Shree Cement Limited vs. State Of Uttarakhand

Held

The Court held that the scope of interference with a show-cause notice under Article 226 of the Constitution is limited, and a writ petition can be entertained only if there are no disputed questions of fact and the legal issue can be decided on admitted facts, as per Sushil & Company. The Court found that the Circular dated 02.01.2018 does not explicitly exclude the use of diesel for purposes other than in generators used in manufacturing. Therefore, it was difficult to hold that the Circular ran foul of the notification on a plain reading. The Court explicitly stated that it was not adjudicating whether the use of diesel in transportation of goods falls within the notification's ambit, as these are matters for the Assessing Authority to examine. The Court also noted that the show-cause notice indicated a tentative opinion and it was open to the assessee to reply and satisfy the Deputy Commissioner. The learned Single Judge's order relegating the assessee to file a reply was found to be without patent illegality. The Court modified the Single Judge's order to grant the appellant two weeks to file its reply, after which the Deputy Commissioner would examine the claim on merits. The appeal was dismissed.

Facts

Shree Cement Limited (the appellant) filed a writ petition challenging a Circular dated 02.01.2018 issued by the Commissioner, State Tax, Uttarakhand, and a show-cause notice dated 28.04.2018. The appellant contended that the Circular restricted the benefits provided by a notification dated 29.12.2017, which offered a concessional tax rate of 5% on diesel used by industrial units in the manufacture of taxable goods. The appellant argued that the Circular's clauses 12 and 13, which purportedly limited the benefit to diesel used in generators for manufacturing, were beyond the Commissioner's power and contrary to the notification. The learned Single Judge dismissed the writ petition, directing the appellant to reply to the show-cause notice. Aggrieved, the appellant filed a Special Appeal before the Division Bench.

Key Issues

1. Whether clauses 12 and 13 of the Circular dated 02.01.2018 issued by the Commissioner, State Tax, Uttarakhand, restrict the scope of the notification dated 29.12.2017, and if so, whether such restriction is beyond the Commissioner's power under the Act? (Question of law, turning on the interpretation of the notification and the Commissioner's powers). 2. Whether the use of diesel in vehicles for transporting raw materials to the manufacturing unit falls within the ambit of the phrase 'for use in the process of manufacture of taxable goods' as stipulated in the notification dated 29.12.2017? (Question of mixed law and fact, turning on the interpretation of the notification and the factual use of diesel). 3. Whether the show-cause notice dated 28.04.2018 was issued with pre-meditation, rendering it illegal and making a reply futile? (Question of law, turning on the assessment of the show-cause notice's tenor). Contentions of the Appellant: The Circular dated 02.01.2018, particularly paragraphs 12 and 13, impermissibly restricts the concession granted by the notification dated 29.12.2017. The Commissioner cannot impose restrictions on a notification issued by the Government. The use of diesel in vehicles for transporting raw materials should be considered part of the manufacturing process. The show-cause notice indicates a pre-determined mind, making a reply pointless. Relied on Deputy Commissioner of Central Excise vs. Sushil & Company and Siemens Ltd. vs. State of Maharashtra & others. Contentions of the Respondent (State): Not recorded in the judgment.