2018-TIOL-155-HC-KERALA-GST

Mohammed Bilal Vs UoI

ST, GST - Whether petitioner is liable to pay Service Tax on its business activities - Petitioner had earlier faced demand for different periods - for one period, the department had accepted the explanation offered by the petitioner and for another period, the demand was confirmed and the matter was carried by the petitioner in Writ Petition, when the assessment came to be set aside and the matter was remanded - On the same issue, SCN has been served by the department for the later period and questioning this action, the petitioner has filed the present Writ Petition - Petitioner contending that unless the authorities decide the matter remanded by the High Court, the whole exercise of issuing SCN and inviting explanation from petitioner is futile; that the department ought to have waited until the earlier proceedings concluded - counsel for respondent Revenue submited that law does not prohibit the authorities from seeking the assessee's explanation for a different assessment year; that if the petitioner submits explanation, the authorities would await the outcome of the pending adjudication and then proceed with the matter.

Held:Petitioner has also questioned the legality of the respondent's demand for fresh assessment in the face of the 101 st Constitutional amendment - In these circumstances, while the petitioner would require to submit his explanation in response to the SCN, the authorities will not finalise the proceedings until they decide the issue pending adjudication - Matter to be posted along with the batch of petitions challenging constitutional validity under the GST regime: High Court

- Matter posted: KARALA HIGH COURT

AAR CASES

2018-TIOL-258-AAR-GST

Indian Cotton Solutions.Com Pvt Ltd

GST - Applicant is engaged in supply of service by providing Mobile Laboratory Services to test the quality of cotton - Applicant is seeking a ruling as to whether they can utilize the ITC in respect of the vehicles purchased by them for the purpose of their core business activity.

Held: From a plain reading of section 17 of the CGST Act, 2017, it is clear that the goods referred by the applicant do not fall under the exceptions referred in section 17(5) of the CGST/APGST Act, 2017 - Hence the applicant is not entitled for claim of ITC: AAR

- Application disposed of : AUTHORITY FOR ADVANCE RULING

2018-TIOL-257-AAR-GST

Agarwal Industries Pvt Ltd

GST - Applicant is engaged in manufacturing ingredients of Poultry feed, particularly involved in manufacturing of substitute of Rice bran oil, which is used in preparation of poultry feed - Applicant named their product "Energy-G premium oil" and stated that the product is inedible or not fit for human consumption and purely for manufacturing of poulty feed - applicant requesting for clarification of correct HSN Code for this product.

Held: Product under question viz. "Energy-G Premium oil" is manufactured out of Vegetable fats/oils and not from animal fats/oils and this being so, the product is rightly classifiable under HSN 1518 and is subject to 5% GST as per S.No. 90 of Schedule I of Notification 1/2017-CTR and corresponding SGST notification: AAR

- Application disposed of : AUTHORITY FOR ADVANCE RULING

2018-TIOL-2359-HC-AHM-MISC

Pravin Natvarlal Modh Vs State of Gujarat

Advocate Act, 1961 - The petitioner is engaged as a sales tax practitioner and carried a certificate issued under the Gujarat Sales Tax Act - He claimed that under the Act & under the Gujarat Value Added Tax Act, 2003, he carried out various obligations such as obtaining registrations, filing returns, seeking refunds and for audit of accounts - He appeared before various authorities while discharging such functions - During the relevant AY, the petitioner's clients purchased duty-paid cigarettes located within Gujarat & sold them outside the state - They approached the petitioner for seeking refund on their behalf, of unutilized ITC & such refunds were subsequently granted by the Revenue - However, the Revenue later doubted the veracity of such inter-State sales & investigated the dealers as well as the petitioner - The petitioner was later served an SCN alleging there to be several irregularities in the discharge of his functions as Sales Tax practitioner, and that he had connived in defrauding the Government - Alleging misconduct, the SCN proposed to disqualify the petitioner from performing such functions - The petitioner claimed that such SCN was invalid & could not have been issued, since he had obtained an LLB degree & was enrolled with the State Bar Council.

Held - considering the definition of Section 2 of the Advocates Act 1961, the term 'legal practitioner' includes an advocate - An individual can appear before an authority in either capacity of a sales tax practitioner or a legal practitioner - The SCN clarifies that the petitioner appeared before the authorities in the capacity of a legal practitioner - In that case, the jurisdiction to commence disciplinary proceedings against the petitioner or conduct an investigation or issue SCN, vests with the State Bar Council - The same is clarified by Section 35 of the Advocates Act 1961 - It must be noted that a sales tax practitioner and a legal practitioner are distinct individual professionals - Section 81(1) of the GVAT Act authorizes each individual to appear in his respective capacity - Section 81(2) further clarifies that proceedings against a legal practitioner can only be initiated by the regulatory authority of which the practitioner is a member - Hence in this case, the Bar Council of Gujarat has the domain to initiate & conduct proceedings for misconduct alleged to have been done by the petitioner - The qualification as a legal practitioner supersedes certificate of sales tax practitioner - Hence the SCN issued by the Revenue is without jurisdiction: HC (Para 2.1-2.4,7,9)

- Writ petition allowed : GUJARAT HIGH COURT

2018-TIOL-2355-HC-MUM-MISC

VVF India Ltd Vs State Of Maharashtra

Whether penalties can be imposed where it is found that Natural Gas purchased from dealers within the State is not used for the declared purpose of power generation - YES: HC

-Assessee's writ petition dismissed : BOMBAY HIGH COURT

SERVICE TAX

2018-TIOL-3371-CESTAT-MUM + Case Story

Tata Teleservices Maha Ltd Vs CST

ST - Value of SIM is includible in the services of telecommunication - Claim of the appellant that the sale of SIM card by the appellant is an independent transaction of sale of goods simpliciter is not tenable, because the same SIM cannot be used for any other purpose other than identifying the consumer on appellants network for provision of telecommunication services - SIM Cards as purchased by the Appellants from the suppliers/vendors etc. are distinct from the one's supplied by them to their consumers. While those purchased by them are liable to VAT/ Custom Duty/ Central Excise Duty, those provided by them through their network are incidental to the supply of services provided by them: CESTAT [para 6.2] ST - SIM as programmed and provided by the Appellant to the consumer is always the part of the telecommunication network of the appellant and has no other use other than to identify the consumer on the said network. Since the property in the said SIM in effect is not transferred to the consumer, and the said SIM is only used for activation, identification and provisioning of the telecommunication services to the consumer, the transaction in SIM cannot be said to be one of sale of goods -benefit claimed of notification No 12/2003-ST, therefore,cannot be extended: CESTAT [para 6.6, 7.1, 7.2] Limitation - After the decision of the Apex Court in BSNL - 2006-TIOL-15-SC-CT-LB there appears to be no interpretational issue left on basis of which appellants could have entertained the bonafide belief as claimed by them - appellants were only devising business plans and strategies to circumvent the law clearly laid down by the Apex Court and such changes which resulted in the short payment of taxes were never brought to the knowledge of the department - non-disclosure of the relevant facts when required, when made to circumvent the payment of taxes due is an act of suppression with intent to evade payment of duty - when appellants have themselves been experimenting with the business practices and documents and have never declared about the same to the department at the appropriate time, they cannot claim the benefit of knowledge of department - Since appellants have suppressed the true nature of transaction in SIM from the department with intention to evade payment of taxes, extended period of limitation has been rightly invoked for demanding service tax from them: CESTAT[para 8.3 to 8.7] Penalty & Interest: Same is a natural corollary when the demand is confirmed - Penalty and interest upheld: CESTAT [para 8.13, 9]

Re-quantification - Insofar as the submission of the appellants that the demand for the period from April 2007 to November 2010 has been made by multiplying the number of startup kits (SUK) with MRP of SUK, disregarding the fact that till November 2010, they had discharged service tax on service value forming part of MRP of SUK; that the demand of service tax needs to be recomputed after taking into account the service tax already paid by them, the Bench agreed and remanded the matter: CESTAT [para 11]

Adjustment of VAT -VAT is levied under the State Act and Service Tax under the Central Act - Since both the authorities, under which Service Tax and VAT are levied are not the same, the Tribunal being creature of the Central Act, would not be in position to determine such transfer and adjustment of VAT paid under State Act, towards the tax liability under a Central Act - Plea rejected: CESTAT[para 12]

- Appeals disposed of : MUMBAU CESTAT

United India Insurance Company Ltd Vs CCE & ST

ST - The assessee is engaged in providing General Insurance Services - During the period of dispute, the assessee availed Cenvat credit of service tax paid on repair & maintenance of vehicles by Authorized Service Stations on vehicles insured by the assessee - The Department held such availment of credit to be invalid on grounds that the same was not valid input service u/r 2(l) of CCR 2004 - Duty demand was raised with interest & penalties u/s 76, 77 & 78 of the Finance Act 1994.

Held - It is undisputed that the assessee availed credit only proportionately to the extent of the amount borne by them - General Insurance Service insures the vehicle against damages - Such service can be provided to the vehicle owner only through reimbursement of repair charges - Hence service tax paid on bill of the authorized service station is valid input service used to provide output service of vehicle insurance - Also considering the decision of the Tribunal in Paul Merchants Ltd. Vs. CCE, Chandigarh it is seen that the assessee becomes the recipient of the services from the authorized service station even though the beneficiary remains the owner of the motor vehicle - Besides, the TRU circular dated 26.02.2010 relied on the by the assessee is applicable for determining eligibility for Cenvat credit even though it is given in the context of health insurance services - Hence assessee is eligible for credit - Moreover, the Department's claim that the assessee did not have any invoice in its favor, cannot be sustained as it is mere procedural infraction & is no ground to deny credit - Hence the demands are set aside: CESTAT (Para 1,6.3,6.4,6.6)

- Assessee's appeal allowed: CHENNAI CESTAT

2018-TIOL-3369-CESTAT-HYD

ST - The assessee company received GTA services tax liability arose on the gross charges - Duty demand was raised to the assessee on grounds that service tax had incorrectly been discharged on the freight incurred on transportation of goods - The assessee was also denied abatement of 75% of value of freight charges, provided under Notfn No 32/2004 - Also considering the assessee's balance sheets for the relevant FYs, it was noticed that the assessee did not pay service tax under reverse charge mechanism on the freight charges - In defence, the assessee claimed that the SCNs relied on did not correctly consider the freight charges paid by the assessee.

Held - The Revenue was unable to show how it worked out the figures mentioned in the SCN - The random extract picked up does not indicate that the amounts which were shown as selling expenses are not only freight charges, leave alone the figures as reported by the assessee ted balance-sheet are totally different from the figures on which demands have been raised - Thus the Revenue fails to justify the demand raised & was unable to produce relied upon documents before the Tribunal - The balance sheets produced by the assessee mention the relevant details of expenses incurred - Hence the demands are set aside: CESTAT (Para 1,5,6)

- Assessee's appeal allowed: HYDERABAD CESTAT

2018-TIOL-3368-CESTAT-MUM

ST -Appellants exported services under the category of Scientific and Technical Consultancy Services to M/s Disphar International BV, Netherland against a service contract and consequently claimed refund of accumulated CENVAT credit under rule 5 of CCR, 2004 -alleging that the services provided was in the nature of performance based service in India, hence not an export service, the cash refund was held inadmissible - appeal to CESTAT.

Held: Appellant had, undisputedly, purchased/procured the goods independently on which they discharged appropriate Customs duty on its import - necessary tests were carried out on the said goods in India and after analysis, the relevant report was submitted to the overseas company - Tribunal has in their own case - 2018-TIOL-1795-CESTAT-MUM already taken a view that the aforesaid service rendered by the appellant is in the nature of export of service and hence eligible for cash refund of accumulated CENVAT credit - Except in relation to input service denied by the Commissioner (A) observing that there is no nexus betweeen the input and output service as necessary evidence in relation to Building maintenance charges were not produced and rent-a-cab service being mentioned in exclusion clause of rule 2(l) of CCR, 2004 after amendment w.e.f 01.04.2011, the matters are remanded to the adjudicating authoirty to calculate admissible refund amount - Appeals disposed of accordingly: CESTAT [para 8 to 10]

- Appeals disposed of: MUMBAI CESTAT

CENTRAL EXCISE

Bunty Foods (India) Pvt Ltd Vs CCE

CX - Appellant availing CENVAT credit in respect of inputs used in manufacture of Biscuits, which were of less than Rs.100/- value and were being exported - Revenue entertaining a view that since the biscuits of less than value Rs.100/- are exempt, the appellant is not entitled to avail credit even if the final product is being exported by them -appeal to CESTAT.

Held: Issue has been covered by the earlier decision of the Tribunal in the appellant's own case reported as - 2015-TIOL-1075-CESTAT-MUM wherein following the Bombay High Court decision in Repro India Ltd. - 2007-TIOL-0795-HC-MUM-CX , the appeal stands allowed - also the said decision of Tribunal stands accepted by the department - impugned order set aside and appeal allowed with consequential relief: CESTAT [para 2, 3]

- Appeal allowed: MUMBAI CESTAT

2018-TIOL-3366-CESTAT-MUM

CX - Assessee is engaged in manufacture of ‘Assorted Instant and Processed Food' during April 2011 to October 2011 and classified the same under CSH 1905 9090, 0404 9000 of CETA, 1985 attracting ‘Nil' rate of duty -SCN issued proposing classification under CSH 2106 9099 and demanding CE duty of Rs.33,63,213/- - demand confirmed along with penalty and interest and in appeal, the Commissioner (A) held that the goods are correctly classifiable under CSH 1901 9090 and at the same time confirmed the duty demand etc. - appeal to CESTAT by both, assessee and Revenue - Appellant submitting that the Commissioner(A) had travelled beyond the scope of the SCN as nowhere in the notice it was alleged that the items are proposed to be classified under CSH 1901 9090 - Revenue too arguing that the classification should be as proposed and held by the adjudicating authority.

Held: Observation/finding of the Commissioner (A) is beyond the scope of the show-cause notice for which both Revenue and assessee are in appeal - to meet the ends of justice, impugned order is set aside and the matter is remanded to Commissioner(A) to decide the issue after taking into consideration the claim of the appellant as well as Revenue and by giving reasonable opportunity of hearing - all issues are kept open - Matter remanded: CESTAT [para 6]

- Matter remanded: MUMBAI CESTAT

2018-TIOL-3365-CESTAT-AHM

CX - Dispute pertains to the period between 1993 and 1996 on the issue of manufacture having been undertaken - On scrutiny of panchnama, it is taken note that stirrer machines with one homogenizer machine and one testing machine was found at the premises in Ahmedabad at the time of search - From the statement of Supervisor, it appears that water and emulsifiers were being mixed with amino silicon in stirrer machines and the resultant 'textile auxiliary chemicals' were marketed by them under the name of 'micro film' and 'micro-X' and 'elastomer', that the principal raw material was 'amino silicon' in which water and emulsifier were mixed in the machine to obtain final product - The process of manufacture of 'textile auxiliary chemical' requires addition of emulsifier which serves as an active agent with the base material and the resultant products are distinguishable from the input in name, quality, character and use - Consequently, the process carried out by assessee is undoubtedly 'manufacture' within the meaning of section 2(f) of CEA, 1944 - The submission made on behalf of assessee does not suffice to controvert the specific findings, based on statements and panchnama, that assessee was in possession of the machinery at Ahmedabad before December 1997 and their claim of mere trading, on the basis of lack of machinery, is not tenable - The closure of the unit, or change in name, coupled with absence of evidence of overt manufacture and casting of aspersions on the reliability of paper slips cannot alter the finding that the machines were received by assessee who had claimed depreciation thereon - Mere assertion of non-dutiability is not a substitute for evidence - No submission was made during course of hearing except inadequacy of evidence and absence of facility to carry out any activity other than blending with water - The assessee is, accordingly, liable to duties of excise on the product cleared by them which was admittedly not discharged - The sanction of refund claim is also vitiated in these circumstances: CESTAT

- Appeals dismissed: AHMEDABAD CESTAT

CUSTOMS

Nypro Forbes Products Pvt Ltd Vs CC

Cus - The assessee imported AC pins which form part of cellphone chargers & classified them under CTH 85177090 - The assessee also claimed benefit of nil rate of duty under Notfn No 21/2005-Cus & Notfn Nos 06/2006-CE & 20/2006-CE - The Department opined that such goods were ineligible for benefit under the Notfns and raised demands for differential amounts of duty with interest - Such demands were upheld by the Appellate authority.

Held - The precedents relied on by the assessee do not advance its case since they involve different facts - The decision cited by the Department in Twenty First Century Builders Vs. CC, New Delhi applies squarely onto the facts in the present case - In this case, it was held that the parts of accessory to cellphone cannot be extended benefit which is otherwise available to mobile phone or its accessories under Notfn No 21/2002 - Besides, such decision was also upheld by the Apex Court in 2005 (183) ELT A88 (SC) - Hence the O-i-A in question warrants no interference: CESTAT (Para 1,5.2,5.3)

- Assessee's appeal dismissed: CHENNAI CESTAT

2018-TIOL-3363-CESTAT-BANG

Cus - The Air Intelligence Unit at Bangalore intercepted the appellants herein as they were trying to exit through Customs Green Channel - The Customs Declaration Form filled by them revealed that no prohibited or dutiable goods had been declared by them - However, search of check-in baggage & of their persons revealed there to be some quantity of gold jewellery - The appellants admitted to have carried them from Dubai - As there was clear intention to smuggle them to evade payment of duty & no declaration had been made of such items, the jewellery was seized & confiscated u/s 111(d), 111(i) & 111(l) of the Customs Act - Penalties were also imposed u/s 112(a) & 114(AA) - Later, the Commr.(A) dismissed the appellant's entreaties.

Held - The provision of Section 124 of Customs Act have not been strictly followed, since no SCN was issued to the appellants & the goods were confiscated - Besides, it is seen that the appellants are not frequent flyers & wore jewellery in a usual manner which cannot be treated as concealment so to ensure their non-deduction - Moreover, Gold is not a prohibited item although its import is regulated by EXIM policy & RBI guidelines - Hence it cannot be absolutely confiscated - In this case, the appellants merit being given option to pay redemption fine - The same can be given on discretion of adjudicating authority, if the assessee is not a habitual offender & is not ferrying the goods for someone else & did not conceal the goods in any manner - Therefore, order of absolute confiscation is unsustainable - The appellants are given option of redemption fine - However, penalties imposed u/s 112(a) & 114(AA) are sustained: CESTAT (Para 2,5.1,5.2,6)

- Assessees' appeals partly allowed: BANGALORE CESTAT