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SERVICE TAX
2018-TIOL-1504-CESTAT-HYD + Case Story
Sri Chaitanya Educational Committee Vs CC, CE & ST
ST - Notification 33/2011-ST, 25/2012-ST, 03/2013-ST, 06/2014-ST - Commercial training or Coaching centre - Mark sheets issued by the appellants jointly with the signature of Controller of Examination has to be considered as the certificate which is recognized by any law for the time being in force: CESTAT [para 11]
ST - Appellants are imparting training for various national entrance tests which are integrated to their intermediate courses as prescribed by the Andhra Pradesh Intermediate Board, therefore, the predominant nature of the service will be imparting formal education which stands excluded from service tax net: CESTAT [para 31]
ST - Training/coaching provided by appellants in the Intermediate Colleges are composite and an integrated course, whereby the students become eligible for intermediate qualification and simultaneously become prepared for taking the entrance examinations - Such a course cannot be artificially split as intermediate and entrance coaching and more particularly, demanding service tax on even the intermediate coaching citing inability to split the course fee - Demand raised on the appellants is in total disregard to the consistent principle of the Government not to subject formal education to service tax: CESTAT [para 20]
ST - Settled law is that if the plain meaning of the exemption notification covers the assessee, the benefit should be allowed: CESTAT [para 17]
ST - Activity by an 'educational institution' as defined with reference to Section 66D of the Finance Act, 1994 was outside the purview of service tax - demand of service tax fails: CESTAT [para 39, 40] - Assessee appeals allowed/Revenue appeal dismissed : HYDERABAD CESTAT
2018-TIOL-1503-CESTAT-DEL
Msd Pharmaceuticals Pvt Ltd Vs CST
ST - Assessee entered into an agreement with their holding company, M/s Merck, USA who is a pharmaceutical company engaged in, among other things, research, development and manufacture of medicines and vaccines - In course of their business M/s Merck, USA intended to do certain clinical trials for newly developed drugs, in India - For this purpose, they have entered into two separate agreements, one with assessee and other one with M/s SIRO, Thane to conduct clinical trial in India as per the requirement of M/s Merck, USA - Dispute is with reference to service tax liability of assessee for their activities connected to such clinical trials - It is recorded that assessee in terms of said agreement, will coordinate clinical status in addition to conducting clinical studies - The assessee was engaged in finalizing testing protocol, training the staff for trial, applying and obtaining approval of DCGI, import of drug to be tested in India, monitoring the protocol, finance management, reporting adverse developments, documentation and archival of said document of final reporting to M/s Merck, USA and DCGI - SIRO were also involved in activities in said clinical trial - These activities are initiation of trial sites, monitoring, trial monitoring, site management, query response and coordinate with M/s Merck, USA - Perusal of details clearly reveal that assessees are directly engaged in activities of conducting clinical trial studies - They did obtain no objection approval from concerned drug authorities in India - Findings recorded in impugned order is neither factually nor legally tenable - Activities are clearly covered by exemption under Notfn 11/2007-ST - Following the ratio of decision of Tribunal in Paul Merchants Ltd. 2012 -TIOL-1877-CESTAT-DEL it is clear that these services are for delivery and consumption of an entity located outside India - Impugned order set aside: CESTAT - Appeals allowed : DELHI CESTAT
2018-TIOL-1502-CESTAT-DEL
British Airways Vs CST
ST - Assessee, a branch office in India of British Airway, United Kingdom, headquartered in London is a service provider, registered with service tax Department - The main service provided by assessee was of "Transport of Passenger embarking in India for international journey by air" service - The air tickets issued by assessee consists of fare components namely, basic fare, fule surcharge & insurance, statutory levies and other charges - The appellant considered the components of base fare, fuel surcharge and insurance as value of taxable service and discharged the Service Tax liability on such components but did not pay the Service Tax on other components i.e. the statutory levies and other charges, on the ground that said charges imposed by Government and Airport Authorities do not constitute service in respect of taxable service provided by them - As a service provider, assessee was liable to pay service tax on taxable value of service received from passengers for international journey by air - The other charges namely, PSF, User Development Fee and Other Development Charges were collected by assessee on behalf of airport authorities and Government and same were also paid to said authorities - Since the assessee is intermediary between passenger and airport authority and is not providing any taxable service with regard to collection and deposit of such charges, value of such charges cannot be included in taxable value for payment of Service Tax - Issue is squarely covered by decisions of Tribunal in case of Austrian Airlines 2017-TIOL-3215-CESTAT-DEL , M/s. Lufthansa German Airlines 2016-TIOL-1086-CESTAT-DEL and Aeroflot Russian Airlines 2018-TIOL-645-CESTAT-DEL wherein it has been held that no service tax liability would arise in respect of various fees and charges, being collected by assessee on behalf of airport authority and being paid to such authority - Therefore, no merit found in impugned order and accordingly, same is set aside: CESTAT - Appeals allowed : DELHI CESTAT
CENTRAL EXCISE
2018-TIOL-1512-CESTAT-CHD + Case Story
Security Engineering Products Vs CCE
CX - A communication submitted to any authority under establishment was to be treated as submitted to the head of the office, therefore, the letter acknowledged by Sector Officer is an intimation submitted to the Assistant Commissioner – Benefit of notification 50/2003-CE is available – Impugned order set aside and appeals allowed: CESTAT by Majority
ST – Prior to 16.06.2005, only production of goods on behalf of client was subject to service tax under Business Auxiliary Services – upon amendment, the definition was expanded to include ‘production or processing of goods on behalf of the client' – bullet proofing of vehicle not covered under BAS prior to 16.06.2005 – demand set aside: CESTAT - Appeals allowed
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CHANDIGARH
CESTAT 2018-TIOL-1501-CESTAT-DEL
Navin Fluorine International Ltd Vs CCE
CX - the assessee company engaged another company to carry out civil construction works for Pilot Plant building - It claimed credit on such service provided - The Revenue claimed that construction service was not an eligible input service w.e.f. April 1, 2011 and so credit availed after such date was invalid - SCN was issued seeking recovery of such credit availed -
Held - The credit was availed on April 30, 2011 while the amendment was carried on April 1 2011 - Admittedly, the construction services commenced & were provided much before the amendment on April 1, 2011 - The assessee produced invoice raised by the service provider dated March 25, 2011 & payment for which was made on March 28, 2011 & certification by Architect was done on March 26, 2011 - Hence the amendment carried out from April 1, 2011 has no implication herein as the services were availed & paid for prior to the said date - Hence that the credit was availed on April 30, 2011 by itself cannot be the reason for denial - Duty demand is unsustainable: CESTAT (Para 1,5,6) - Appeal Allowed : DELHI CESTAT
2018-TIOL-1500-CESTAT-MAD
Wipro Ltd Vs CCE
CX - Assessee is manufacturer of 'Computers/Automatic Data Processing Machines' - On verification of records, it was noticed that they had wrongly availed credit on various input services like 'Rent a cab service, Courier service, Mandap keeper service and Catering service' - The period involved is prior to 01.04.2011 when definition of input service had a wide ambit as it included the words "activities relating to business" - In M/s. Coca Cola India Pvt Ltd. 2009-TIOL-449-HC-MUM-ST , amendment of phrase "activities relating to business" was analyzed and it was held that any activity relating to business of manufacture would fall within the definition of input service - Assessee has submitted that Rent a Cab services were availed for picking up and dropping of employees of company - Catering services were used for providing Canteen facilities for employees - Mandap keeper services were availed to conduct the programs of Company - The Courier services were availed for dispatch of goods upto the depot or to dispatch the goods directly to customer's premises - It needs to be mentioned that period involved in regard to Courier service is prior to 01.04.2008 - After said date, an amendment was brought forth in definition of input service, whereby words 'from place of removal' was substituted by words 'upto the place of removal' - Following Apex Court judgment in Andhra Sugars Ltd. 2018-TIOL-45-SC-CX , since the period involved is upto December, 2007, input services availed for dispatch of goods upto buyer's premises is eligible for credit - Applying the ratio laid in case of M/s. Coca Cola India Pvt. Ltd. wherein the impugned services were held eligible for credit, denial of credit is unjustified - The impugned order to the extent of dis-allowing the credit on services is set aside: CESTAT - Appeal allowed : CHENNAI CESTAT
2018-TIOL-1499-CESTAT-MAD
Deccan Alloys Pvt Ltd Vs CCE
CX - M/s SAPL were holding dealer registration and were suppliers of MS ingots - They supplied such MS ingots from invoices issued from allegedly non-existent depot address to M/s. DAPL - It appeared to department that invoices issued by SAPL from said address had been issued with fraudulent intention to pass on cenvat credit to DAPL, although there was no movement of MS ingots - Similarly, it appeared that SAPL had sent the goods to M/s. BAPL for conversion into re-rolled products of such MS channels and MS angles - However, on the allegation of non-existent address, it is seen that impugned order refers to a letter of Superintendent of Central Excise informing that SAPL Bangalore were not operating from said depot and that following their letter, SAPL had discontinued issue of cenvatable invoices from that address; that they had obtained new Central Excise Registration - It is not the case that SAPL did not have any depot at all in Bangalore, only omission is that though they had changed their depot address, the invoices continued to reflect the earlier address - When the department alleges that no raw material was received from SAPL, the department has to indicate what is the alternate source of raw material, obtained by DAPL, in an accounted or unaccounted manner for use in their manufacture - This has certainly not been done - The investigation also has not satisfactorily proved that paper trail purporting movement of material consigned to BAPL and redirected to DAPL for immediate requirements, had actually not happened - True, while the entry of vehicles transporting the raw materials at certain check posts is surely an useful tool to corroborate the fact or otherwise of such transportation, nonetheless, that cannot be the sole evidence which could be relied on, especially, when the department has not been able to establish non-receipt or shortage of raw materials at DAPL during their visit - Apart from these unfounded evidences and uncorroborated facts which are the main basis of SCN, department has also, to a large extent, relied upon the statements of manufacturers of assessee - None of these persons whose statements were recorded have been cross examined.
In case of Bhuwalka Steel Industries Ltd. , Tribunal held that credit is admissible irrespective of fact that dealers issuing invoices had shifted the premises - This decision was affirmed by High Court of Karnataka - In case of Motabhai Iron and Steel Industries 2014-TIOL-1617-HC-AHM-CX , the High Court of Gujarat in respect of demand based on allegation that vehicles which were shown to transport goods were not capable of carrying such goods, upheld the Tribunal's view that such goods were duly found to have been recorded in assessee's factory and consumed in production and no investigation was made at consignors' end and no error can be found in Tribunal's findings in favour of assessee - Department has not been able to satisfactorily establish the allegations made in SCN - This being so, impugned order set aside: CESTAT - Appeals allowed : CHENNAI CESTAT
CUSTOMS
2018-TIOL-182-SC-CUS + Case Story
CC & CE Vs Adani Exports Ltd
Cus - Whether High Court is mandatorily required to call for a statement from the Tribunal in every case, where a reference is made u/s 130A of the Customs Act, 1962 - Being a question of law, matters to be decided by a larger Bench of appropriate strength - Registry directed to place order before CJI for appropriate further course of action: Supreme Court. - Matter referred : SUPREME COURT OF INDIA
2018-TIOL-1511-CESTAT-DEL
Vijay Kr Sharma Vs CC
Cus - During the period of dispute, eight containers loaded with imported goods were cleared from ICD, Tughlakabad - On verification, the Bills of Entry mentioned on Customs Manual Gate Passes were found to be forged - The containers were found to contain cigarettes, R-22 gas and air conditioners and the containers were found to have been cleared based on forged Bills of Entry and gate passes, without proper documents & without paying duty - Enquiry revealed that the signatures & stamps of officers concerned were forged - This was confirmed by the Central Forensic Science Laboratory - Statements of certain ICD officers were recorded regarding issue of job orders for the bills of entry - During investigation by the DRI, statements of transporters, drivers, shipping line and other related persons & entities were recorded u/s 108 of the Act - Based on some such statements, a godown was opened and searched revealing about 540 sets of air conditioners - Thereupon, the DRI zeroed in upon the mastermind of the entire scam and his statements were recorded - The DRI also recorded statements of the first appellant herein, who supplied the labourers for unloading the containers - He recognized the godowns already searched and also led the DRI to two more godowns, whose search revealed different models, refrigerators, LCD & LED TVs and voltage stabilizers as well as several cartons of imported cigarettes - Hence duty demands were raised and penalties were imposed - The goods were confiscated & the cigarettes were sold by the Department - Later, the adjudicating authority dropped the charges levied against a few of the accused persons - Thus the cross appeals by the assessee and the Revenue - The appellant also contested the sale of the cigarettes by the Department - Held - The sale of cigarettes is justified since they are perishable items and there were no claimants for them - No duty had been paid on them and the appellant claimed to have not imported them - No bank guarantee was furnished for them as well - Further, the facts & circumstances reveal a syndicate of smugglers in which some officers of the Department are also involved - The removal of eight containers based on forged documents without payment of duty & using forged duty challan, is a glaring example of smuggling - Forged IDs were used & false documents were prepared - Given the menace and cancerous nature of smuggling, the orders in challenge are sustained in toto - The adjudicating authority in fact took a lenient view by dropping charges against some persons - But doing so cannot be faulted due to lack of evidence against them - Hence Department's appeals too are dismissed: CESTAT (Para 2-9,30-33) - Assessee's Appeals Dismissed : DELHI CESTAT
2018-TIOL-1510-CESTAT-DEL
Sandeep Rikhi Vs CC
Cus - An entity cleared certain goods from the ICD, Tughlakabad - Based on intelligence inputs that such goods had been cleared through mis-declaration - Examination of goods revealed imported items declared as 'Multi utility bags' - However, such bags were found to contain items such as cosmetics, ready made garments & mobile phones housings - Such goods were found to have been smuggled, which would normally attract levy of Customs duty on import - Statements were taken from persons concerned - Duty demand was raised on the importer and penalties u/s 112(a) and u/s 114AA of the Customs Act were imposed - Hence the present appeals by five persons who were involved in various stages in handling the goods - Held - The present case clearly involves smuggling & mis-declaration, which was committed by the proprietor of the importer-firm - Herein, all five appellants played their own vital role - Two of the appellants passed some papers to two other appellants for Customs clearance - Before handing over the papers, none of the appellants examined the contents - If in doubt, they could have asked and examined the sample of the goods - However, they blindly passed on the papers - Considering such facts, it appears that none of the appellants tried to know the real contents of the consignment & blindly passed on documents and money - This reveals carelessness and casual attitude, which warrants punishment - Nonetheless, considering that each of the appellants was only one link in the entire chain, and that the main culprit is the importer firm and its proprietor, the penalties imposed on the appellants merits being reduced: CESTAT (Para 2,19,21,22) - Appeals Partly Allowed : DELHI CESTAT
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