SERVICE TAX

2018-TIOL-3581-CESTAT-MUM + Case Story

Sanghvi Movers Ltd Vs CCE

ST - Supply of Tangible Goods service - Notification No 17/2011-ST could not have eclipsed or restricted the exemption provided by Section 26(1)(e) of the SEZ Act, 2005 - It is quite evident from the decisions in Intas Pharma - 2013-TIOL-1091-CESTAT-AHM and Reliance Ports and Terminals Ltd - 2013-TIOL-1473-CESTAT-AHM that in terms of s.26(1)(e), the taxable services provided by a service provider to a Developer or a Unit in SEZ are exempt from payment of service tax- Section 51 gives overriding effect to the provisions of this Act over all other Acts and Rule 31 of SEZ Rules, 2005 provides the scheme for operationalizing the said exemption - There is no dispute that the sites in respect of which these invoices/ log sheets are produced belong to the SEZ Unit or a developer and these services have been wholly consumed at the said site - there also appears to be no dispute about the fact that these services are falling in the category of the approved services for the SEZ Operation - Commissioner has not sought to state the contrary but has only sought to deny the exemption on the ground that in these instances the exemption should not have been allowed affront but by way of the claim of refund by the SEZ Unit/ Developer - from the plain wordings of the Section 26(1)(e) of SEZ Act, 2005 read with Rule 31 of The SEZ Rules, 2006, and notification No 9/2009-ST dated 03-03-2009 as amended by Notification No 15/2009-ST, Bench is of the view that Appellants have substantially complied with the conditions prescribed and, therefore, the order of Commissioner holding that these services have not been wholly consumed within the SEZ is not sustainable -Tribunal has in FEDCO Paints and Contracts - 2017-TIOL-2726-CESTAT-MUM held that exemption shall be available even if the services for consumption in SEZ by the SEZ Unit/ Developer are provided through the Contractor of SEZ Unit/ Developer - Appeal allowed on merits without going into the issue of limitation: CESTAT [par 9 to 13]

- Appeal allowed : MUMBAI CESTAT

Saransh Ads Vs CST

ST - Tribunal had remanded the matter to the original authority with a direction to examine the various documents claimed to be in possession of the appellant as evidence of discharge of tax liability on accrual but sought to be recovered in proceedings on receipt basis - remand order also directed a revisit of the tax held to be recoverable as provider of Business Auxiliary Service - Bench notices churlishness on the part of the adjudicating and the lower appellate authority in refusing to enumerate the documents submitted and the deficit therein that hindered compliance with the remand order of the Tribunal - lower authorities have, in their findings, misdirected themselves, in the determination to fasten tax on the consideration without compliance of the pre-requisite to fit the activity within the framework of one of the taxable services - demands and the attendant detriments set aside and matter remanded to the original authority for a second time to enable ascertainment of validity of the contention of the appellant on the discharge of tax liability: CESTAT [para 6, 7]

- Matter remanded: MUMBAI CESTAT

Dusters Total Solutions Services Pvt Ltd Vs CST

ST - Assessee is engaged in providing specialized professional cleaning services - During verification of records, it was noticed that assessee had collected, from their clients, apart from service charges, service tax liability, however, did not remit the same to the exchequer within the due date - It also emerged that assessee had not filed ST-3 returns within due date - A SCN was issued to them - In the impugned order, a clear chit has been given to assessee that there was no mala fide intention on their part and that proviso to Section 73(1) of the Act has been invoked without any evidence - As the Department has not come in appeal against this finding of the Commissioner and subsequent decision not to impose penalty under Section 78 ibid, it would only be presumed that the Department has accepted the impugned order in toto, including the said findings - Once it has been held that service tax has not been paid on account of fraud or collusion or wilful misstatement or suppression of facts, etc., with intention to evade payment of service tax, the provisions of Section 73(3) of the Act would hold sway in the case of assessee and, in fact, as per the provisions of that Section, on the basis of tax ascertained by the Department Officer, if the amount is paid up by assessee before service of a notice on him, there shall not be served any notice under Sub-section 1 of Section 73 ibid - Once no notice was required to be issued, there would be no question of imposition of any penalties on assessee - The assessee, for the disputed period, were always one step behind in paying up their tax liabilities, since they were paying up the arrears built up for the previous periods - This is the fact which has been taken cognizance of and found correct by the adjudicating authority also - The Department has also not called any evidence that assessee had sufficient financial reserves and were not monetarily strained - In case there is a positive finding under Section 78 of the Act ibid, the assessee has an option to pay reduced penalty of 25% within one month of the date of the order - The interest which is in the nature of compensation for the delay in payment, was also paid after issuance of SCN and much before issuing the O-I-O - The conduct of assessee in paying up service tax and interest, and the categoric finding of Commissioner that there is no intention to evade tax, persuades to hold that assessee has established reasonable cause for invoking Section 80 of the Act - The penalty imposed under Section 76 is set aside - The impugned order is modified to the extent of setting aside the penalty imposed under Section 76 only: CESTAT

- Appeal partly allowed: CHENNAI CESTAT

CST Vs Sinar Jernih India Pvt Ltd

ST - Assessee is registered with Service Tax Department under category of "Cleaning Services" - Pursuant to internal audit of accounts, it was noticed that for the period from October, 2006 to July, 2008, the assessee had not discharged their service tax liability - The grievance of department is that the Commissioner did not impose penalty equal to that of the service tax demand - It was submitted by assessee that they could not make timely payment due to financial hardship as they had to first make payment to their employees - This was not considered by adjudicating authority as a reasonable cause for invoking Section 80 of FA, 1994 - However, by taking note of the fact that the assessee had paid an amount before issue of SCN, the adjudicating authority reduced the penalty imposed under Section 78 of Finance Act, to this extent - From the counter filed by assessee, it is seen that they had already paid the balance of demand as well as the penalty imposed under Section 77 - It is correct that Commissioner has not given the benefit of reduced penalty (25% of the demand of service tax) to the assessee - The penalty imposed under Section 78 needs to be reconsidered for which matter is remended to the Commissioner: CESTAT

- Matter remanded: CHENNAI CESTAT

CENTRAL EXCISE

2018-TIOL-2473-HC-DEL-CX + Case Story

Reliance Cable Industries Vs Commissioner of GST

CX - Questions of law urged by the appellant are purely factual – upon a total analysis of the circumstances, especially the statements made by the various parties including the third parties i.e. the sellers of the raw material, the inference drawn by the Commissioner that the appellant indulged in clandestine manufacture and removal of wires and cables without payment of any CE duty could not have been faulted - appeal dismissed: High Court [para 7, 10]

- Appeal dismissed :DELHI HIGH COURT

2018-TIOL-3570-CESTAT-HYD

Cubane Speciality Chemicals Pvt Ltd Vs CCT

CX - The assessee is engaged in manufacturing paper quality products, organic compounds and water treatment chemicals - The only issue that falls for consideration is whether the assessee is eligible to avail CENVAT credit of service tax paid by him on Royalty charges paid to M/s Solute - Undisputedly, assessee procured technology for manufacturing of speciality chemicals from M/s Solute, paid royalty charges and discharged service tax - Assessee had availed CENVAT credit of service tax paid on procurement of technology from M/s Solute, which cannot be faulted with and demanded as being availed with an intention to evade duty - The factual matrix clearly indicates that finished goods manufactured out of technology procured by assessee was marketed by assessee after retail pack would itself mean that assessee entertained a bonafide belief that they are eligible for CENVAT credit of service tax paid as it is used in relation to the manufacture of final products - It is also undisputed that assessee had declared availment of such CENVAT credit to the authorities in the monthly returns which would mean that department was aware of the same in the year 2011-13 when the returns were filed - The revenue authorities are not contesting that the service tax liability has not been paid or they are not required to pay the tax - If the revenue is not contesting the service tax paid by assessee and genuinity of documents, assessee's availment of CENVAT credit seems to be under bonafide belief and cannot be faulted with as being with an intention to evade duty by misstatement and suppression of facts - The SCN issued in September, 2015 is blatantly time barred - Hence the entire demand is set aside on the question of limitation itself: CESTAT

- Appeal allowed: HYDERABAD CESTAT

Saritha Synthetics And Industries Ltd Vs CCCE

CX - The assessee, an EoU, manufactured Grey Cotton Fabric, which it then cleared to the DTA upon payment of duty, as per Notfn No 23/2003-CE - Such duty was paid for the entire period, barring a short span of time - For such period, duty was paid under different provisions of the same Notfn - The assessee was served SCN for the smaller period, raising demands for AED (GSI) with Education Cess & for the larger period, demanding AED (Textiles & Textile Articles) - Such demands were upheld by the Commr.(A).

Held: It has been held in several judgments, that CVD on goods imported are equivalent amount on goods which are cleared by EoU to DTA & should be calculated after considering the relevant exemption Notifications - During the period of dispute, the Notfn No 31/2004 & Notfn No 32/2004 have exempted all goods from AED (T&TA) and AED (GSI) - The Commr.(A) relied on Circular No. 29/2003-CUS dated 03.04.2003 issued from F.No.305/45/2003- FTT, to sustain such demands - Such circular clarifies that for goods cleared into DTA, duty is levied on goods u/s 3 of CEA 1944 & since duty on goods manufactured by EoU & sold in DTA is equal to aggregates of Customs duty leviable on imported goods, then CVD would constitute all components of Excise duty, namely Excise duty leviable u/s 3 of the Additional Duties of Excise (GSI) Act, 1957 & Additional Duty of Excise leviable u/s 3 of Additional Duties of Excise (T & TA) Act, 1978 - While applicability of such circular is not disputed, CVD must be calculated after accounting for Notfn No 31/2004 which exempts goods from AED (T & TA) Act & AED (GSI) - Hence if similar goodsare imported into India or are cleared by EOU to DTA then no CVD can be levied on components of AED (T & TA) and AED (GSI) - Hence the demands are not sustainable: CESTAT (Para 3,6-9)

- Assessee's appeals allowed: HYDERABAD CESTAT

SPM Polymers Pvt Ltd Vs CCE, C & ST

CX - The assessee manufactures plastic moulded furniture & household articles - It availed benefit of SSI exemption during the period of dispute - It also manufactured goods as job worker - It irregularly availed SSI exemption on goods bearing brand name of another entity - Duty demands were raised with interest & penalties, alleging clandestine clearance of finished goods, shortage of finished goods at its premises & irregular availment of SSI exemption - Further, duty already paid by the assessee was appropriated.

Held: Regarding incorrect availment of SSI exemption, the SCN is itself unclear as to whether the brand name of 'VSN' found on the assessee's goods is indeed belonging to some other entity - The assessee further claimed that its goods did not bear the brand name of 'NAMASKAR' as alleged by the Department in the SCN - Hence these factual aspects must be verified & duty be recomputed accordingly - In such case, the penalty too must be re-computed - Besides, penalty on the assessee company's owner merits being reduced as it is found that she was hardly involved in the management of day-to-day affairs - Penalty imposed on assessee company u/s 11AC is also reduced: CESTAT (Para 3,4,5,9,10)

- Assessees' appeals partly allowed: HYDERABAD CESTAT