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SERVICE TAX
2018-TIOL-1761-CESTAT-DEL + Case Story
Mesco Airlines Ltd Vs CST
ST - Supply of Helicopters to State Governments for transportation of personnel – taxable under SOTG service : CESTAT
ST - Assessee holds a permit issued by DGCA, New Delhi, permitting them to operate non-scheduled air transport service - In terms of their agreement with various clients which are State Governments, assessee provide Helicopters for transportation of persons in India, as required by State Governments - Department views that during period from 2006-07 to 2008-09, the activity of assessee was covered under "Supply of Tangible Goods Service" taxable under Section 65 (105)(zzzzj) of FA, 1994 - Besides this, assessee had received Technical Inspection and Certification service from Service providers situated abroad for which payment had been made - According to department, assessee as recipient were liable to pay service tax in respect of the same under reverse charge basis, under Section 66A of FA, 1994 read with Rule 2(1)(d) of STR, 1994.
Held: An identical issue regarding charter hire of helicopter to ONGC came up before Tribunal in case of Global Vectra Helicorp Ltd. - 2015-TIOL-380-CESTAT-MUM wherein assessee claimed the classification of their service as Transportation of Passengers by Air Service but, the Tribunal after very detailed discussion of the facts and various case law on the subject as well as CBEC Circular No. 20/2009 came to the conclusion that the services will be rightly classifiable under category of "Supply to Tangible Goods Service" - By following the decision of Tribunal, classification of service ordered under category of "Supply to Tangible Goods Service" and findings of Adjudicating Authority upheld - The next issue is with reference to Technical Inspection Certificate Service received by assessee from service providers abroad for which an amount have been paid - Payments were made by assessee towards receipt of services from abroad - The detailed nature of service has been confirmed by Sh. Puneet Singhla, Chartered Accountant of assessee during his statement given before departmental officers - Such services are classifiable under Technical Inspection and Certificate Service - The service tax on such services is required to be paid by recipient under the reverse charge basis in terms of Section 66A of the Act read with Rule 2(1)(d) of STR, 1994 - Hence, demand alongwith interest and penalty upheld - No infirmity found in impugned order which is sustained: CESTAT [para 11 to 13] - Appeal dismissed: DELHI CESTAT
2018-TIOL-1760-CESTAT-MUM + Case Story
Kagal Nagar Parishad Vs CCE
ST - "Premium" or "Salami" is paid for transfer of interest in the property from the lessor to the lessee - As this amount is not for continued enjoyment of the property leased, same is not liable to tax under Renting of Immovable Property – Impugned order set aside and appeal allowed: CESTAT [para 4, 5] - Appeal allowed : MUMBAI CESTAT
2018-TIOL-1759-CESTAT-MUM
Wanbury Ltd Vs CCE, ST & C
ST - Assessee is in appeal against impugned order which has confirmed demand, interest thereon, and penalties under section 76, 77 and 78 of FA, 1994 - Assessee is a manufacturer of bulk drugs and had made use of certain service providers located abroad on a failure to discharge liability of tax under section 66A of FA, 1994 on the consideration for these services which included that of BAS, 'banking and financial services', 'management consultancy services', 'club and association service', 'technical inspection and certification' services as prescribed by overseas Food and Drug Administration authorities - The claim for exemption as provider of BAS does not lie as the conditions in the notification had not been fulfilled - It is submitted that the arguments against levy of tax as recipient of banking and financial service has not been placed before the lower authorities and hence no evidence has been submitted - It is clear that the impugned order has determined tax liability on commission that was paid by assessee to agents situated outside the country - It is also not in doubt that their services were utilised in connection with the promotion of their products which involved exports out of India and, consequent to such exports, the issue stands settled by the decision of Tribunal in Genom Biotech Pvt Ltd 2016-TIOL-529-CESTAT-MUM in near identical circumstances - Accordingly, the levy of service tax on an activity rendered by an entity located abroad and in relation to the goods after their arrival in those countries is not liable to tax.
From the decision of Tribunal in Basti Sugar Mills Company 2007-TIOL-657-CESTAT-DEL and from the nature of services availed for securing approval of US Food and Drugs Administration, it would appear that assessee is not a recipient of 'management consultancy service' and consequently the demand under those head cannot sustain - The nature of activity that was sought to be taxed as 'club or association service' were the payment of fees paid for membership of overseas stock exchanges - In the circumstances of a specific and distinct liability to tax under 'stock exchange service' and the inability of Revenue to connect that activity within the scope of taxable service under section 65(105) it is not permitted to attempt tax under any other taxable service - The charges paid to statutory authorities outside the country for an activity related to export of goods is not liable to tax as 'technical inspection and certificate service' as clearly laid down by the decision in re Intas Pharmaceuticals Ltd.
Turning to issue of 'banking and other financial services' it would appear that the factual circumstances in which commission or other charges were paid to banks outside the country in relation to the external commercial borrowings or realisation of export proceedings were not placed before the original authority - These are questions of fact which must be ascertained on that level and subject to scrutiny by original authority - The demand as recipient of 'banking and financial services' shall be subject to fresh decision by the original authority: CESTAT - Appeal partly allowed: MUMBAI CESTAT
2018-TIOL-1758-CESTAT-BANG
SVB India Advisors Pvt Ltd Vs CST
ST - Assessee is service provider under category of 'Management Consultant Services' and is registered with STPI and availing input service credit as per CENVAT Credit Rules - Assessee filed a refund claim for October 2010 to March 2011 in respect of unutilized CENVAT credit giving all required particulars on 31/03/2011 along with all documents - Same was rejected on the ground that the claim is hit by limitation under Section 11B of Central Excise Act as made applicable to Finance Act, 1994 - Since there were divergent views on this issue by various Benches of Tribunal, a Larger Bench was constituted on a reference made by Single Member Bench and the Larger Bench in case of Span Infotech (India) Pvt. Ltd. 2018-TIOL-516-CESTAT-BANG-LB has unanimously held that the relevant date for purposes of deciding the time limit for consideration of refund claim under Rule 5 of CENVAT Credit Rules may be taken as the end of quarter in which FIRCs are received in cases where refund claims are filed on a quarterly basis - Since the Larger Bench has clarified the position with regard to the relevant date for computing the period of one year, by following the ratio of Larger Bench in said decision, these appeals needs to be remanded back to the original authority to dispose of the refund claims as per the decision of the Larger Bench: CESTAT - Matter remanded: BANGALORE CESTAT
CENTRAL EXCISE
2018-TIOL-1757-CESTAT-BANG
Merck Specialities Pvt Ltd Vs CCT
CX - Assessee engaged in manufacture of excisable goods and availing input service tax credit facility under CCR, 2004 - They are also undertaking trading activities from the premises and depots - During audit, it was observed that assessee have availed common input service tax credit during the period April 2007 to October 2009 on common input services like building rent, security services, maintenance services and financial services at the sales office and depots - They have an input service distributor (ISD) at Chennai who have in turn passed the credit from centralized service tax registration - Based on the ratio of turnover of calculation of trading/manufacturing to be 1:2, the manufacturing unit is eligible to take credit to the extent of 2/3 of the service tax paid and received from the ISD - Hence, the ineligible excess credit availed on trading activity i.e. 1/3 input service tax distributed, is liable to be disallowed and recovered under CCR, 2004 - Larger period has rightly been invoked as assessee has suppressed the facts from Department and it was detected during the audit - Further, Madras High Court in case of FL Smidth Pvt. Ltd. 2014-TIOL-2186-HC-MAD-CX has also upheld the decision of Tribunal invoking the extended period of limitation on the ground that assessee has not disclosed the availment of input service credit in respect of trading activities - Further, Madras High Court in case of Ruchika Global Interlinks 2017-TIOL-1235-HC-MAD-ST has held that inclusion in explanation to Rule 2(e) viz. trading was without doubt only clarificatory but the same is applicable retrospectively - Accordingly, there is no infirmity in impugned order which is upheld: CESTAT - Appeal dismissed: BANGALORE CESTAT
2018-TIOL-1756-CESTAT-MAD
Sun Pharmaceuticals Industries Ltd Vs CCE & ST
CX - Assessee, a 100% EOU engaged in manufacture of bulk drugs - They had imported raw materials (inputs) packed in MS drums and HDPE drums availing concessional duty benefit of Notfn 52/2003-Cus. as amended - Empty drums after use of inputs were sold by assessee in DTA - Department took the view that such clearances will attract customs duty in view of condition No.4(b) of the notfn - From the facts on record and assertions of assessee made before the lower authorities, it clearly emerges that the empty drums have been sold only as scrap to merchants and to their employees - True, these drums may well be used for some purpose or the other by the persons who purchase them like storing water which is apparently the purpose for which the employees buy these drums - However, for the purpose of notification the test of being "suitable for repeated use", is whether the drums are being reused for containing and transporting the very same goods in which they had initially arrived - There is no such allegation or evidence brought forth - In the circumstances, impugned goods are only in the nature of used packing material of a kind of unsuitable for repeated use which then should be allowed to be cleared without payment of any duty, as per provisions of 4(c) of same notification: CESTAT - Appeal allowed: CHENNAI CESTAT
CUSTOMS
NOTIFICATION
cnt49_2018
CBIC notifies new Customs Exchange rates effective from June 8, 2018
CASE LAWS
2018-TIOL-1755-CESTAT-AHM
CC Vs Varsana Ispat Ltd
Cus - Issue raised in appeals, inter alia, involve a substantial question of law of classification of Steam Coal and Bituminous Coal and referred to Larger Bench as conflicting opinions have been expressed by various benches of the Tribunal - When the matter was heard before Larger Bench, taking note of the fact that the issue has already been taken up and pending before the Supreme Court, the Larger Bench relegated these appeals to the respective Benches to dispose the same in the light of observations of Larger Bench in its order dt.16.01.2017, wherein liberty is granted to all the assesses to come again before this Tribunal after receiving final verdict from the Apex Court within prescribed time, if advised so - Thus, the present appeals are disposed of with liberty to the assessees to approach this Tribunal after final verdict on the issue of classification of Steam Coal and Bituminous Coal from the Apex Court - Status quo should be maintained i.e. no recovery nor any refund of amounts involved in these appeals would be processed during this period: CESTAT - Appeals disposed of: AHMEDABAD CESTAT
2018-TIOL-1754-CESTAT-MAD
Chemplast Sanmar Ltd Vs CC
Cus - Issue is with reference to calculation of Cess on Customs duty for imported steaming (non-coking) coal by assessee - The assessee filed various Bills of Entry for clearance of said imported goods - The Bills of Entry were originally assessed provisionally for want of certain original documents - Thereafter, on submission of these documents the assessments were finalized - The assessee is aggrieved only by that portion of finalization of assessment which they claimed do not extend the benefit of exemption available to Education Cess and Higher Education Cess on Clean Energy Cess while calculating the aggregate of Cess payable on Customs duty - The lower authorities held that the said Education Cess levied under Section 126 (1) of Finance Act, 2007 on imported goods specified in the 10th Schedule to the Customs Tariff Act, 1975 will also be levied on Clean Energy Cess as being part of aggregate of duty of Customs - Original authority in one of the orders elaborately discussed legal provision with model calculation before arriving at the final conclusion - Tribunal is in full agreement with analysis made by lower authorities and find no merit at all in submissions made by assessee - The legal provisions for calculation of aggregate duty of Customs and Education and Higher Education Cess leviable on such duty of customs are clear and there is no ambiguity in the same - No merit found in appeals, accordingly, same are dismissed: CESTAT - Appeals dismissed: CHENNAI CESTAT
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