SERVICE TAX

Mohd Ameen Vs CCE, C & ST

ST - Assessee is a holder of Service Tax registration and has provided services of 'Maintenance or Repair', 'industrial construction, clearing, manpower supply and erection and commissioning to M/s. ACC Ltd. during period from 01/07/2003 to 30/09/2006 - Based on intelligence that assessee had not paid applicable service tax on consideration received by him, proceedings were initiated against him - Assessee is a small contractor who was new to the service tax and was not aware of Service Tax procedure - Further, he has not charged nor collected the service tax from his customer and has paid the service tax more than what was due from him under the provisions of the Act - Once the Commissioner has dropped the penalty under Section 76 by invoking provisions of Section 80 then the penalties under Sections 77 and 78 can also be dropped by invoking Section 80 of the Act because there was a reasonable cause for the failure to pay the service tax - The decision of High Court of Karnataka in case of Motor World 2012-TIOL-418-HC-KAR-ST is squarely applicable in present case and therefore by following the ratio of said decision, penalties are dropped: CESTAT - Appeal partly allowed: BAGALORE CESTAT

2018-TIOL-1976-CESTAT-DEL

Nissin Brake India Pvt Ltd Vs CCE

ST- The assessee is engaged in the manufacture of automobile parts - The assessee entered into dispatch agreement with its parent company for payment of salary and other perks of the employees deputed from the foreign company - The employees deployed by the parent company were working under the control, direction & supervision of the assessee - The Department took a view that the services provided by the parent company in Japan to the assessee should be classifiable under the taxable category of "manpower recruitment or supply agency service" - There being an agent-client relationship, assessee is liable to pay service tax under reverse charge mechanism - Duty demand was raised.

Held - When employee-employer relationship exists, the method of disbursement of salary cannot determine the nature of transaction - Following the decisions of Volkswagen India (Pvt.) Ltd. vs. CCE, Franco Indian Pharmaceutical (P) Ltd. vs. CST & advance ruling case of North American Coal Corporation India Pvt. Ltd - The demand cannot be confirmed against the assessee: CESTAT (Para 2, 5, 6) - Appeal Allowed: DELHI CESTAT

2018-TIOL-1975-CESTAT-DEL

Rishi Enterprises Vs CCE

ST - Assessee have entered into different contracts with North Western Indian Railway, Jodhpur Division which involved cleaning of bed rolls, towels, pillow covers and blankets - It was the responsibility of assessee, as part of contract, to pick-up the dirty clothes from AC coaches of nominated trains and carry out the work of cleaning, washing/dry cleaning, ironing and also distribution of items to passengers on board - In addition to contracts entered into with the Railways, assessee also entered into separate agreement with M/s.P.K. Shefi to work as their sub-contractor to carry out similar services - Department was of the view that assessee was liable to pay service tax on consideration received by them - As regards to jurisdiction, assessee have their office in Ratlam (M.P.), from where he has been carrying out the business but it has been submitted on behalf of assessee that the activities were carried out from the premises made available to assessee by Jodhpur Division of Railways - For purpose of registration for service tax, jurisdiction of Revenue Authorities is normally decided on the basis of geographical address of business premises of assessee - Since the assessee’s business premises are located in Ratlam (M.P.), which comes within the jurisdiction of Indore Commissionerate, no infirmity found in jurisdiction of Indore Central Excise Authorities to adjudicate the matter - Hence, ground of jurisdiction raised by assessee dismissed.

From the activities carried out by assessee, same are required to be considered as a composite service and it will not be proper to vivisect the services into various components even though the contract specified the different components and separate charges for the same - It is further seen that assessee is required to carry out the services to customers of Railways, who are passengers travelling in AC compartments - Since it is the responsibility of Railways to provide the services and assessee has provide the services on behalf of Railways, services are rightly classifiable under "BAS" as has been held in impugned order - This view also finds support in decision of Tribunal in case of R.C. Goel 2017-TIOL-2931-CESTAT-DEL - By following the said decision of Tribunal, classification of service under BAS and consequential demand of service tax upheld - Since the assessee has not even got registered their services for payment of service tax, no infirmity found in order imposing penalty: CESTAT - Appeals rejected: DELHI CESTAT

CENTRAL EXCISE

INSTRUCTION

F.NO.390/Misc/116/2017-JC

Pr CC/CC's Views regarding - Raising of monetary limits at various appellate FORA in legacy Central Excise & Service Tax matter only

CASE LAWS

2018-TIOL-1200-HC-KAR-CX + Case Story

Trishul Arecanut Granuels Pvt Ltd Vs CCT

CX - Computing the quantum of evaded duty on the basis of production capacity and unaccounted purchases of packing material is a mode of best judgment assessment - S.3A of CEA was brought on the Statute Book on 10.05.2008 just to crystallize and fortify such assessment procedure – CESTAT order upheld and appeals dismissed: High Court [para 13 to 18, 20] - Appeals dismissed: KARNATAKA HIGH COURT

2018-TIOL-1979-CESTAT-MUM

Balkrishna Paper Mills Ltd Vs CCE

CX -Whether differential insurance charges charged from customers on basis of equalized insurance premium is includible in the assessable value.

Held: In view of the settled legal position in Baroda Electric Meters Ltd - 2002-TIOL-96-SC-CX-LB, the insurance charges collected from customer over and above the actuals, on the basis of equalized insurance, shall not be includible in assessable value - impugned orders are set aside - appeals are allowed: CESTAT [para 4] - Appeals allowed: MUMBAI CESTAT

2018-TIOL-1978-CESTAT-DEL

Structural Waterproofing Pvt Ltd Vs CCGST & CE

CX - The assessee is engaged in manufacture of construction chemicals - The assessee availed subsidy under the The Rajasthan Investment Promotion Scheme - Under this scheme the assessee were required to deposit VAT/CST/SGST at the applicable rate with the Government - They will be entitled to disbursement of subsidy by the appropriate authorities - The VAT 37B challan was used for discharge of sales tax liability - When Revenue opined that the subsidy amounts was to be included in the value of the goods cleared by the assessee - Differential duty demand was raised.

NDTV LTD Vs RBI

FEMA - the petitioner company is a leading news agency engaged in operating news channels - The Enforcement Directorate (ED) served an SCN u/s 13 of the FEMA, alleging contravention of Section 3(d) of FEMA r/w Sections 6(3)(a), 6(3)(b) and 6(3)(j) r/w Regulations 6(2)(ii) & 6(2)(iv) of the FEM (Transfer or Issue of any Foreign Security) Regulations, 2004, Regulation 5(1) and 10B of FEM (Transfer or Issue of Security to Persons Resident Outside India) Regulations, 2000 and Regulation 3 of the FEM (Guarantees) Regulations, 2000 - In their replies to the SCN, the petitioner and the other noticeees denied any contravention - Thereafter, so as to protect its goodwill and to avoid bad publicity and keeping in mind the interests of existing & potential investors, the petitioner sought compounding of offences - Hence it filed two applications with the Reserve Bank of India (RBI) as the jurisdiction for compouding lay with it - Pursuant to filing such applications, the petitioner requested the RBI to stay ongoing investigation proceedings - The ED stayed the investigation proceedings - Meanwhile the RBI returned the two applications on grounds that the petitioner had to complete certain administrative actions - The petitioner did so and again filed two compounding applications - Thereafter, the petitioner filed a third compounding application when it realized that certain other technical & procedural contraventions also needed compounding - Later, the RBI again returned all three applications & advised the petitioner to approach its OID and Foreign Investment Division (FID) for guidance in this regard - When the petitioner approached the OID & FID, it was advised to set forth all its transactions in a simplified manner - The petitioner set forth all transactions in a simplief manner using various charts, which it then submitted to the FID & OID - However, the petitioner received no response from either of them - Meanwhile, the ED restarted adjudication proceedings against the petitioner - When the petitioner requested the ED to stay the adjudication proceedings for a second time, such request was denied & date of hearing was fixed - Thereafter, the petitioner wrote to the FID & OID & marked a copy to the RBI's cell for effective implementation of FEMA, as reminder for seeking guidance - However, depsite such efforts, neither the FID nor the OID provided any guidance to the petitioner - Hence the petitioner is aggrived by the act of the ED in continuing proceedings against the petitioner under FEMA despite the petitioner being entitled for compounding - It also contested the RBI's inability to compound the alleged offences.

Held - It is seen that the termination of compounding of offences was the result of a communication exchanged between the ED and the RBI, wherein the former claimed that one of the promoters of the petitioner was an accused in the Aircel-Maxis case - Hence considering the gravity of the offence, it recommended that the offences not be compounded - It is the FEMA which permits a compounding application to be considered by the RBI - This is a specific power given to it - The ED cannot be allowed to interfere with the exercise of discretionary powers as doing so would defeat the purpose of the FEMA - Also considering the the RBI's position as an apex bank & also considering the trust reposed in it by the public and the legislature, the undermining of its authority would not be conducive to the proper management of forex - While the RBI cannot be expected to compound an offence casually & lightly, it certainly cannot refuse to exercise its discretion to compound offences, spurred on by general & vague material - Thus, the ED cannot be permitted to intervene in compounding proceedings - Hence the compounding proceedings initiated vide the compounding applications of the petitioner and pending before the RBI should proceed uninfuenced by the communication from the ED - Agencies such as the RBI also form the pillars of Indian democracy - The safety of legal rights is safeguarded by the safety of the RBI - Hence such institutions should be left out from unnecessary attacks, uncalled for criticism and attempts to overpower or over-reach them: HC (Para 7-20,102-119) - Writ Petition Allowed: BOMBAY HIGH COURT

2018-TIOL-04-AAR-VAT

BU Bhandari Pvt Ltd

MVAT Act, 2002 – Registration charges, insurance charges, handling charges received and paid on behalf of the customer of a motor vehicle forms part of the 'sale price'– so also, incentive and discount received from automotive manufacturers need to be treated as ‘sale price' of the motor vehicle: AAR

MVAT Act, 2002 – Appellant is entitled to claim set off on purchased motor vehicles and used as 'Demo vehicles' irrespective of the fact that such vehicle continue to be 'stock-in-trade', if the demo cars are not capitalized: AAR

MVAT Act, 2002 - Tax liability of applicant on receipt of handling/service charges related to 'registration only' is protected from 11 th July 2011 to 29 th January 2016 in view of the Bombay High Court judgment in Sehgal Auto dated 11 th July 2011 (which held that registration charges would not be part of sale price) and the apex court ruling in KTC dated 29 th January 2016 holding otherwise: AAR - Application disposed of: AAR