SERVICE TAX
2018-TIOL-2159-HC-AHM-ST + Case Story
Shree Dutt Enterprises Vs UoI
ST - No appearance by official respondents or Government Advocates - Court is left with very poor assistance - for the respondents, freezing of bank accounts of petitioner may be a small issue - payment of Rs.10,000/- to be deposited before the State Legal Services authority by respondents and reply to be filed by 17.10.2018 - freezing order of the petitioner's bank accounts suspended as an interim relief: High Court [para 5 to 7]
- Matter posted : GUJARAT HIGH COURT
2018-TIOL-3113-CESTAT-HYD
Margadarsi Marketing Pvt Ltd Vs CC & CE
ST - The assessee has a contract with M/s Ushodaya Enterprises Ltd., under which they collected newspaper bundled and distributed them to various agents for a consideration - The SCNs were issued which proposed classification of these services under three categories namely, Business Auxiliary Services, Clearing and Forwarding services and Cargo Handling service - The services rendered by assessee are not just bundling and transporting newspapers, but a wide range of activities related to selling of newspapers including packing and transportation and forwarding of newspapers - The packing of newspapers can be in the form of bundling and tying or any other form; the agreement is very clear that they have to pack the newspapers and also perform several the other activities listed - This activity relates to sales by publishers by M/s Ushodaya Enterprises Ltd., and therefore strong force found in the contentions raised by revenue that this amounts to Business Auxiliary service - However, as observed by First Appellate Authority at the time SCN was issued, the Department itself is not sure under which head the assessee is liable for service tax - For this reason, these appeals need to be decided in favour of assessee - Before issuance of SCN, the Department could have collected necessary information and come to a conclusion, as to the classification of services rendered and issued a more specific SCN which would have been sustainable - In view of the above, the appeals filed by Revenue are dismissed and the appeals of assessee are allowed with consequential relief: CESTAT
- Assessee's appeals allowed: HYDERABAD CESTAT
2018-TIOL-3112-CESTAT-MAD
Pi Shipping And Logistics Ltd Vs CCE & ST
ST - The assessee is engaged in providing support to international steamer agents - They are covered within definition of "Steamer Agents Services" for which they have taken registration and are paying service tax - During audit, Revenue found that there was a huge difference between total receipts and the amounts on which service tax was paid - Similar differences were noticed by Revenue for the entire period of dispute which were not offered for payment of service tax - Revenue views that amounts are liable to payment of service tax under the category of BAS - The main thrust of arguments advanced by assessee is that most of the amounts received by them for which no service tax has been paid are in the nature of reimbursements by customers to cover the expenses incurred by assessee for activities carried out on behalf of customers such as obtaining the services abroad, clearance of goods from port and transporting the same to the customer’s premises, CFS charges, CHA charges and Fumigation charges - The amounts reimbursed to assessee for various miscellaneous services in India as well as abroad which were contracted by them on behalf of the customers cannot be levied to service tax - Consequently by following the decision of Apex Court in Intercontinental Consultants and Technocrats Pvt. Ltd - 2018-TIOL-76-SC-ST, all such demands which will come under Sl.no. 1 & 5 are set aside - As regards to issue relates to the amounts recovered by assessee from the customers towards ocean freight payable to the foreign shipping lines, a A part of it also comes with discounts obtained by assessee in the payment of such ocean freight - Transportation by sea cannot be subjected to service tax as these activities are carried out beyond the territorial waters - The levy of service tax on the freight elements se aside - In respect of discounts enjoyed by assessee in payment of freight charges, the issue has been decided by Tribunal in favour of assessee in the case of Diamond Shipping Agencies Pvt. Ltd. - By following the same, demand of service tax made on the portion of freight and discounts set aside: CESTAT
- Appeals allowed: CHENNAI CESTAT
2018-TIOL-3111-CESTAT-BANG
National Institute Of Fire Engineering Vs CCE, C & ST
ST - Assessee is a Commercial Training Centre engaged in providing training to persons who aspire to take up employment in fire protection, lift technology and dental technology - A SCN was issued to assessee on the ground that they were providing taxable services under FA, 1994 and they had not paid service tax on the amounts received by them from persons undertaking training - As assessee is not contesting the issue of franchisee service, accordingly, the demand pertaining to franchise service is upheld along with interest and equivalent penalty under Section 78 of FA, 1994 - On the second issue, assessee have contended that during period 1.7.2004 to 9.9.2004, when there was no exemption available for commercial training or coaching services, they should be allowed the benefit of exemption as the activity was exempted in the period preceding 1.7.2004 and the period after 9.9.2004 - The Notfn 24/2004-ST makes it clear that it is effective from 10.09.2004 and not before - It is trite law that exemption notifications have prospective effect unless it is explicitly provided that it is retrospective and the legislature provides for such retrospective operation - Assessee is liable to pay service tax for the period 1.7.2004 to 9.9.2004 and accordingly uphold the order of adjudicating authority for demand of service tax and interest on this issue - On the third issue, Tribunal is unable to agree with the findings of Commissioner that the study material for vocational courses are in the nature of Intellectual property service in view of the judgment of this Tribunal in case of M/s. Cerebral Learning Solutions Pvt. Ltd. - Accordingly, the demand of service tax, interest and penalty in relation to this issue of Intellectual Property Service is set aside - As for the penalty under Section 78 of the Finance Act in relation to Commercial Training or Coaching, assessee has been filing nil returns regularly and it was within knowledge of the Department that assessee had not paid service tax for the period when the exemption was not available - Hence, the penalty under Section 78 of the Act Commercial Training or Coaching is not justified and the same is set aside: CESTAT
- Appeal partly allowed: BANGALORE CESTAT
CENTRAL EXCISE
2018-TIOL-2155-HC-MUM-CX
CCGST Vs J MSM Satellite Singapore Pte Ltd
CX - Whether the Tribunal was justified in holding that service tax paid on inputs such as electricity transmission structure could be utilized to pay service tax on output service, when the assessee had not provided any output service - The Tribunal by impugned order held on facts that the authorities under the Act have proceeded on the erroneous assumption that there are two different entities namely MSS Singapore and MSS India, when in fact, there is only one entity i.e. assessee, which is located in Singapore and also has office in India - Thereafter, it holds that it is an undisputed fact that assessee was granted registration to pay service tax on the broadcasting services being provided by it - Assessee had admittedly discharged the tax on the output services through their office in India - It further held that if the contention of Revenue is to be accepted, then the payment made on output service is not payment of service tax, then in such a case, the credit taken stands reversed by payment made on output service - In support, reliance was placed upon the decision of the its Coordinate Bench in Infosys Technologies Ltd. 2016-TIOL-2237-CESTAT-MUM - The observations would apply in the present facts - Therefore, when specifically asked, Revenue submits that they had accepted the decision of Tribunal in case of Infosys Technologies Ltd. - The substance of the issue is entitlement to take Cenvat Credit on the inputs services, when admittedly the tax on the output services has been collected by the Revenue - Therefore, once the Revenue has accepted the order of the Tribunal in the case of Infosys Technologies Ltd., the distinction pointed out by the Revenue of Infosys Technologies Ltd., being a case of refund and this a case of demand, is held a distinction of no consequence, to decide the issue at hand: HC
- Appeal dismissed: BOMBAY HIGH COURT
2018-TIOL-3110-CESTAT-AHM
Alpha Converting Machines Pvt Ltd Vs CCE
CX - These appeals have been filed by assessee and Sh. Rajan M. David, Director of said company against confirmation of demand of duty and imposition of penalty by clubbing clearances of various units - It is apparent that all clearances of all manufacturers from one factory needs to be clubbed to arrive at the aggregate value of exemption available under Notfn 08/2003 - Similarly all clearances made by one manufacturer from more than one factory need to be clubbed to arrive at the aggregate value of clearances for the purpose of Notfn 08/2003-CE - Assessee have not been able to produce any document showing purchase of machinery by the units namely, M/s Alpha Flexible Machinery and M/s Alpha Convert Machines Industries - In his statement, Sh. Rajan David admitted that all the machines are being used commonly and that factory shed belong to him and no rent was being recovered - He had also failed to explain the transfer of funds from one entity to another - In these circumstances, the only conclusion that can be reached is that it was one factory and M/s Alpha Flexible Machinery and M/s Alpha Convert Machines Industries are not manufacturers as they do not possess any machinery or premises of their own - All the transactions of all the 3 entities were being made by Sh. Rajan David - The buyers also knew only Sh. Rajan David - In these circumstances, the only conclusion that can be reached is that there was only one factory belonging to M/s Alpha Converting Machines Pvt. Ltd. which came in existence in 1997 - Thereafter entities namely, M/s Alpha Flexible Machinery and M/s Alpha Convert Machines Industries were created on paper without any manufacturing facility to show clearances and to avail small scale benefit - The entire argument of Revenue is based on the fact that only one entity has factory/ machines and other two are creations on paper to avoid payment of tax - In these circumstances, recognition of separate existence by issue to SCN would have run counter to the allegation that they are dummy - Moreover, opportunity was given to Sh. Rajan David to defend and he was authorized signatory of all entities - In these circumstances, no merit found in the appeal and same is dismissed: CESTAT
- Appeal dismissed: AHMEDABAD CESTAT
2018-TIOL-3109-CESTAT-AHM
Chennai Petroleum Corporation Ltd Vs CCE & ST
CX - The assessee is manufacturer of petroleum products - The products are cleared from refinery through pipelines to the terminals of Oil Manufacturing Companies - During the period, assessee was required to pay excise duty at the time of removal from the refinery - Accordingly, assessee was paying excise duty on the quantity removed from factory - But the buyers (OMCs) were paying the price and excise duty only based on the quantity received (‘receipt quantity’) in their terminals, pursuant to the industry practice at that time - However, the receipt quantity did not match the despatched quantity from refinery for various reasons - Hence department took the view that differential excise duty is required to be paid for the amount removed from the refinery but not received by the OMCs - Assessee paid up the differential duty liabilities as pointed out by department, however preferred refund claims subsequently - Discernably, the issue per se has been thoroughly addressed by the Tribunal in the decision of Bharat Petroleum Corporation Ltd. 2010-TIOL-1375-CESTAT-MUM - Following the said ratio laid down by Tribunal, no merit found in the appeals filed by assessee: CESTAT
- Assessee's appeal dismissed: AHMEDABAD CESTAT
CUSTOMS
2018-TIOL-2156-HC-AHM-CUS Jindal Saw Ltd Vs Directorate General Of Anti Dumping And Allied Duties
Anti-Dumping - The Govt had imposed Anti-dumping duty on import of Ductile Iron pipes from China - After five years, a review was conducted so as to determine whether the duty needed to be continued - It was concluded that the revocation of Anti-Dumping duty would adversely impact the domestic industry - Hence the levy of duty was extended for five more years upto 09/10/2018 - The petitioner sought sunset review of the duty u/r 23(1B) of the Anti Dumping Rules about six months before it was due to expire - However, the application was rejected.
Held - The provisions of Rule 9A empower reviewing of the necessity of continuing the enforcement of anti-dumping duty - The petitioner along with some other industry representatives had requested for review of the duty and had filed an application as envisaged under the Act, seeking extention of the duty - Such application was followed by a second one providing additional data - Rule 6 lays down the principles for investigation to be followed by the Designated Authority (DA) - It must provide the basis for alleging dumping, factors causing injury - Thereafter, Rule 17 provides that the DA must record its final findings, reflecting on whether or not the article is being dumped - It must also establish a causal link between the allegedly dumped imports & possible material injury to the domestic industry - Such findings must reflect certain established facts as laid out in Rule 17 - In the present case, it is seen that the order rejecting the application for review, has been passed without assigning any reasons - Hence such order merits being set aside & the DA is directed to adjudicate the application seeking fresh sunset review - Meanwhile, the anti-dumping duty shall be extended: HC (Para 2,10-10.4,12)
- Writ petition allowed: GUJARAT HIGH COURT 2018-TIOL-2154-HC-AHM-CUS Zip Zap Exim Pvt Ltd Vs UoI
Cus - The petitioner wants to re-export the consignment of Dry Batteries, the import of which had run into controversies - Petitioner submitted that on the import of goods, no IGST was to be levied since the petitioner Unit was situated in a SEZ - The competent authority has completely ignored this aspect of the matter while computing the Customs Duty on the redetermined value of goods - He further submitted that the goods are lying unutilized since long and are fast deteriorating - Considering the issues arising, let there be Notice, returnable on 25.10.2018 - By way of ad interim relief, the respondents are directed to permit reexport of the goods in question on condition that the Director of petitioner Company files an Undertaking before this Court latest by 09.10.2018 that eventually, if the Court does not accept the petitioner's contention, then the petitioner shall furnish the remaining Bank Guarantee: HC
- Petition disposed of: GUJARAT HIGH COURT
2018-TIOL-2153-HC-AHM-CUS
Pooja Tex Prints Pvt Ltd Vs ADDL CCE
Cus - The assessee has imported certain goods for manufacture and reexport of finished goods - A raid was carried out by DGCEI at the premises of assessee’s factory, during which, prima facie evidence of clandestine removal of imported goods, i.e. imported fabrics, was detected - The adjudicating authority, appellate authority and the Tribunal have concurrently come to the conclusion that allegation of clandestine removal of imported goods, without payment of duty, had been established - The Director of Company had categorically stated in his two statements that such goods were sold in the market to one Iqbalbhai - The second of these two statements was recorded nearly eight months after the raid - Partial retraction of this statement came much later - In such statement also, the assessee admitted partial diversion of the goods - The details and whereabouts of Iqbalbhai could not be provided by him - Both the Commissioner (A) and the Tribunal were of the opinion that the statements of Director recorded by raiding party were in terms of Section 108 of Customs Act, which was admissible in evidence - The entire issue is, thus, based on appreciation of the materials on record - The assessee’s ground of limitation also has no merits - The statute permits extended period of five years to enable the authorities to issue SCN when Duty is not paid or is shortpaid on account of fraud, misstatement, collusion or breach of Rules so as to evade Duty - If allegations are believed, then there was clearly an attempt to evade the Duty: HC
- Appeal dismissed: GUJARAT HIGH COURT |
