SERVICE TAX
2018-TIOL-2194-HC-AHM-ST + Case Story
Ows Warehouse Services LLP Vs UoI
ST - Audit - Rule 5A of STR, 1994 not saved by s.174(2) of CGST Act, 2017 - there was no saving of Rule 5A in such manner that fresh proceedings for audit could be initiated in exercise of powers under the said Rule - Serious doubts as to whether with the aid of Rule 5A, CAG can carry out Service Tax Audit of private agencies - Ad interim relief granted - CAG not to carry out any further Service tax audit - Notice returnable on 28.11.2018: High Court [para 8, 9]
- Ad-interim relief granted :GUJARAT HIGH COURT
2018-TIOL-3154-CESTAT-HYD Aster Teleservices Pvt Ltd Vs CCCE
ST - The assessee is engaged in manufacturing tower parts & also providing erection, installation & commissioning of the telecom towers & equipments, consulting engineers, maintenance & repair services as well as construction services - Pursuant to investigation by DGCEI, the Department opined that the assessee short paid duty on various services - Duty demands were raised by invoking extended limitation along with interest & imposition of penalty - The Department claimed that abatement was available only to contract for supplying plant, machinery or equipment and commissioning and installation of the said plant, machinery or equipment and not for supply on cement or steel - It was also pointed out that no proof was submitted that the main service provider discharged the duty - It was also claimed that the railway signalling system could not be treated as construction services & that classification of railway signally system as structure is not acceptable.
Held: It is seen that the services rendered by the assessee were indeed rendered by the assessee & that the billing is done on erection per tower basis rate - In respect of the telecom tower installation services, construction of petrol pumps and industrial buildings, erection & painting of telecom towers and erection of signalling system for railways, these works had been awarded to the assessee on turnkey basis - Hence this constitutes a works contract - Considering the decision of the Apex Court in CCE, Kerala Vs Larsen & Toubro Ltd the demands for the period prior to 01.06.2007 is set aside - Hence matter is remanded for re-quantification of duty - Demand on signalling erected for railways post 01.06.2007, the work was executed by the assessee under a contract awarded by the railways - The same is works contract which is excluded from tax liability, being executed for the railways - Hence demand on this count is set aside - As the entire issue is one of interpretation, the demands for interest & penalties are set aside - Nonetheless, the penalty be requantified for those duties which have been remanded for re-calculation: CESTAT (Para 2,7-12)
- Assessee's appeal partly allowed: HYDERABAD CESTAT
2018-TIOL-3153-CESTAT-HYD
Jaya Hume Pipes Pvt Ltd Vs CC, CE & ST
ST - The aassessee executed various contracts for the Andhra Pradesh State Irrigation Development Corporation Ltd., Panchayat Raj RWS, Public Health, on composite/Turnkey basis - The organization purchased pipes from the assessee & then entrusted work of their erection, commissioning & installation for water supply - Such activities also included earth work, laying, jointing, testing for raw water, pumping main, clear water transmission, construction of foot bridge, sump, pump house, supply, deliver and erection of pump sets and Transformers, supply, laying and testing of distribution system and maintenance for one year - Duty demand was raised with interest on such activities under heading of 'Erection, commissioning and installation services' - Penalties were imposed too.
Held: As the activity under taken by the assessee is laying of pipeline for irrigation projects for the period involved under a composite contract & the SCN also demands service tax under erection, commissioning and installation charges, the entire demand unsustainable & must be set aside - Besides, as the entire contract is found to be a works contract, the duty demands are not sustainable: CESTAT (Para 2,5,6,7)
- Assessee's appeal allowed: HYDERABAD CESTAT
2018-TIOL-3152-CESTAT-MUM
Sairaj Labour Services Vs CCE & ST
ST - Issue is whether the amounts paid to ESIC and EPF in the course of providing taxable service to customers under the category of Manpower Recruitment & Supply Agency is to be included in the gross taxable value or otherwise.
Held: Matter is no longer res integra and is covered by the decision in NeelavJaiswal& Brothers - Tribunal has held therein that the amount contributed towards EPF in relation to Manpower Recruitment & Supply Agency service is includible in the value of the services rendered - following the same, appeal is dismissed: CESTAT [para 5]
- Appeal dismissed: MUMBAI CESTAT
CENTRAL EXCISE
2018-TIOL-2192-HC-MAD-CX
CCE Vs IBM India Pvt Ltd
CX - The assessee company exported certain services & paid some amount to service providers located abroad - It also undertook some marketing services for its parent company in India - Duty demands were raised - The Tribunal held that no tax liability arose for period prior to 18.04.2006 - It also held that no tax was leviable on the services such as selling, obtaining orders, market support to identify and promote the products of parent concern - Regarding demand raised on grounds that assessee received consideration in forex were not exempted since the exemption Notification No. 6/1999 was withdrawn during that period, the same was set aside on grounds that no tax can be levied on services exported - The Tribunal also passed an order in the rectification application filed subsequently, wherein the appeal was dismissed for non-appearance - Hence the present appeals by the Revenue as well as the assessee.
Held - Considering the facts of the case, the Tribunal did not assign a specific date on the date of hearing when the case was adjourned - The Revenue also omitted to point out that the adjournment notice had been sent to the assessee - Hence the non-appearance of the assessee is not attributable to itself, considering that it was not intimated of the date of hearing - Hence such reasons are sufficient to recall & set aside the Tribunal's order enabling disposal of the appeal on merits: HC (Para 1,2,4,5)
- Case remanded : MADRAS HIGH COURT
2018-TIOL-3151-CESTAT-MUM Royal Food Stuffs Pvt Ltd Vs CCE
CX - Appellant engaged in export of non-excisable goods viz. "fruit pulp" - they filed refund claim in respect of Input services received of 'Manpower recruitment service" and "Security service" - claim rejected on ground that appellant are not service provider and, therefore, not entitled for refund; that final products manufactured are not excisable, hence appellant not entitled to CENVAT credit - appeal to CESTAT.
Held: Issue regarding availment of credit has been dealt by the Bombay High Court in the case of Sharp Menthol India - 2011-TIOL-490-HC-MUM-CX and in view thereof credit cannot be denied on the ground that fruit pulp, chargeable to Nil rate of duty as per tariff, is exported by the appellants: CESTAT [para 3, 3.2]
Refund - Facility under rule 5B of CCR, 2004 has been provided subject to restrictions prescribed in notification 12/2014-CE (NT) - it is mentioned therein that the facility of refund is limited to service providers providing following services viz. renting of a motor vehicle, supply of manpower, security services, service portion in the execution of works contract etc. - it is clear therefrom that the said rule and notification are intended solely for the service provider providing specific services - in the present case, the appellant is paying service tax on these services under reverse charge basis - Act differentiates between 'service provider' and 'person liable to pay service tax' - if the government intended to provide this facility u/r 5B to service recipient paying service tax on reverse charge basis, it would have mentioned so - Section 68(2) of FA, 1994 is a special mechanism for shifting part liability to pay service tax from 'service provider' to 'service recipient' but it does not convert the 'service recipient' into 'service provider' - as rule 5B has no application in the appellant's case, impugned orders are consequently upheld and appeals are dismissed: CESTAT [para 4, 4.1, 5]
- Appeals dismissed: MUMBAI CESTAT
2018-TIOL-3150-CESTAT-MUM
Kalyani Hayes Lemmerz Ltd Vs CCE
CENVAT - Input Service - Rule 2(l) of CCR, 2004 -Service Tax paid to providers of Transport service for staff and Outdoor catering services during the period 2011 - 2013, whether admissible as credit - appeal to CESTAT.
Held: In view of the Tribunal decisions in Marvel Vinyls Ltd. - 2016-TIOL-3071-CESTAT-DEL and Hindustan Coca Cola Beverages Pvt. Ltd. - 2014-TIOL-2460-CESTAT-MUM , disallowance of credit by the lower authorities is not in order - impugned order is set aside and appeal is allowed: CESTAT [para 3, 4]
- Appeal allowed: MUMBAI CESTAT
2018-TIOL-3149-CESTAT-MUM
Axayya Alloys Pvt Ltd Vs CCT
CX - CENVAT - Waste Disposal Service - Appellant had disposed off the waste hazardous chemicals as per the direction of the Pollution Control Board by sending the waste to authorised waste disposal agency as enumerated by the Maharashtra Pollution Control Board - said authorised agency is entitled to charge service charges from the appellant and has discharged service tax liability - Whether such services are Input Services.
Held : Issue is no more res integra in view of Tribunal decision in Tube Investment India Ltd . - 2017-TIOL-4129-CESTAT-MAD wherein it is held that CENVAT credit of service tax paid for disposal of waste is allowed as Input service credit - following the same, impugned order is set aside and appeals are allowed: CESTAT [para 3]
- Appeals allowed: MUMBAI CESTAT
CUSTOMS
2018-TIOL-3162-CESTAT-BANG Udupi Power Corporation Ltd Vs CC
Cus - Issue pertains to classification and exemption for import of steam coal - Respondent department has denied the benefit of Notification No. 12/2012-Cus dated 17.03.2012 whereby the Basic Customs Duty for steam coal was 'nil' and CVD was 1% and confirmed a total Customs duty demand of Rs.121,50,11,459/- along with equivalent penalty and also levied interest - applicant has filed an application seeking waiver of pre-deposit of the aforesaid Customs duty, penalty and interest on the ground that the issue involved is pending before the Apex Court and, therefore, the appeal may be kept in abeyance - it is also submitted that they had already paid Rs.10 crores during investigation and which amount has been appropriated by the Commissioner in the impugned order; that they have also deposited an additional amount of Rs.2 crores before filing the present appeal and which is more than 10% of the confirmed duty.
Held: Bench finds that against Rs. 121,50,11,459/- of confirmed demand, applicant has paid Rs.12 crores in total and which is more than 10% of the duty demand and which is sufficient pre-deposit to hear the appeal on merits - moreover, entire issue is sub judice before the apex court - Bench, therefore, grants waiver of pre-deposit of balance amount and stays the recovery of the remaining demand and penalty till disposal of appeal: CESTAT [para 4]
- Stay granted : BANGALORE CESTAT
2018-TIOL-2193-HC-MUM-CUS
Sai Raj Enterprises Vs Additional Director of Foreign Trade
Cus - Petitioner's grievance is that its contention in appeal as recorded in the impugned order has not been dealt with - Petitioner's submission was that they had never submitted any documents to obtain IEC certificate nor did he do any export and that the same was done by one Ajay Mishra without his knowledge and in that context the proceedings are pending before a Criminal Court - however, the Additional Director General of Foreign Trade had merely recorded the above submission and without giving any reasons stated that the same is not accepted.
Held: There is merit in the contentions raised on behalf of the petitioner that the order passed by the authority under the Act is not a speaking order - reasons are the lifeblood of any adjudicating/appellate order - giving of reasons while dealing with the submissions alone injects objectivity in deciding the appeal / dispute - Moreover, this alone would let the parties know as to why its submissions are not accepted so as to effectively challenge it before the superior forum - Also, the superior forum would have the advantage of knowing the reasons which weighed with the authority in accepting or not accepting a particular submission - without examining the merits of the case, the appeal is restored to the file of the Additional Director of Foreign Trade for fresh disposal in accordance with the principles of natural justice - Petition allowed in above terms: High Court [para 5]
- Matter remanded :BOMBAY HIGH COURT
2018-TIOL-3148-CESTAT-MUM
Rajaram Ns Bandekar And Company Pvt Ltd Vs CC & CE
Cus - Claim of the appellant is that the goods left the shores of India after the export duty on 'Iron Ore fines' was rescinded vide notification 129/2008-Cus dated 7th December 2008 and hence they were not liable to pay duty.
Held: Goods were entered for export before 7th December 2008 when export duty on 'Iron Ore fines' subsisted - notwithstanding the date of departure of the vessel u/s 16 of the Customs Act, 1962, the grant of 'let export order' is the relevant date on which date the export formalities are completed and clearance is allowed u/s 51 of the Customs Act, 1962 - no merit in appeal, hence dismissed: CESTAT [para 5]
- Appeal dismissed: MUMBAI CESTAT
2018-TIOL-3147-CESTAT-BANG
Global E Business Opretion Pvt Ltd Vs CC
Cus - Assessee is a 100% subsidiary of M/s. Hewlett Packard Europe BV and the unit is a 100% EOU working under STP scheme for the development of software - They had also been issued Customs Private Bonded Warehousing License and In-bond Manufacturing Sanction Order for manufacturing, development and export of computer software under Section 58 and Section 65 of the Customs Act, 1962 - The assessee got the extension of Private bonded Warehouse License from time to time and same has been granted up to 13.09.2010 - Assessee have been carrying out the activity of software development and has been regularly exporting software and realizing the foreign exchange thereon and has been regularly filing Annual performance Report with the STPI, Bangalore - The only violation alleged against assessee is that they have violated the condition of notification and has not used the capital goods on IUT - Further, in the said notfn 140/91 -Cus, there was no such condition that at the time of IUT, the recipient unit must use the goods - This condition of use by recipient unit was introduced in Notfn 140/1991 by customs notfn 64/2002-Cus which is after the transfer of goods to the present unit and therefore this condition of use cannot be made applicable retrospectively - Further, the goods which were received by assessee on IUT basis have already been used by Verifone because the duty in the impugned order was confirmed on depreciated value of the goods which clearly shows that the goods were put to use by the Verifone prior to IUT - Under the notfn 140/91, duty can be demanded only from Verifone if there is a violation of any condition of the said notification because the importer of the said goods is Verifone and not the present assessee - The finding of Commissioner that the assessee has not obtained extension of warehousing period of the said goods is not correct as assessee has obtained renewal of the warehousing licence up to 30.09.2010 and the warehousing period of capital goods is co-terminus with the period of warehousing licence granted to assessee in view of the latest circular 7/2005-Cus issued by CBEC - Further, the demand of duty is wrong when the goods are still in the warehouse and confiscation of same and the imposition of redemption fine is also legally unsustainable - Further, the demand is also barred by limitation as the officers of Department visited the unit of assessee on 28.06.2005 and finally issued SCN on 02.05.2008 which is much beyond the period of limitation - Further, on an identical issue, Tribunal in the case of Infosys Technologies India pvt. Ltd. 2003-TIOL-300-CESTAT-BANG and Perot Systems TSI India Pvt. Ltd. has given relief to the assesses - The impugned order is not sustainable on merit as well as on limitation: CESTAT
- Appeal allowed: BANGALORE CESTAT |
by Shailendera Kumar 
