SERVICE TAX SECTION

2018-TIOL-124-SC-ST

UoI Vs UTV News Ltd

ST - Question is whether service tax u/s 65(105)(zzzz) of the Finance Act, 1994 on renting of immovable property or any other service in relation to such renting, for use in the course of or, for furtherance of, business or commerce is within the legislative competence of the Union Parliament. Held: Question is directly relatable to the scope and ambit of Entry 49 of List II of the Seventh Schedule to the Constitution of India dealing with Taxes on lands and buildings - If the impost/levy is directly relatable to the lands/buildings contemplated in Entry 49 of List II of the Seventh Schedule to the Constitution of India, Bench would have had no hesitation in saying that the Union Parliament would lack legislative competence to enact the particular provision in the Finance Act, 1994 However, Bench is unable to take the said view as has been advanced by the individual Assessees - However, the arguments advanced may indicate that even if there is no direct nexus there may be an indirect one - Whether such indirect connection or relation would be of any relevance to decide the issue of legislative competence appears to be pending before a nine judges Bench of this Court on a reference made in an order in Mineral Area Development Authority and others vs. Steel Authority of India and others (2011) 4 SCC 450 ? - Bench is, therefore, of the opinion that these matters should await the decision of the nine judges Bench whereafter the hearing of these matters will be taken up once again in the course of which it will be open for the parties to urge such additional points as may be considered relevant - Matter is accordingly deferred until disposal of the issues pending before the nine judges Bench in Mineral Area Development Authority and others (supra): Supreme Court [para 4] -Matter deferred : SUPREME COURT OF INDIA

Karad Nagar Parishad Vs CCE & ST

ST - 'Jahirat Kar' (Advertisement Tax), being a statutory levy by the Municipal Corporation is not liable to service tax - As per the Twelfth Schedule of Article 243W, Regulation of Slaughter houses is the sovereign function of the Municipal Corporation, therefore, the fees collected towards the Regulation of Slaughter houses is not exigible to service tax - appellant is a Government Municipal Corporation and not an individual and it cannot be imagined that the Government itself is involved in suppression of fact with intent to evade service tax - there being no existence of malafide, penalty cannot be imposed: CESTAT [para 4] - Appeal partly allowed: MUMBAI CESTAT

2018-TIOL-1108-CESTAT-MAD

Computer Access Pvt Ltd Vs CST

ST - Assessee was awarded contracts by various System Integrators like Wipro in connection with procurement and management of leased circuits for connectivity to various customers of such System Integrators - Revenue entertained a view that consideration received by assessee for such activities are liable to be taxed under category of Management, Maintenance or Repair services - The period of dispute is from July 2004 to March 2008 - The work order clearly mentions the scope of work as procurement and management of such circuits, ISD connectivity for the customers of Wipro - The work order given by Wipro to assessee stipulates that the assesee shall manage and maintain such lines for a consideration identified per circuit per year - On plain reading of work order as well as the tax entry under Section 65 (105) (zzg) which covers management, maintenance or repair service, activities undertaken by assessee in pursuance of work order is clearly covered by tax entry as they are involved in management, maintenance of such circuit for which they have obtained consideration from their clients - No reason to hold against the tax liability of assessee, accordingly, on merits the impugned order is upheld - Regarding limitation, assessee is registered with the department and had discharged service tax on management, maintenance and repair service for some of their activities - However, no tax is paid on present disputed activity - Extended period demand is sustainable - Assessee have pleaded that Wipro has given a certificate of payment of service tax on the whole consideration which is inclusive of consideration paid to assessee - Though on merit it is held that the tax liability cannot be determined on such criteria, the penal consequences of non-payment can be waived by invoking the provisions of Section 80 of FA - Accordingly, while upholding the tax liability in full against assessee, penalty in terms of Section 80 of the FA waived: CESTAT - Appeal partly allowed: CHENNAI CESTAT

Forbes And Company Vs CCE

ST - Assessees are Brokers and Auctioneers operating pursuant to licence issued under Tea (Marketing) Control Order, 2003 and in accordance with Coonnoor Tea Trade Association Rules - It appeared to department that assessees are providing services of "Promotion or Marketing or Sale of Goods" produced or provided by or belonging to various clients, i.e. tea factories in auctions conducted at Coonoor, which fall under taxable service of BAS - It further appeared to department that the BAS so provided were not under category of "Commission Agent" but under section 65(19)(i) of FA, 1994, namely, production or sale or marketing or sale of goods produced or provided by or belonging to client - Assessee promote the sale of the tea produced by their clients by sending out samples to their prospective buyers advertising by way of printing and distribution of catalogues - Wide gamut of activities of assessee would go far beyond the scope of a commission agent since the services rendered by them are not restricted only to sale of goods on behalf of sellers for consideration, which is the main edifice of definition of commission agent - Activities of assessee go much beyond even the amended definition of 'commission agent' which was brought into Explanation to Section 65(19) w.e.f. 16.6.2005 - Notwithstanding the fact that assessee may have been appointed as a broker, that by itself is only a requirement of Coonoor Tea Trade Association - The services performed by assessee is thus promotion and sale of goods produced or provided or belonging to their clients and thus fall within the ambit of section 65(19)(i) of the Act. Services provided by assessee will not fall either in category of 'commission agent' under section 65(19) or as a 'commission agent' under Notfn 13/2003-ST or for that matter under 'auction of property service' under section 65(7a) but only under BAS for promoting sale and marketing of goods of tea sellers as falling under section 65(19)(i) of the Act - The services rendered by assessee for 'private sales' also being of same genre, they would also fall under the ambit of section 65(19)(i) only. Resonance found of this conclusion in decision of Tribunal in case of Container Tea and Commodities 2016-TIOL-545-CESTAT-MAD - No merit found in appeals filed by assessee for which reason their plea to set aside demand of service tax and interest thereon fails. However, on the issue of penalty, assessee from the beginning have been making a contention, albeit misconceived, that their activities are of a commission agent for sale of 'agricultural produce' and hence they are covered by exemption from tax liability - They also have taken a stand that since they conduct auction, their activity would come within the ambit of 'auction service' with effect from 1.5.2006 - Thus, the whole dispute has been based on interpretation as to classification of their services - This being so, there is a strong case for setting aside the penalties.

As it has been concluded that activity of assessee would fall under section 65(19)(i), and not under 'commission agent' Tribunal do not intend to enter into the question of whether tea would fall under agricultural produce for purpose of notfn 13/2003-ST as amended, as claimed by assessee: CESTAT - Appeals partly allowed: CHENNAI CESTAT

CENTRAL EXCISE SECTION

2018-TIOL-1114-CESTAT-MUM + Story

Force Motors Ltd Vs CCE

CX -CENVAT - Inputs - Rule 2(k) of CCR, 2004 - Fruits of research and development facility ultimately finds its way, in form and in costs, to the excisable product - apart from production of excisable outputs any activity that is incidental or ancillary also constitutes manufacture in terms of section 2(f) of CEA, 1944 - Inputs in any activity that contributes to the final product would be in compliance with the definition of "input" in CENVAT Credit Rules, 2004 -there is no allegation that research and development facility is not integral to the manufacturing process - considering the wide latitude offered for availment of credit and in the absence of any allegation that research and development is not concerned with manufacture, the disallowance of CENVAT credit does not find favor - Impugned order set aside and appeal allowed: CESTAT [para 4 to 10] - Appeal allowed: MUMBAI CESTAT

2018-TIOL-1113-CESTAT-DEL

Britannia Industries Ltd Vs CCE

CX - Assessee have done their best whatever they could do under the scheme of Act under rule in order to lead evidence - Authorities below failed to exercise jurisdiction by not referring for cross-verification of relevant data from the jurisdictional assessing authority of the manufacturer in spite of the full details of the concerned manufacturer namely M/s Dhampur Sugar Limited, Dhampur - More so, in face of fact that assessee have categorically stated that said evidence is not available with them or with the first stage dealer-Delhi Sugar Trading Company - There is no adverse report material on record as regards non-availability of Cenvat credit, in question - Assessee is in possession of proper documents as required under Cenvat Credit Rules, read with the Service Tax Rules for availing the Cenvat credit, in question - Accordingly, impugned order set aside: CESTAT - Appeal allowed: DELHI CESTAT

2018-TIOL-1112-CESTAT-MAD

Hindustan Coca Cola Beverages Pvt Ltd Vs CCE

CX - Assessee is manufacturer of aerated waters (dutiable product) and Maaza Mango (exempted product) - They used furnace oil as common input for manufacture of both exempted as well as dutiable product - Though furnace oil was used as common input by assessee for manufacture of both dutiable and exempted product, they did not maintain separate account - The department was of the view that assessee cleared exempted product, therefore they are liable to pay duty under Rule 6(3)(b) of CCR, 2004 - The assessee was restricting the credit availment to 85% on inputs other than Furnace Oil - They availed 100% credit of duty paid on Furnace Oil - The Apex Court has held that credit is not admissible on fuel input used for manufacture of exempted product - The assessee contend that they have reversed proportionate credit and therefore may not be compelled to pay the 8%/10% of value of clearances - This is opposed by department stating that the government had given a concession to exercise option within a time frame - Assessee having not exercised the option cannot now contend to have complied with requirement of provision of law - In similar set of fact, Tribunal in case of Tamil Nadu News Print & Paper Ltd 2014-TIOL-1421-CESTAT-MAD observed that when proportionate credit is reversed there is no requirement to pay 8%/10% of value of clearance - The Tribunal relied on decision of Himalaya Drug Company 2011-TIOL-246-HC-KAR-CX - Similar view was taken by Gujrat High Court in Shree Rama Muthi Tech Ltd 2011-TIOL-940-HC-AHM-CX - In the present case, assessee was bonafidely prosecuting the issue by his appellate remedy - Therefore the contention that assessee had not filed application to exercise option does not find favour - However, it needs to be verified whether the amount reversed would be actual proportionate credit or not - For this limited purpose, matter remanded to the adjudicating authority - As regard to penalty, issue is an interpretational one and had travelled up to the Supreme Court - Further the period involves pre as well as post amendment - Taking these facts into consideration, penalty imposed is unwarranted and requires to be set aside: CESTAT - Appeal partly allowed: CHENNAI CESTAT

Thiru Arooran Sugars Ltd Vs CCE

CX - Assessee engaged in manufacture of sugar, molasses and rectified spirit and were availing the facility of cenvat credit on capital goods / inputs used in their factory - On verification of records during period April 2008 to December 2008 and for period from February 2009 to April 2009, it was noticed that they had taken credit on H.R. Plates, H.R. Sheets, M.S. Channels and M.S. Joists used as structural items in their factory - Department views that as these items fall under Chapter 72 and are not covered by definition of capital goods under Rule 2 of CCR, 2004, the asessee is not eligible for credit - Demand confirmed alongwith interest and penalty - The period involved is prior to 07.07.2009 - The credit on MS items used for structural supports has been denied alleging that after fabrication and fixing to the earth, these become immovable property - The department has also applied amendment dt. 07.07.2009 retrospectively so as to deny the credit - In case of Mundra Ports & Special Economic Zone Ltd. 2015-TIOL-1288-HC-AHM-ST, it has been observed that Tribunal has not explained in decision of Vandana Global 2010-TIOL-624-CESTAT-DEL-LB as to what is the aid used for considering that amendment brought forth has retrospective application - These aspects have been analyzed in various decisions and also in recent decision of jurisdictional High Court in assessee’s own case - Following the same, disallowance of credit is unjustified - In the result, impugned order disallowing the credit is set aside: CESTAT - Appeal allowed: CHENNAI CESTAT

2018-TIOL-1110-CESTAT-DEL

Ultratech Cement Vs CCE

CX - Assessee engaged in manufacture of cement and has the factory situated within the State of Rajasthan - The assessee was availing the benefit of Notfn dated 06.05.1986 issued by Government of Rajasthan in relation to payment of sales tax - The Department was of the view that the rebate so claimed by assessee is nothing but a form of exemption from payment of CST/VAT and is includible in the transaction value for payment of Central Excise duty - Assessee has claimed that they have paid the CST without partial exemption at the time of clearance of goods - But during the assessment of VAT returns, such VAT paid is taken into account and if assessee is eligible, the same is adjusted when partial exemption is allowed to assessee in terms of VAT Notfn dated 06.05.1986 - The net result of assessment for CST is that the CST actually paid is at the partially exempted rate - Hence, following the decision of Supreme Court in Super Synotex (India) 2014-TIOL-19-SC-CX, benefit of deduction from transaction value will be restricted to actual CST paid i.e. at the partially exempted rate - In this view of the matter, impugned order is justified and sustainable - Demand is justified in the light of decision of Apex Court in Super Synotex (India) case: CESTAT - Appeal dismissed: DELHI CESTAT