M/S Anubhav Industries vs. The Union Of INDIA And 3 Ors

Held

The Court held that the respondent authorities were obligated to first consider the petitioner's application for a special rate under Clause 3(1) of Notification No. 20/2008-CE dated 27.03.2008. The Court noted that similar issues in other writ petitions (WP(C) No. 1644/2021 and WP(C) No. 2089/2021) were disposed of by directing the department to decide the special rate applications pending before them before re-deciding the matter. The Court found no reason why similar directions could not be issued in the present case, as the issues and petitioners were similarly placed. The Court made the ad-interim order dated 09.04.2021 absolute, directing the Commissioner, GST, Dibrugarh (respondent No. 2) to expeditiously consider and dispose of the petitioner's special rate application, affording the petitioner an opportunity of hearing. The impugned demand notices were ordered to be kept in abeyance until a decision was passed on the special rate application. The Court clarified that the application should be decided on merit and not rejected on technical grounds like limitation. The legality of the impugned demand notices was expressly left undecided.

Facts

The petitioner, M/s Anubhav Industries, a partnership firm, challenged demand-cum-show cause notices dated 01.01.2021 and 09.02.2021 issued by the Assistant Commissioner, Central Goods and Service Tax, Guwahati. These notices sought recovery of Central Excise duty, purportedly following a Supreme Court judgment. The petitioner had availed area-based exemption under Notification No. 32/99-CE, later amended by Notification No. 35/2001-CE. Under Notification No. 20/2008-CE, the petitioner applied for a special rate for excise duty refund based on value addition. The Supreme Court in Union of India –Vs- VVF Limited restored the notification dated 27.03.2008, which had been set aside by various High Courts. The petitioner contends their special rate application was not decided before the demand notices were issued.

Key Issues

1. Whether the respondent authorities were required to decide the petitioner's application for a special rate under Clause 3(1) of Notification No. 20/2008-CE dated 27.03.2008 before issuing demand-cum-show cause notices for recovery of Central Excise duty? Petitioner's arguments: The petitioner argued that Clause 3(1) of Notification No. 20/2008-CE provided a legal right to manufacturers to apply for a special rate, and the authorities were duty-bound to consider such applications before initiating recovery proceedings. They contended that if the special rate application were accepted, it could lead to a re-evaluation of the refund amount, potentially obviating the need for recovery. The petitioner relied on coordinate bench orders in similar cases (WP(C) No. 1644/2021, WP(C) No. 2089/2021, WP(C) No. 740/2022) which directed the authorities to decide special rate applications first. Revenue's arguments: The judgment records no specific arguments from the revenue or state regarding this issue.