SERVICE TAX
Duttmenon Dunmorrsett Vs UoI
ST - The petitioner filed the petition against impugned order wherein the Adjudicating Authority relied upon Rule 5 of STR, 2006 to hold that the reimbursement, by its clients to petitioner had to be included in the value of services that was subjected to levy - The two SCNs issued to the petitioner cover the period from 01.09.2009 to 30.06.2012 - The petitioner relies upon a Division Bench ruling of Court in Intercontinental Consultants & Technocrats Pvt. Ltd. 2012-TIOL-966-HC-DEL-ST wherein the Court had declared that Rule 5(1) of the Rules to the extent it mandates inclusion of reimbursements to the assessee, in respect of payments made to third parties cannot be subjected to service tax levy - The judgment was later affirmed by Supreme Court in Intercontinental Consultants Pvt. Ltd. 2018-TIOL-76-SC-ST - Revenue could not have included the payments received as reimbursements, payments made by petitioner or received through reimbursements towards Senior Counsel fee, in the value of services rendered by it - Consequently, the impugned order is quashed: HC - Writ petition allowed : DELHI HIGH COURT
ST -Appellant provided services of construction of complex but did not discharge service tax - consequently, SCN was issued and adjudicated confirming the demand of Rs.79,45,689/- for the period 01.07.2010 to 31.03.2012 and imposing penalties u/s 78 of equivalent amount and Rs.56,000/- u/s 77 of FA, 1994 - the entire tax paid along with interest was also appropriated by adjudicating authority - in appeal before CESTAT, appellant seeks waiver of penalties imposed u/ss 77, 78 by invoking s.80 of FA, 1994.
Held: It is observed that the constitutional validity of levy of service tax on construction of residential complex was under challenged by the Association of builders i.e. Maharashtra Chamber of Housing Industry before Bombay High Court and a judgment was passed on 20/01/2012 - 2012-TIOL-78-HC-MUM-ST , 2010-TIOL-526-HC-MUM-ST and this judgment was challenged and matter was sub-judice before the Supreme Court - in view of the same, contention of appellant regarding entertaining bona fide belief is reasonable - fit case made out for waiver of penalty u/s.s 77 and 78 of FA, 1994 - demand of service tax and interest is maintained - appeal is partly allowed: CESTAT [para 5, 6, 7] - Appeal partly allowed : MUMBAI CESTAT
ST- The assessee is engaged in providing mailing & related services - For this purpose it used franking machine licensed by the Postal Dept. & discharged service tax liability under the category BAS - On audit, it was noticed by the Revenue that assessee received service charges along with postage amount from client for mailing services - In addition, it received rebate from the Postal Department for handling the bulk mail by using franking machine - The issue at hand was whether franking charges and rebate received is liable to service tax - The Revenue opined that rebate is paid as a consideration for procuring & placing bulk volume of business to the Postal Department - This would count as marketing of postal services, altogether taxable as 'provision of services on behalf of client' - Duty demand was raised - The Commr. (A) upheld the demand along with interest and penalty with an option to pay reduced penalty - Hence, the present appeal by assessee.
Held - For levy of service tax it is important to understand the nature of transaction between Department and the assessee - They have the status of bulk mailers in relation to post office & franks are used for dispatch of postal articles - In common parlance, while dealing with numerous customers franking machines are offered as a facility instead of for ease of business - Resultantly, rebates are offered as an incentive for the reduced workload on the post office staff - Therefore, in view of flow of the transactions the assessee is only a customer of the Postal Department - The assessee has not rendered any service - Following the decision of United Mailing Services vs. Comm. of Service Tax, the demand is set aside : Para (1, 5, 6) - Appeal allowed : CHENNAI CESTAT
ST - The assessee, a production house makes a range of television serials - On audit, it was found that assessee did not discharge service tax on tele serials produced by them - Further, the Revenue opined that assessee had discharged incorrect amount of service tax - In addition, it availed inadmissible credit on input services which the Revenue rejected on grounds that service tax paid on telecast fees cannot be considered as input service for the output service of programme producing service and sale of space or time of advertisement services - Duty demand was raised.
Held - w.r.t. demand raised under the category of "TV or Radio Programme Production Service" only when the programme is produced on behalf of another person, levy of service tax would be attracted - In the present case no evidence is placed before the Tribunal that shows that assessee has produced the programme on behalf of another person - Moreover, after production it transfers the copyright in the programme temporarily to the broadcasting agency - This transfer of copy right does not attract levy of service tax - This follows from the case of BBC World Services India Private Ltd. Vs CCE & ST - Next, with regard to short payment of service tax under 'Sale of space or time for advertisement' service - This issue needs to be verified by the lower authorities as to whether the assessee has paid service tax on three components i.e. fixed cost, variable cost and profit sharing - Hence, the case is remanded for this issue - Lastly, the disallowance of credit on input service is set aside, for the reason that for providing output service of 'sale of space or time of advertisement' the assessee will have to obtain free time slots - Therefore, the telecasting charges paid are used for providing the output service of 'Sale of space or time for Advertisement' - Hence, the order challenged is modified and demands on 'programming services as well as sale of space or time for advertisement are set aside: CESTAT (Para 2, 6, 7, 8) - Appeals dismissed : CHENNAI CESTAT
CENTRAL EXCISE
2018-TIOL-2276-CESTAT-MUM + Case Story
Piaggio Vehicles Pvt Ltd Vs CCE
CX - Manufacture - Section 2(f)(iii) of the CEA, 1944 - Third Schedule - Section 4A of the CEA, 1944 - Merely because specific entry was inserted which covers those goods which are already specified earlier, it cannot be said that these goods prior to 01.06.2006 were not falling under the third schedule - CE duty rightly demanded: CESTAT [para 4]
CX - In the present case classification stands settled when the goods were received by the appellant - Since only activity that was carried out by the appellant is of repacking and relabeling, there is no question of change of classification - In the present case department has not insisted to change the classification, whereas the same classification which was applied by the supplier was applied mutatis-mutandis when it is cleared by the appellant, therefore, there is no quarrel as regard the classification in the present case - Duty demand correctly raised: CESTAT [para 4]
CX - Limitation - activity undertaken by the appellant was not disclosed to the department, hence, there is clear suppression of facts and the extended period of limitation is rightly invoked: CESTAT [para 4] - Appeal dismissed
: MUMBAI CESTAT
CX - The department issued SOD seeking to disallow the credit for legal service and share transfer agent's service with further demand of interest and penalty and the credit sought to be thus disallowed pertains to April 2014 to December 2014 - The assessee responded to SOD and during personal hearing before adjudicating authority, assessee also contended that both the services on which credit was availed had direct nexus with manufacturing activity and that share registry and transfer agents service was specifically included in inclusive definition which could not be disallowed - It is the case of assessee that they had filed sample copies of bills raised by advocate which the adjudicating authority says that "no service are mentioned" - The adjudicating authority further has observed that apart from two sample bills, no bill copy was produced - There appears to be a miss as far as production of bills are concerned - It is not uncommon that most of the advocates would raise their bills in form of letters only but, in any case it is for the assessee to establish that such letters demanding payment for professional services was towards rendering of such professional services to assessee - Matter requires re-examination by adjudicating authority after providing reasonable opportunity to the assessee - Assessee shall furnish the bills or letters evidencing availment of professional services, credit for which was availed by them: CESTAT - Matter remanded : CHENNAI CESTAT
CX - Assessee is a manufacturer of various petroleum products and sulphur - Some of these are cleared on payment of duty while others are exempt within the meaning of rule 2(d) of CCR, 2004 - They also render certain services which are taxable under Finance Act, 1994; likewise, they are recipients of certain taxable services on which they, in are 'persons liable to pay tax', albeit partly, subject to certain conditions - Of particular relevance, is the liability under 'goods transport agency' service for which they discharge only a quarter subject to providers of service not availing CENVAT credit of 'inputs'/' input services' - Assessee under the impression that the abated payment as 'person liable to pay tax' is an exempt service considered itself obliged to comply with rule 6(3) of CCR, 2004 and w.e.f. 1st April 2011, exercised the option under sub-clause (ii) of the said rule - Recovery of an amount confirmed being the amount payable at 6% of the value of exempted goods as obligated under rule 6(3)(i) of CCR, 2004 - Impugned order has held the assessee ineligible for recourse to payment of such amount as is prescribed in rule 6(3)(ii) of CCR, 2004 owing to noncompliance with the conditions in rule 6(3A) of the said Rules - To the extent that input services have been used in common for dutiable and exempted goods, option of recourse to rule 6(3A) of CCR, 2004 cannot be denied - It is obvious that the adjudication order is based on the incorrect appreciation of reasoning for such apportionment in rules and the principle underlying the formula - The denial of facility of reversal of proportionate credit is not consistent with law - The assessee is entitled to such reversal as an alternative to payment of 6% of value of exempted goods - The assessee has, in its rights, exercised the former option which cannot be faulted - Intimation as prescribed has also been made to the jurisdictional authorities: CESTAT - Appeal allowed : KOLKATA CESTAT
CUSTOMS
2018-TIOL-2262-CESTAT-BANG
Indus Logistics Vs CCE, C & ST
Cus - The assessee filed the present restoration application to set aside the ex-parte order - This order was passed in appeal before the Tribunal for stay and waiver of predeposit - The Tribunal passed an interim order to deposit a certain portion of predeposit amount - However, the assessee filed another petition for modifying the order of predeposit - The Tribunal directed the assessee to produce additional evidence available with the assessee to prove that the assessee delivered the goods to bona fide consignees and not fictitious persons - During proceedings, the assessee asked for adjournment and resultantly, the appeal was dismissed by the Tribunal - Hence, the present application by assessee.
Held - The assessee did not comply with the interim order passed by Tribunal - It filed application for modification of stay order which was listed on various dates but nobody was present on behalf of the assessee - Further, with respect to assessee's contention of inherent powers to modify the stay order - The Tribunal can neither modify its stay order subsequently like an appellate authority nor can keep tinkering with such order as and when application for modification is filed - This follows from the decision of Karnataka High Court in the case of McDowell & Co. Ltd. - Therefore, the restoration application lacks merits : CESTAT (Para 1, 3) - Application dismissed : BANGALORE CESTAT
2018-TIOL-2261-CESTAT-KOL
R B Agarwalla and Company Vs CCE & ST
Cus - The assessee claimed duty drawback in terms of Notification No. 68/2011-Cus(NT) for Mild Steel Stranded wire classifiable under tariff item No.7312 04 - The Revenue decided to reject the payment of duty drawback - Duty demand was raised and confirmed by the adjudicating authority with interest - On appeal, the Commr. (A) upheld the adjudication order - On further appeal the Hence the present appeal.
Held - As no samples were drawn from the exported goods for testing they were finally assessed as Mild Steel Stranded wire as declared by the exporter - The final assessment order was not challenged by the Department - The orders-in-original sanctioning the refund already attained finality and the Revenue did not filed any appeal against the sanctioning of the refund order - The Revenue wants to recover the erroneously sanctioned refund by parallel proceedings by issue of SCN which is not permitted under law - Therefore, the orders attained finality and new proceedings are not legitimate - The Tribunal in the case of TVS Motor Co. Ltd. v. CCE & ST, Mysore allowed the refund in an identical situation - Hence, the order challenged is set aside : CESTAT (Para 2, 5, 6) - Appeal allowed : KOLKATA CESTAT
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