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SERVICE TAX
2018-TIOL-1873-CESTAT-MUM + Case Story
Sai Marketing Vs CST
ST - Appellant acting as Direct Selling Agents (DSA) for marketing of auto loan products of HDFC Bank for which they received commission/incentive to the extent of 5% of the loan amount - ST demand raised under Business Auxiliary Service (BAS) and confirmed along with penalties - appeal to CESTAT.
Held: Case can be decided on the basis of limitation without going into the merits of the case - there was reasonable confusion about the category of service, whether the said service of the appellant falls under "Business Auxiliary Services" or "Business Support Services" - Since there were contrary decisions the matter reached the Larger Bench in the case of Pagariya Auto Center - 2014-TIOL-141-CESTAT-DEL-LB and when the issue was settled - In this undisputed fact, it cannot be said that the appellant had any malafide intention or any suppression on their part - appellant’s entire service provided to HDFC Bank and all the transactions are recorded in Books of account of appellant as well as in the Books of HDFC Bank - as demand was raised on the basis of such recorded transaction in Books of account, therefore, it cannot be said that the appellant has suppressed any material fact with intention to evade payment of Service Tax - period involved was 10.07.2003 to 31.03.2006 and the show-cause notice was issued on 08.10.2007 - entire demand is hit by limitation - impugned order set aside and appeal allowed: CESTAT [para 4, 5] - Appeal allowed: MUMBAI CESTAT
2018-TIOL-1866-CESTAT-DEL
SB Developers Ltd Vs CST
ST - Assessee engaged in activity of various services including Maintenance or Repair Service and Renting of Immovable Property Service - Demand raised and confirmed by Revenue is on various grounds - First issue relates to the fact that assessee received electricity from Grid and in addition also had the capacity to generate electricity using generators - They supplied electricity from both sources to tenants of Mall and the payment therefor was collected by assessee - Department was of the view that charges recovered for electricity generated by assessee using generators and supplied to tenants, are to be included in maintenance charges and such amounts will be liable to payment of service tax - There can be no levy of service tax on electricity charges which are reimbursed to assessee by tenants - However, on a perusal of agreement entered into by assessee with tenants, tenant is also liable to pay to assessee for the electricity generated by assessee and supplied to tenant as part of the maintenance agreement - Adjudicating authority is directed to allow the claim of assessee with respect to reimbursement of electricity charges from tenants in respect of electricity received from the Grid - At the same time assessee is directed to submit before adjudicating authority the details of electricity generated by them and supplied to the tenant and the charges recovered therefor.
The second issue relates to the fact that assessee, from various tenants, recovered interest free maintenance advance which is equal to approximately six month’s charges - In addition, they have also recovered security deposit equivalent to six months’ maintenance charges - In respect of interest free maintenance advance, assessee has admitted the liability for payment of service tax from the date such advance has been received - Such liability has also been paid with interest - In respect of security deposit, amounts cannot be included in consideration as long as the same remains interest free advance to be returned to tenant at a subsequent date - Assessee is directed to submit details to adjudicating authority, duly certified by Chartered Accountant, to the effect whether security deposit also stands adjusted towards maintenance charges during the disputed period.
The third point is that the assessee is availing cenvat credit on service tax paid on various services claimed as input services - They have utilised such cenvat credit in payment of service tax - The input services claimed include the services procured by assessee from sub-contractors - For the period prior to 01.07.2007, the Revenue was of the view that assessee was rendering the taxable service of Maintenance as well as the service of Renting of Immovable Property which was not leviable to service tax - If the sub-contractor services relate only to maintenance service, the restriction imposed by Rule 6(3) will not be applicable to assessee - Hence, matter remanded to adjudicating authority: CESTAT - Appeals partly allowe: DELHI CESTAT
2018-TIOL-1865-CESTAT-MAD
CST Vs Raghavendra Automations Pvt Ltd
ST - Assessee engaged in manufacture of certain items used in various erection commissioning work for oil companies - In pursuance of a composite contract work, when they supplied their own items manufactured and cleared, certain items procured from outside along with supply of labour, completed the erection commissioning work for the client - Revenue entertained a view that erection commissioning of work undertaken by assessee is liable to be taxed as a service contract - Admittedly, the contract involves supply of assessee's own manufactured goods, certain procured goods and provision of labour and technical input for completion of work - This is a typical works contract service liable to be taxed only with effect from 1.6.2007 in view of Supreme Court's decision in Larsen & Toubro Ltd. 2015-TIOL-187-SC-ST - The claim of Revenue that certain commercial invoices were specifically for service and the contract can be clearly segregated for service portion is not sustainable - The rate schedule mentioned in contract by itself does not say the nature of contract - The invoices may be for supply of goods or for labour or for both, the nature of such invoices does not decide the contract liability - What is important is to see whether the assessee is acting in ambit of overall composite works contract - These are composite works contract and cannot be taxed as simple service contracts under a particular heading like erection commissioning service - No merit found in appeal filed by Revenue and same is dismissed: CESTAT - Appeal dismissed: CHENNAI CESTAT
2018-TIOL-1864-CESTAT-MAD
Sindhu Cargo Services Ltd Vs CST
ST - The assessee is engaged in providing service of custom house agent & freight forwarders - On verification of accounts, it was noticed that the assessee collected various amounts from their clients on which service tax was not paid - The assessee claimed these amounts as reimbursement of certain expenditure incurred on behalf of the clients - The Department opined that the assessee had not included various expenses & receipts in the taxable value - The amount received and the amount spent did not match and supporting evidences were not satisfactory - Hence this consideration amount was to be added in the taxable value - Duty demand was raised - The Commr. (A) confirmed the demand & imposed penalties - Hence the present appeal.
Held - The point of consideration before the Tribunal was whether or not these charges are to be added in the taxable value of service - The exclusion can be allowed on satisfactory proof of documents to the effect that these are on actual basis as per the arrangement between the client and the assessee - These documents require verification - Also, various other receipts that were not liable to tax are to be scrutinized by the Revenue - Therefore,the matter is remanded for fresh adjudication: CESTAT ( 1, 5, 6, 7) - Matter Remanded: CHENNAI CESTAT
CENTRAL EXCISE
2018-TIOL-1872-CESTAT-MUM + Case Story
Godrej & Boyce Mfg Co Ltd Vs CCE
CX - No interest imposition was proposed in the SCN and it was also not demanded in the adjudication order, therefore, Tribunal could not have held appellant liable to pay interest - Mistake rectified and ROM allowed: CESTAT [para 4]
CX - ROM - Penalty - Judgment relied upon by appellant pertains to past period wherein Tribunal set aside the demand on ground of time bar - in the present case, demand pertains to normal period of demand - since despite denial of exemption and confirmation of demand, appellant continued to avail exemption, plea of bonafide belief cannot be entertained - no case made out for rectification of mistake with regard to penalty sustained under rule 173Q - correction made as regards mention of section 173Q in place of rule 173Q of CER, 1944 - ROM application disposed of in above terms: CESTAT [para 4.1, 4.2] - Application disposed of: MUMBAI CESTAT
2018-TIOL-1863-CESTAT-CHD
Ind Swift Laboratories Ltd Vs CCE
CX - Assessee is manufacturer of bulk drugs, DMO, Terpenes, and Menthene and Peppermint oil and exempted goods, namely Menthol and Menthol Crystals - As per Budget, 2008, Menthol and Menthol Crystals were exempted from payment of duty vide Notfn 4/2008-CE by inserting entries No.54A and 54B in said notfn - The assessee is availing Cenvat credit facility on inputs and capital goods used in or in relation to manufacture of final products - It was alleged that as the assessee is manufacturing exempted goods, therefore, they are not entitled to avail Cenvat credit on the goods used in manufacture of exempted goods and required to pay back/reverse Cenvat credit - Duty was confirmed along with interest and penalty was also imposed under Rule 15 of CCR read with Section 11AC of the Act - Issue has been examined by Tribunal in case of Sharp Menthol India Limited 2009-TIOL-1500-CESTAT-MUM wherein it is held that Rule 11(3)(ii) is only a transitional provision without any non abstain clause and is not an overriding provisions to erode the benefits conferred vide Rule (3), (4), (5) and (6) of CCR, 2004 - Said order has attained finality by order of Supreme Court in that circumstance, issue is no more res integra - Similar view has been taken by Himachal Pradesh High Court in case of Drish Shoes Limited 2010-TIOL-350-HC-HP-CX wherein it is held that an assessee, manufacturing goods chargeable to nil duty, is eligible to avail CENVAT credit paid on inputs under the exception clause to Rule 6(1), as contained in Rule 6(5) of CCR, 2002 and Rule 6(6) of CCR, 2004, used in manufacture of such goods, if goods are exported - Admittedly, goods which became exempted has been exported by assessee, therefore, assessee is not required to reverse the Cenvat credit in terms of Rule 6: CESTAT - Appeal allowed: CHANDIGARH CESTAT
2018-TIOL-1862-CESTAT-DEL
Indo Alusys Industries Ltd Vs CCE
CX - Assessee engaged in manufacture of Aluminium Hollow Sections - It was noticed by Department that assessee had raised supplementary invoices on account of price variation and paid the Central Excise duty - However, the interest during the period August, 2013 to March 2014 was not paid on delayed payment of duty on account of supplementary invoices - Assessee had paid duty on the value at the time the goods in question were removed from his premises - It is also an admitted fact that there was a supplementary invoice due to price escalation on account of increase in input labour and other costs - It is clear that balance of higher price of goods is due to the reasons, which could not be foreseen by assessee at the time he made delivery of those goods and thus, it cannot be considered as retrospective revision of price - Supreme Court in case of Bharat Electricals Ltd. has held that since the price escalation was due to increase in input labour and other costs, which were determined by All India Industrial Price Indices and by Reserve Bank of India communicated by All India Electrical Manufacturer Association, it was held that there was neither determination of duty nor any short payment under sub-section (2B), of Section 11A of CEA, 1944 also Section 11AB of the Act for interest is not applicable - The moment the assessee received the enhanced price due to price escalation, it paid the amount for differential period on its own immediately on receipt of the said price - Since both the parties were not aware of escalated price or possibility of escalation at the time the goods were removed, the supplementary invoice cannot be a ground to call the said duty paid as short levied - Resultantly, no question of paying the same along with interest at all arises: CESTAT - Appeal allowed: DELHI CESTAT
2018-TIOL-1861-CESTAT-AHM
Bombardier Transportation India Pvt Ltd Vs CCE & ST
CX - Assessee engaged in manufacture and supply of railway coaches to Delhi Metro Rail Corporation Ltd (DMRC) - Such supplies to DMRC was claimed to be exempted from payment of duty under Sr No 90 of Notfn 6/2006-CE and also under Sr No 91 of said Notfn as the supplies were made against International Competitive Bidding - A SCN was issued to them demanding interest on aforesaid amount which on adjudication was confirmed and penalty of equal amount imposed under Rule 15 of CCR, 2004 - The short issue involved is whether interest is payable on the amount of cenvat credit which was wrongly availed in year March 2010, but reversed pursuant to being pointed on investigation by department - Assessee vehemently argued that credit availed on various input services in March 2010 was not required to be reversed but voluntarily reversed by them on being insisted by Dept - It is his contention that there was no suppression of fact nor any mis-declaration in availing the credit, therefore, on its reversal, no interest is required to be paid - In support, he has referred to the judgment of Gujarat High Court in GNFC's case - The Revenue, on the other hand, argued that aforesaid credit was availed on input services by suppressing the fact of its utilization in manufacture of exempted goods accordingly interest is required to be paid on reversal of the credit so availed - In the present case, no such findings has been recorded by Adjudicating Authority i.e., whether the amount paid by assessee can be confirmed by invoking the extended period or otherwise - Therefore, to ascertain the said fact, matter remanded to adjudicating Authority: CESTAT - Matter remanded: AHMEDABAD CESTAT
CUSTOMS
2018-TIOL-1860-CESTAT-DEL
PR CC Vs Ahamed Mujjaba Khaleefa
CUS- The assessee an individual, purchased gold jewellery from Dubai and carried it to Delhi - On search by the officer, who opined that the gold in the possession of the assessee was smuggled by him from Dubai - In his statement the assessee admitted that he bought gold jewellery from Dubai - Also, the Revenue noted that assessee has failed to explain as to how he came to be in possession of the smuggled goods - On the basis of this , the goods were confiscated, however, Commr. (A) ordered in favour of the assessee as no foreign markings were found on the jewellery - The Revenue appealed.
Held - The statement of the assessee is not substaintiated by any other evidence to establish that the assessee bought the seized goods from Dubai - In addition, there is no foreign marking on the jewellery - Therefore, the Revenue could not prove that the gold jewellery is actually bought by the assessee - Hence, the order challenged is upheld :CESTAT (Para 2, 9 ,10) - Revenue Appeal Dismissed: DELHI CESTAT
2018-TIOL-1859-CESTAT-BANG
BOC India Ltd Vs CC & ST
CUS- The assessee-company imported one compressor for their air separation plant under warranty clause from Germany - Although these goods were re-exported for repair & replacement to their supplier, all of the components could not be repaired - Mistakently, the supplier raised an invoice showing value as if all the goods re-imported were replacements - Due to this reason the assessable value was higher and assessee paid excess duty - The assessee filed for claim of refund but it was rejected by the Revenue as well as Commr. (A) being time-barred.
Held - In the present case, the refund claim was filed after a lapse of nine months, therefore it is beyond the time limit - Hence, the appeal is dismissed : CESTAT (Para 2, 6) - Appeal Dismissed: BANGARLORE CESTAT
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