SERVICE TAX

2018-TIOL-2941-CESTAT-HYD

GJF Construction Company Ltd Vs CCE & ST

ST - The assessee company is a sub-contractor - It received the work of constructing civil & architectural works of the buildings & foundations - The assessee was to receive the Cement and Steel needed for execution of the contract from the contractor - Also the surplus if any was to be returned to the contractor - The assessee received advance of 10% of the consideration - The remaining 90% was paid on pro rata progress of work - The assessee also gave an bank guarantee to the contractor which could be invoked by the latter should the former fail to fulfil its obligations - On audit, the Revenue opined that the assessee short-paid duty by not including value of free supply of materials - It was also alleged that reconciliation of accounts revealed further short payment of duty - Duty demands were raised with interest & penalty u/s 78.

Held: The issue of materials supplied free by the service receiver stands settled by the Apex Court in Bhayana Builders case wherein it was held that value of such goods or materials not includible in the gross amount, for calculating Service Tax even if the assessee claimed abatement of service tax - Regarding demand on mobilization advance paid paid before enactment of Point of Taxation Rules, 2011 then the assessee not liable to pay service tax when they received these advances - Besides the service recipient is free to encash the bank guarantee at any time & the cost of the bank guarantee is incurred by the assessee - There is no case to add an amount of notional interest in the value of taxable services rendered - Hence demand on this account is also not sustainable - Hence the demands are set aside: CESTAT (Para 3,6)

- Appeal allowed: HYDERABAD CESTAT

Creations Vs CST

ST - Assessee is a proprietary concern of which Shri R. Kumar is the proprietor and is mainly engaged in promotion of residential complex - The department was of the view that assessee is liable to discharge service tax under construction of residential complex and SCNs were issued proposing to demand service tax along with interest and for imposing penalties - The assessee has relied upon various Board circular - As per Board Circular F.No. 332/35/2006-TRU, the Board has categorically clarified that if no other person is engaged for construction work and the builder undertakes construction work on his own, in the land belonging to him, without engaging the services of any other person, then there is no service provider and service recipient relationship in existence and therefore the question of providing taxable service does not arise - The permission certificate for construction of the complex as well as the completion certificate is issued in the name of assessee - These documents therefore strongly indicate that the land belongs to assessee till the completion of construction - Thus, in the instant case, prior to 1.7.2010, the levy of service tax cannot sustain for the reason that the assessee is the land owner and the construction done by himself without engaging a contractor would amount to self-service - Needless to say that the Board circulars are binding upon the department - The period after 1.7.2010 is to be analyzed in the background of amendment to Section 65(105)(zzzh) of Finance Act - The amendment brought to effect a deeming fiction, that if any sum is received from the prospective buyer before grant of completion certificate would be construction of residential complex service - The said amendment is prospective in nature and would be effective only after 1.7.2010 - However, the completion certificate shows that the construction activity has been completed on 19.11.2008 - The provision of service, which is the taxable event during the impugned period happened prior to 1.7.2010 - Therefore, the said amendment cannot be pressed upon the assessee to demand service tax - The demand is without legal basis: CESTAT

- Assessee's appeals allowed: CHENNAI CESTAT

CCE Vs Combined Financial Services

ST - The assessee is engaged in services of franchisee for marketing and sourcing of its auto products; their main business is to locate the customers, assess their credit worthiness and prepare the documentation on behalf of ICICI Bank in the category of commercial vehicles - The Revenue opined that services rendered by the assessee were covered under BAS - Duty demand was raised - However, on appeal the Commr. Cus (A) set aside the demand - Hence, the present appeal by Revenue.

Held: Following the ratio laid down in the case of Bhaven Desai vs. CST the activity undertaken by assessee squarely falls under 'Business Auxiliary Service' - Hence, the order-in-original is upheld : CESTAT (1, 2, 5)

- Revenue's Appeal Allowed: BANGALORE CESTAT

CENTRAL EXCISE

2018-TIOL-2944-CESTAT-DEL

Esquire Electrovision Pvt Ltd Vs CC

CX - The assessee company is engaged in the manufacture of DVD & other electronic items falling under CTH 8404 and 8521 of CTH using BESTON-S brand - The Department later searched the premises of three other companies which were owned by relatives of the assessee's proprietor - It was found that they imported electronics & sold them without affixing label bearing their brand name - Some material was seized & taken in for investigation - The Department then claimed that the assessee was ineligible for SSI exemption as it was selling products bearing brand name owned by some other entity - The Department also highlighted supposed variation in the valuation of the goods - Duty demands were raised with interest & equivalent penalty.

Held: The brand name BESTON-S is registered in the name of the second appellant who is shareholder in the assessee company along with other family members - Hence denial of SSI exemption on grounds that use of brand name of another person is used, is unjustified and untenable - Regarding issue of valuation, the adoption of MRP from the website of BESTON-S is not justified, considering that the market enquiry conducted supports the valuation adopted by the assessee - Nonetheless, issue of extended limitation is left open: CESTAT (Para 2,10,11,19-22)

- Appeals partly allowed: DELHI CESTAT

Cement Division Unit Of Kesoram Industries Ltd Vs CCE, C & ST

CX - CENVAT credit availed by assessee in respect of works contract services is correctly denied as the services were of works contract services for structural construction of building as post 01.04.2011 the services were excluded from the purview of input services in terms of Rule 2(1) (ii) of CENVAT Credit Rules - As regards the CENVAT credit availed of the service tax paid on GTA services, these services are for the period June, 2011 to March, 2012 i.e. post 01.04.2008 and the judgement of Apex Court in the case of Ultra Tech Cement Ltd. - 2018-TIOL-42-SC-CX would cover the issue in favour of Revenue - The orders of lower authorities to that extent are correct - As regards the CENVAT credit availed on capital goods like Washer Blanks, Foundation Bolts with nuts, CENVAT credit availed onthese items are ineligible as they are for the purpose of structural construction on shed/ building etc., however, CENVAT credit of the Central Excise duty paid on dust collection bags made from 100% Polyester Nonwoven Needle felt supplied by Genuine Filters & Fabrics in invoice are to be held has eligible for availment of CENVAT credit and arguments of assessee that these bags were for the purpose of controlling the pollution that arises due to dust during the manufacturing of cement removed has to be accepted - Accordingly, CENVAT credit on this point allowed.

As regards the CENVAT credit availed on service tax paid on renting of immovable property services and the security services involved for the said property, assessee had leased premises at Bollaram which was functioning and assessee was manufacturing cement from these premises - Assessee was manufacturing cement at their Bollaram unit; even though production at Bollaram factory was suspended they had continued to maintain the lease premises with them, in anticipation that the Bollaram unit will start manufacturing after labour trouble is sorted out - This gets indicated from the letter dated 01.03.2012, wherein the assessee has stated that they are temporarily stopping of production activity, in converse they had intention to re-start the production - Accordingly, the findings of the lower authorities that production was not taking place at Bollaram unit, hence, the CENVAT credit needs to be denied is incorrect proposition - As regards the CENVAT credit availed on Liaison Services, Labour charges for laying cables, these invoices were raised on their another unit, but the renewal was for various licences at Bollaram unit and the labour charges were paid for laying cables and various other activities in spite of the unit at Bollaram suspended - In view of this, assessee is eligible to avail CENVAT credit.

The penalty imposed on assessee for the various infractions, seems to be unwarranted as the most of CENVAT credit availed by them are allowed and denied by the Bench on the question of interpretation of eligibility to avail credit and the assessee had informed the Revenue Authorities by filing the returns regularly - Assessee is directed to reversed/pay the amounts of CENVAT credit denied along with applicable interest: CESTAT

- Appeal partly allowed: HYDERABAD CESTAT

Innocorp Ltd Vs CCE, C & ST

CX - Assessee manufactures plastic moulded chairs with brand name of "POLYSET" and supplies the same to M/s PPL at an assessable value - M/s PPL in turn, sells these plastic chairs at a much higher price - The demand in SCN is only on the ground that PPL and assessee were related parties and therefore the price at which M/s PPL was selling the chairs to the customers should be the assessable value for the purpose of Central Excise duty - There is no demand whatsoever in the SCN on the grounds that there is an additional consideration for sale - That being the fact that O-I-O has travelled beyond the scope of SCN in confirming the demand which is not correct and the same needs to be set aside - Since the demand has been found liable to be set aside the interest and penalties do not survive either: CESTAT

- Appeals allowed: HYDERABAD CESTAT