and November 2015 to June 2017, concerning an amount of Rs. 1,52,55,181/- disbursed pursuant to an interim order of the High Court. The Petitioner had submitted a surety bond/solvency certificate. The order in original confirmed the demand of Rs. 1,52,55,181/- and interest under Section 11AA of the Central Excise Act, 1955, but no penalty was imposed. The Petitioner also sought a direction for the Respondents to decide their application for fixation of a special rate before recovery proceedings. Subsequently, an order dated 18.08.2022 was produced, granting special rates for certain financial years but rejecting the claim for 2014-15.

Key Issues

1. Whether the show cause notice dated 20.11.2020 and the consequential order in original dated 05.11.2021 can coexist with the subsequent order dated 18.08.2022 fixing special rates for certain periods. Petitioner's contention: The Petitioner argued that the subsequent order fixing special rates rendered the earlier show cause notice and order in original unsustainable, as the basis for recovery had been altered. They also contended that the rejection of their application for fixation of a special rate for the financial year 2014-15 was done without assigning reasons. Revenue's contention: The Revenue (GST Department) produced the order dated 18.08.2022, which had granted special rates for some periods but rejected the claim for 2014-15. The Revenue did not explicitly argue for the upholding of the impugned notice and order in light of the subsequent order.