Durgesh Garg S/O Krishan Kumar vs. Union Of INDIA

CW/6507/2024HC RajasthanGSTCNR RJHC02033490202412 July 2024Bench: AVNEESH JHINGAN,ASHUTOSH KUMAR4 pages

AI SummaryRemanded

Facts

The petitioner, M/s Waheguru Tradelink, is aggrieved by the dismissal of its rectification application by the Customs, Excise & Service Tax Appellate Tribunal (Tribunal). The petitioner supplied material to M/s Tarun Alloys Ltd. Unit-II between November 2014 and April 2015. The Excise Department initiated proceedings, alleging that M/s Tarun Alloys was not entitled to CENVAT credit of Rs. 22,13,137/- claimed on invoices from three parties, including the petitioner. These transactions were deemed bogus, and penalties equivalent to the demand were imposed on all parties. The petitioner's appeal was dismissed for non-compliance with the pre-deposit requirement. The petitioner contends that the demand against them should have been limited to the value of their supplies, Rs. 3,48,126/-. The respondent argues that the appeal was not entertained due to non-compliance with the pre-deposit.

Held

The Court acknowledged that it is undisputed that the CENVAT credit disallowed to M/s Tarun Alloys, qua the supplies made by the petitioner, amounted to Rs. 3,48,126/-. The Adjudicating Officer had confirmed a total demand of Rs. 22,13,137/- for supplies made by three parties, including the petitioner, and imposed penalties equivalent to the demand on all suppliers. The Court found that suppliers could only be penalized for the supplies made by them. Consequently, the Court remitted the matter back to the Assistant Commissioner for the limited purpose of deciding the quantum of demand, including penalty, specifically vis-a-vis the petitioner. The Court directed the parties to appear before the Assistant Commissioner on 20.08.2024. The petitioner is at liberty to avail further remedies after this decision.

Key Issues

1. Whether the demand and penalty imposed on the petitioner should be limited to the value of supplies made by the petitioner, as argued by the petitioner, or if the entire demand of Rs. 22,13,137/- is attributable to the petitioner's alleged involvement, as implied by the initial adjudication order. This issue turns on the interpretation of provisions related to the determination of demand and penalty for alleged bogus transactions under the relevant excise law. Contentions: Petitioner: The CENVAT credit disallowed to M/s Tarun Alloys concerning the petitioner's supplies was Rs. 3,48,126/-. Therefore, the demand and penalty against the petitioner should be restricted to this amount. The petitioner relies on the principle that penalty should be proportionate to the supplies made by the individual supplier. Respondent: The appeal of the petitioner was not entertained by the appellate authorities due to the non-compliance with the mandatory pre-deposit requirement.

Sections Cited

None explicitly mentioned in the judgment text provided, other than general reference to 'excise law' and 'CENVAT credit'.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

[2024:RJ-JP:29186-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 6418/2024 M/s Waheguru Tradelink, Through Its Partner Durgesh Garg S/o Krishan Kumar 15, Ashiyana Village, Bhiwadi Rajasthan-301019 ----Petitioner Versus 1. Union Of India, Through, Commissioner Of Central Excise, And Cgst, Ncrb, Statue Circle, Jaipur-I. 2. Assistant Commissioner, Central Goods And Service Tax, Division-B, A-Block, Surya Nagar, Alwar-301001 ----Respondents Connected With D.B. Civil Writ Petition No. 6433/2024 Durgesh Garg S/o Krishan Kumar, Director Of M/s Ambey Ispat Pvt. Ltd., 15, Ashiyana Village, Bhiwadi, Rajasthan - 301019 ----Petitioner Versus 1. Union Of India, Through Commissioner Of Central Excise And Cgst, Ncrb, Statue Circle, Jaipur-I. 2. Assistant Commissioner, Central Goods And Service Tax, Division-B, A Block, Surya Nagar, Alwar-301001. ----Respondents D.B. Civil Writ Petition No. 6507/2024 Durgesh Garg S/o Krishan Kumar, Partner Of M/s Waheguru Tradelink 15, Ashiyana Village, Bhiwadi Rajasthan - 301019. ----Petitioner Versus 1. Union Of India, Through Commissioner Of Central Excise And Cgst, Ncrb, Statue Circle, Jaipur- I. 2. Assistant Commissioner, Central Goods And Service Tax, Division - B, A Block, Surya Nagar, Alwar - 301001. ----Respondents D.B. Civil Writ Petition No. 6509/2024 M/s Ambey Ispat Pvt. Limited, 15, Ashiyana Village, Bhiwadi Rajasthan - 301019, Through Director Durgesh Garg S/o Krishan [2024:RJ-JP:29186-DB] (2 of 4) [CW-6418/2024] Kumar. ----Petitioner Versus 1. Union Of India, Through Commissioner Of Central Excise, And Cgst, Ncrb, Statue Circle, Jaipur -I. 2. Assistant Commissioner, Central Goods And Service Tax, Division - B, A Block, Surya Nagar, Alwar - 301001. ----Respondents For Petitioner(s) : Mr. P.K. Kasliwal with Mr. Priyesh Kasliwal For Respondent(s) : Mr. Kinshuk Jain with Mr. Saurabh Jain HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MR. JUSTICE ASHUTOSH KUMAR

Order 12/07/2024 AVNEESH JHINGAN, J (ORAL):-

These petitions are being disposed of by this common order as the facts and issues involved are similar. For convenience, the facts are being taken from D.B. Civil Writ Petition No.6418/2024. 2. This petition is filed aggrieved of dismissal of the rectification application vide order dated 01.12.2023 passed by the Customs, Excise & Service Tax Appellate Tribunal (for short ‘Tribunal’).

The brief facts are that the petitioner during the period from November, 2014 to April, 2015 supplied material to M/s Tarun Alloys Ltd. Unit-II, Bhiwadi, Rajasthan (for short ‘M/s Tarun Alloys’). The proceedings were initiated by the Excise Department setting up a case that M/s Tarun Alloys was not entitled to CENVAT credit amounting to Rs. 22,13,137/- claimed on the basis of invoices issued by three parties including the petitioner. The

[2024:RJ-JP:29186-DB] (3 of 4) [CW-6418/2024] transactions were held to be bogus and penalty equivalent to the demand created was imposed on all the parties including the petitioner. Aggrieved of the adjudicating order, the petitioner preferred an appeal, which was dismissed for non-compliance of requisite pre-deposit of the entire amount. The petitioner failed before the Tribunal on the same ground and thereafter, after dismissal of the rectification application, the present petition is filed.

Learned counsel for the petitioner submits that the CENVAT credit disallowed to M/s Tarun Alloys vis-a-vis the petitioner was to the tune of supply made of Rs. 3,48,126/-. The contention is that the demand vis-a-vis the petitioner should have been created for the supplies made to the tune of Rs. 3,48,126/-.

Learned counsel for the respondent submits that the appeal of the petitioner was not entertained for non-compliance of pre- deposit.

Heard learned counsel for the parties and perused the pleadings.

It is undisputed fact that CENVAT credit dis-allowed to M/s Tarun Alloys qua the supplies made by the petitioner, was to the tune of Rs. 3,48,126/-. The Adjudicating Officer vide order dated 31.03.2022 confirmed the demand of CENVAT credit amounting to Rs. 22,13,137/- for the supplies made by M/s A.I. Metals Private Limited, M/s Ambay Ispat Pvt. Ltd. and the petitioner. The penalty upon all the three suppliers was imposed equivalent to the demand, where as the suppliers could have been penalized only qua the supplies made by them. In such circumstances, the matter is remitted back to the Assistant

[2024:RJ-JP:29186-DB] (4 of 4) [CW-6418/2024] Commissioner for a limited purpose of deciding the issue of quantum of demand, including penalty vis-a-vis the petitioner.

In order to avoid further delay, let the parties appear personally or through representative before the respondent No.2 on 20.08.2024 at 11:00 am.

Needless to say that the petitioner shall be at liberty to avail remedies in accordance with law for redressal of surviving grievance, if any, after the decision by respondent No.2. 10. The writ petitions are disposed of accordingly. (ASHUTOSH KUMAR),J (AVNEESH JHINGAN),J Simple Kumawat /01-04 Whether Reportable: Yes

Reproduced from the public record of the Rajasthan High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.