R P Techsoft International PVT. LTD. vs. Union Of INDIA - Kerala High Court, 01 February 2018

Cause title — parties, addresses and appearances

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE THURSDAY, THE 1ST DAY OF FEBRUARY 2018 / 12TH MAGHA, 1939 WP(C).No. 40371 of 2017 ------------------------ PETITIONER ----------- R P TECHSOFT INTERNATIONAL PVT. LTD, 9A, CARNIVAL TECHNOPARK, PLOT NO.2, TECHNOPARK THIRUVANANTHAPURAM- 695 581 REP. BY ITS CORPORATE FINANCE MANAGER & AUTHORIZED SIGNATORY, MR.PRAKASH D.L. BY ADVS.SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM RESPONDENT(S): -------------- 1. UNION OF INDIA, REP. BY ITS REVENUE SECRETARY, MINISTRY OF FINANCE, NEW DELHI- 110 004 2. THE COMMISSIONER OF CENTRAL GST AND CENTRAL EXCISE GST BHAVAN, PRESS CLUB ROAD, THIRUVANANTHAPURAM- 695 001 R2 BY ADV. SREELAL N. WARRIER, SC, THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01-02-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.V. WP(C).No. 40371 of 2017 (V) --------------------------- APPENDIX PETITIONER(S)' EXHIBITS ----------------------- EXHIBIT P1 TRUE COPY OF THE RETURN DATED 18-08-2013 FILED UNDER THE KVAT ACT FOR THE YEAR 2012-13 EXHIBITP1(A) TRUE COPY OF THE RETURN DATED 01-04-2015 FILED UNDER THE KVAT ACT FOR THE YEAR 2013-14 EXHIBIT P1(B) TRUE COPY OF THE RETURN DATED 22-07-2014 FILED UNDER THE FINANCE ACT, 1994 FOR THE PERIOD APRIL TO JUNE 2012 EXHIBIT P1(C) TRUE COPY OF THE RETURN DATED 21-07-2014 FILED UNDER THE FINANCE ACT, 1994 FOR THE PERIOD OCTOBER, 2012 TO MARCH 2013 EXHIBIT P1(D) TRUE COPY OF THE RETURN DATED 21-07-2014 FILED UNDER THE FINANCE ACT, 1994 FOR THE PERIOD FROM APRIL TO SEPTEMBER 2013 EXHIBIT P1(E) TRUE COPY OF THE RETURN DATED 21-07-2014 FILED UNDER THE FINANCE ACT, 1994 FOR THE PERIOD OCTOBER, 2013 TO MARCH, 2014 EXHIBITP2 TRUE COPY OF THE SHOW CAUSE NOTICE NO.02/2016-17 EX (COMMR) DATED 19-07-2016 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER EXHIBIT P3 TRUE COPY OF THE REPLY DATED 16-12-2016 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT EXHIBIT P4 TRUE COPY OF THE SHOW CAUSE NOTICE NO.01/2017-18 CE(JC) DATED 26-04-2017 ISSUED BY THE JOINT COMMISSIONER OF CENTRAL EXCISE EXHIBIT P5 TRUE COPY OF THE REPLY TO EXT.P4 SHOW CAUSE NOTICE VIDE LETTER DATED 21-07-2017 ALONGWITH ANNEXURES EXHIBIT P6 TRUE COPY OF THE ADDITIONAL WRITTEN SUBMISSION DATED 27-07-2017 ALONG WITH ANNEXURES, FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT EXHIBIT P7 TRUE COPY OF THE ARGUMENT NOTE DATED 28-07-2017 FILED BEFORE THE 2ND RESPONDENT EXHIBIT P8 TRUE COPY OF THE ORDER NO.TVM-EXCUS-000-COM-43 & 44-17-18 DATED 28-07-2017 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER /TRUE COPY/ K.V. P.S.TO JUDGE A. MUHAMED MUSTAQUE, J. ......................................... W.P.(C).No.40371 of 2017 .......................................... Dated this the 1st day of February, 2018.

JUDGMENT The petitioner claim that they procure IT products and install the products in the premises of customers after customizing it according to the choice and options of such customers.

The petitioner claims to have paid service tax for the service undertaken by them. Their activities include purchasing from different vendors and integrate such components of hardware and software to make such products suitable for the customers. According to them, integrating multiple products sourced from different vendors only involves a skill of service and nothing else.

The controversy in this writ petition is in relation to an assessment order passed by the Commissioner of Central Excise of Thiruvananthapuram division. Claiming the entire activities of the petitioner as a manufacture of marketable products, the Commissioner assessed the petitioner under the Central Excise Act and demanded the petitioner to pay Rs.6,91,86,012/- and Rs.1,52,53,311/-. This is based on two show cause notices issued to the petitioner. This assessment order is under challenge in this writ petition.

Learned standing counsel for the Department raised an objection with regard to maintainability. According to the learned standing counsel, the petitioner is having an alternate remedy and without recourse to such alternate remedy, the petition is not maintainable. Learned standing counsel also submitted that the Commissioner has elaborately considered the point of law involved in the matter with respect to the facts and therefore, this Court cannot invoke its power under Article 226 of the Constitution as an appellate authority to interfere with such assessment order.

Learned counsel for the petitioner submitted that the Commissioner committed a grave juri ictional error in passing the order. According to the learned counsel, it is overlooking facts involved in this matter, the Commissioner passed the order. Learned counsel particularly submitted that the Commissioner only had adverted to the point of law involved without referring to the factual situation involved. According to him, there is no co- relation between the law discussed by the Commissioner with the facts involved and therefore, the matter should be remitted back for reconsideration.

At the first instance I can say that the order is not legally sustainable. As adverted in the impugned order itself, it has to be shown that the petitioner has manufactured goods. Certainly examination of goods is necessary to find goods are exigible to be assessed. Without there being an examination of each of the goods alleged to have been manufactured by the petitioner, the Commissioner should not have ordered that the petitioner is liable to pay excise duty based on an assessment for service tax. Each of the activities of the petitioner will have to be examined from the point of view whether it is a manufactured good or not. It is only on being satisfied that each of such goods come within the meaning of manufacture, the Commissioner has a power under the Central Excise Act to impose excise duty on the petitioner. There cannot be generalization of the activity of the petitioner to hold that all the activities of the petitioner fall within the meaning of manufacturing goods. No doubt, the law discussed by the Commissioner is the correct principles revolving around the issue. But, the point is whether each of the activities of the petitioner would fall for consideration as a 'manufacturer of goods' or not.

The petitioner's case is that they have provided service to different customers in the assessment year and each of such services would depend upon the requirement of such customers. The main activity, according to the petitioner, is the supply and installation of goods purchased from the vendor by integrating such goods to the need of such customer. Therefore, in such situation, the Commissioner will have to examine each of such activities on a focal point whether it fall within the meaning of manufacturing goods or not. In view of the fact that the Commissioner had not adverted to the vital aspect, it is necessary to remand the matter back to the Commissioner for reconsideration.

The power of the Commissioner would depend upon the factual situation. In that sense, without adverting to the factual situation, the Commissioner could not have exercised the power. That means the Commissioner had erred in exercising the juri iction to pass such order. This Court is not interfering with the decision, but with the decision making process. Therefore this Court can invoke the power under Article 226 of the Constitution to set right such juri ictional error committed in the decision making process. Therefore, the impugned order is set aside leaving it for reconsideration. The petitioner shall appear before the Commissioner and explain the details of each activities undertaken by them during the assessment year. Fresh order shall be passed after affording a personal hearing to the petitioner. It is made clear that I have not expressed anything on merits of the case. The matter shall be considered afresh. The writ petition is disposed of as above. No costs. A. MUHAMED MUSTAQUE, JUDGE. cl