2018-TIOL-2342-HC-MUM-VAT + Case Story

Whether the amendments made by Maharashtra Act No.XXII of 2009 do not apply to units whose cumulative quantum of benefits have been fully utilized before expiry of the eligibility period even if the incentive is computed in terms of amended Section 93 of the MVAT Act, 2002 - YES : HC

Whether even if such amendment has retrospective effect, the same would only govern those units where the Cumulative Quantum of Benefits has not yet lapsed without full utilization and assessee can't made liable to pay the tax for the sales affected from 1st April 2005 to 27th August 2009 - YES : HC

- Assessee's appeal allowed : BOMBAY HIGH COURT

2018-TIOL-2341-HC-MUM-FEMA

Whether imposing pre-condition of deposit of certain percentage of the total penalty amount for hearing the appeals on merits, is just and reasonable condition put by Tribunal and does not deny the noticee company a right of appeal - YES : HC

Whether since noticees chose to remain absent when Tribunal was ready and willing to hear the restoration application and behaves in non bona fides manner throughout the time, request for reduction in the amount of penalty can be dismissed on this ground - YES : HC

- Appeal dismissed : BOMBAY HIGH COURT

2018-TIOL-23-AAAR-GST

Merit Hospitality

GST  - Appellant has entered into a contract with a company called, say "B Ltd." and "B Ltd." is having its unit in SEZ area (Special Economic Zone) - Supply of food is done by Appellant to the employees of "B Ltd." and the payment for the same is made by the employees of "B Ltd." to the appellant directly - Appellant had sought a ruling as to whether such supply can be considered as supply to SEZ area and hence no GST would be applicable - The Authority for Advance Ruling had held that the question cannot be answered on the ground that there is lack of clarity on the issue in absence of adequate information or details - appeal before Appellate authority.

Held  - From the provisions of section 16(1)(b) of the IGST Act, 2017, it is crystal clear that the supply made by the appellant to the employees of the unit located in SEZ cannot be construed as Zero-rated supply by any stretch of imagination as the employees can neither be treated as SEZ developer nor as SEZ unit - GST will, therefore, be applicable as per the classification of the services determined in terms of the scheme of classification of services as provided under Annexure ‘A' to the notification 11/2017-CTR - appellant is presuming and putting a pre-emptive notion before the Appellate authority that they are running the ‘restaurant' in the SEZ area and then asking the authority to decide upon the GST rate applicable on such activities -it is apparent that the food is being cooked at one place and being distributed to various different locations of the companies with whom they have entered into a contract - Thus, this event is not covered under the definition of ‘Restaurant service' - appellant's claim that it is running ‘Restaurant services' in the SEZ area is not tenable and hence the GST rate of 5% envisaged by appellant is not correct: AAAR

SERVICE TAX

Precision Camshafts Ltd Vs CCE

ST - During the course of audit, it was observed that the appellant had not paid service tax in terms of rule 2(1)(d)(iv) of the STR, 1994 on facilities fees, arrangement fees and legal expenses provided to the appellant by persons located in the non-taxable territory - Such fees were charged by the service provider for availment of the External Commercial Borrowings (ECB) loan to the appellant - appellant contended that it had not actually received disputed services and the said services were received by the bankers viz. Bank of Baroda and Bank of India and those service recipients should actually be held liable to pay tax under the reverse charge mechanism - demand confirmed and penalties imposed - appeal to CESTAT wherein appellant submitted that there were divergent views of the Tribunal on the subject matter and the issue came to be referred to the Third Member for a majority decision in the case of Tata Steel Ltd. - 2015-TIOL- 2464-CESTAT-MUM ; therefore, in absence of clarity, extended period of limitation cannot be invoked for confirmation of the adjudged demand.

Held: In view of conflicting views and the matter having come to be referred to the third Member for majority decision, it cannot be said that non-payment of service tax by appellant was by reason of fraud, collusion, willful mis-statement etc. with intent to defraud the government revenue - in the present case, period of dispute is from April 2011 to March 2012 and the SCN was issued on 07.01.2016, extended period of limitation cannot, therefore, be invoked in the present case - impugned order cannot be sustained on the ground of limitation - appeal allowed: CESTAT [para 6, 7]

- Appeal allowed: MUMBAI CESTAT

2018-TIOL-3340-CESTAT-MUM

ST - Construction of residential complex service - Part of the service tax liability was discharged by assessee before issuance of SCN and balance amount before adjudication of the matter - demand confirmed, amounts paid appropriated and penalties imposed - appeal to Tribunal.

Held: From the findings recorded by the adjudicating authority, it transpires that the appellant had no fraudulent intention to defraud the government revenue - rather due to the complexity of the issue regarding leviability of service tax on the disputed service the appellant did not pay service tax and subsequently paid such amount before adjudication of the matter - since the appellant did not pay service tax due to the reasonable belief that same is not payable, benefit of section 80 of the Finance Act, 1994 can be invoked and penalties can be waived - ordered accordingly - appeal disposed of: CESTAT [para 5, 6]

- Appeal partly allowed: MUMBAI CESTAT

2018-TIOL-3339-CESTAT-MAD

ST - The assessee was holding service tax registration for "Cargo Handling Service" - During audit of accounts of M/s.TATA Coffee Ltd., it emerged that assessee was performing certain tasks in the factory of TATA mainly in processing of coffee beans - Department views that assessee was providing "Manpower Recruitment or Supply Agency Service" and the taxable service thereof - Accordingly, proceedings were initiated against assessee - The period of dispute is June 2005 to March 2010 - Manpower Recruitment and Supply Agency Service was made exigible to service tax w.e.f. 7.7.1997 - The definition of this service in Section 65 (68) of FA, 1994 has undergone a number of changes since its inception - W.e.f. 1.5.2006, the words "commercial concern" were substituted by the words "person" - W.e.f. 16.05.2008, the words "to a client", were replaced by words "to any other person" - It is therefore evident that the taxable service requires supply of manpower temporarily or otherwise - At the same time, there are a number of services which require engagement of manpower at the premises of the client - Supply of manpower service would necessarily entail supply of manpower, temporarily or otherwise - The CESTAT Chennai Bench of Tribunal in a recent decision in Indira Industrial Labour Welfare Association 2018-TIOL-2889-CESTAT-MAD relying upon its own earlier decision in the case of A. Malathy 2018-TIOL-2271-CESTAT-MAD and also decision of CESTAT Mumbai in Bhagyashree Enterprises 2017-TIOL-1113-CESTAT-MUM - It is clear from the agreements and communication between assessee and its service recipient that although there was indeed use of manpower, however that was only for the purpose of actualizing the work contracted to assessee - This manpower was at all times under the control and superintendence of assessee - The consideration for the work contracted was dependent upon the extent of work completed or executed and not on the basis of number of manpower supplied - T he services rendered by assessee are not in the nature of "Manpower Recruitment of Supply Agency Service - The impugned order to the contrary cannot then sustain and is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

CENTRAL EXCISE

2018-TIOL-2344-HC-AHM-CX + Case Story

CX - Provisions of Settlement under the CEA, 1944 clearly bring out one to one relation between a case where the assessee to whom such case relates has filed an application for settlement and whose application for settlement is considered by the Settlement Commission - Every assessee in whose case, the case is pending would have to apply for settlement, if otherwise settlement application is maintainable, and invite an order of settlement from the Commission in order to get any benefit of immunity from prosecution, penalty or fine - Merely because the appellants herein could not have applied for settlement due to monetary limit would not change the situation - Immunity from imposition of penalty cannot be expanded to cover cases of those who were not part of the settlement proceedings - Tax appeals dismissed: High Court [para 12, 16, 19, 24]

- Appeals dismissed : GUJARAT HIGH COURT

2018-TIOL-3338-CESTAT-AHM

CX - Revenue filed the appeal seeking enhancement of penalty under section 11AC which was reduced by the Commissioner (A) from equal amount to 25 percent - The assessee filed the appeal challenging the amount of duty, interest and remaining amount of penalty - The assessee first time raised the issue regarding examination of witnesses whose statements were relied upon by adjudicating authority - Since this issue has not been considered at all by any of the lower authorities, the matter needs to be sent back on this aspect to the adjudicating authority on the issue whether the stentering process amount to manufacture or otherwise - The impugned order is set aside and matter is remanded to the adjudicating authority to pass a fresh order: CESTAT

- Matter remanded: AHMEDABAD CESTAT

2018-TIOL-3337-CESTAT-AHM

CX - The assessee is engaged in manufacturing of cryogenic tank for liquefied gases, Domestic Vaporizer, Piping and Miscellaneous Structures, Cryogenic Tank for transportation of liquefied gas and Cryo Container - They are availing the facility of Cenvat Credit on inputs, capital goods and input service under the provision of CER, 2004 - On scrutiny of cenvat register maintained by the assessee wherein certain discrepancies noticed as in column of type of document they made entries as B/L and B/E, in the column of number and date of document for certain entries they shown the name of the scheme as DEPB/FMS/ SHIS and in certain entries reflected the specific number of bill of entries - As regard the limitation for availing the cenvat credit, during the relevant period as per the provision of Rule 4(1), it was merely provided that the Cenvat Credit in respect of inputs may be taken immediately on receipt of the inputs in the factory - However, there is no time limit prescribed for taking the credit - There is no bar provided in the Cenvat Credit Rules that within how much period credit should be taken - The limitation was brought in the statute by way of 3rd Proviso to Rule 4(1) of CCR, 2004 only with effect from 01.09.2014 by Notfn 21/2014–CE(NT) by which the time limit of one year from date of issue of the duty paying document was prescribed - This prescription of time limit itself makes it clear that before this proviso there was no time limit prescribed for the earlier period, therefore, merely because the credit was belatedly taken, the same cannot be disallowed - As regard, the fact of receipt of inputs, in part of the cases it is a differential cenvat credit in respect of part of the duty debited under duty credit scrip, however part of the duty was paid in cash on which the credit was already taken at the time of receipt which was not disputed - In such cases, there is no need to go into the issue that whether the inputs were received or otherwise - However, in those cases where the cenvat credit was taken first time belatedly the fact of receipt of inputs needs to be established - In this regard, assessee had provided various records which were got verified from the Jurisdictional Range Officer, the adjudicating authority satisfied with the documentary correlation of the reconstructed record except in case of two bill of entries - Since the additional records such as LRs were produced before this tribunal and not before the Adjudicating authority, to this extent, the matter needs to be remanded - As regard the issue of limitation, since it is mixed question of law and fact, the same can be decided when the matter is decided afresh: CESTAT

- Matter remanded: AHMEDABAD CESTAT

2018-TIOL-3336-CESTAT-MAD

CX - The assessee is aggrieved by disallowance of input tax credit on various services stating the ground that the said services do not have nexus with their activity of manufacture - The period involved is prior to 01.04.2011 when the definition of input services had a wide ambit as it included the words "activities relating to business" - The assessee has submitted that gardening activities were availed by them to keep the premises eco-friendly and to comply with the conditions prescribed by the Tamilnadu Pollution Control Board - Such services held to be eligible for credit during the relevant period - The services for renovation and modernization has been availed in respect to the canteen - Under the Factories Act, 1948 it is mandatory for them to maintain a canteen - Therefore, the services availed for renovation and modernization of canteen is eligible for credi - It is the case of assessee that in order to provide accommodation for employees they have availed the services of 'Real Estate Agents' - Further, the services of Packers and Movers were availed by them for transportation of the belongings of the executives of assessee company when relocated - These are welfare measures for the employees of the company and will fall within the ambit of activities carried out relating to business - Said activities have been held to be eligible for service tax credit - The disallowance of the credit is unjustified: CESTAT

- Appeal allowed: CHENNAI CESTAT

CUSTOMS

Nathi Mal Rugan Mal Vs CC

Cus -Appellant's main grievance is against imposition of condition of re-export for redeeming the goods.

Held: In terms of s.125 of the Customs Act, 1962, officer adjudging cases in relation to confiscation of goods shall confiscate the goods absolutely when goods under adjudication are prohibited goods and when not so, still confiscation can be ordered but goods can be allowed to be redeemed on payment of redemption fine as adjudged - And on redemption, the person redeeming the goods becomes the owner of the goods and he is entitled to deal with the goods in the manner he likes - inasmuch as no condition can be imposed by the adjudicating authority for dealing the goods in a particular manner -person redeeming the goods can ask for re-export of the goods if he deems fit - in view thereof, Bench is not in a position to uphold the order of the authorities below whereby a condition of re-export has been imposed in the proceedings of confiscation u/s 125 of the Customs Act, 1962 - condition of re-export imposed by adjudicating authority is deleted - impuged order modified to the said extent - redemption fine and penalties imposed are upheld in toto - appeals disposed of: CESTAT [para 4.6, 4.7, 5.0]

- Appeals disposed of: MUMBAI CESTAT

2018-TIOL-3334-CESTAT-AHM

Cus - the assessee company is engaged in importing tableware & household items - The assessee entered into long term agreement for purchasing glassware directly from manufacturer located abroad - Such goods bear the assessee's brand name - The assessee filed bills of entry & the goods were taxed under CTH 70.13 as ‘Glassware of a kind used for table, kitchen, toilet, office and indoor and similar purposes.' - The classification claimed in the bills of entry was CTH 70132900 being ‘others' - The DRI made investigations and alleged mis-declaration and mis-classification of the goods - The DRI opined that the goods were classifiable under CTH 70133229 - Duty demand was raised - Subsequently, the Tribunal set aside such findings and pursuant to remand ordered by it, the adjudicating authority dropped the proceedings.

Held - The issue at hand is whether or not the assessee undervalued the goods - The SCN alleged mis-declaration of goods as basis for under-valuation - The Tribunal held there to be neither mis-declaration nor mis-classification - Hence there is no basis for valuation of the goods - Once SCN makes certain charges, the adjudication order cannot travel beyond such allegations based on material adduced in the SCN - Besides, the Department relied on parallel invoices to allege under-valuation & such invoices mention prices which are generally applicable to all such importers - However, the assessee in the present case is importing tableware which is specifically branded as per its requirements - Hence valuation in this case cannot be done based on value of contemporaneous imports - Hence the allegations in the SCN are unsustainable and the demands raised based on extended limitation must be set aside: CESTAT (Para 1,8,9)

- Revenue's appeal dismissed: AHMEDABAD CESTAT