SERVICE TAX

2018-TIOL-3588-CESTAT-MAD

Krishna Mills Pvt Ltd Vs CCE

ST - Dispute in both the appeals concern taxability on amounts received by assessee towards renting of immovable properties such as commercial complex, shops and lands to various parties - The lower authorities have confirmed the demands of service tax with interest on such amounts under the head Renting of Immovable Property and have also imposed penalties under various provisions of FA, 1994 - The ratio laid down by High Court of Delhi in Home Solutions Retails India Ltd. - 2011-TIOL-610-HC-DEL-ST-LB and Ritika Pvt. Ltd. which had upheld the constitutional validity of levy of service tax of renting of immovable property has been consistently followed by this Bench in all recent decisions - No doubt, appeals against these judgments have been admitted by Supreme Court but there is no stay on operation of these judgments - The Supreme Court in UTV News Ltd - 2018-TIOL-124-SC-ST has found it proper to defer decisions in these matters awaiting the judgment of nine Judge Bench in Mineral Area Development Authority and Others - In the interests of justice, all these appeals should be kept in abeyance pending the decision of Supreme Court in all the three cases, since the final outcome therein will have a translational impact and affect the decision in all such matters as covered in these appeals - It would be appropriate and prudent to close the files in respect of all these appeals for the purpose of statistics: CESTAT

- Appeals disposed of : CHENNAI CESTAT

Zenith Birla India Ltd Vs CCGST

ST - Appellant had not paid the service tax which was liable to be paid by them under the reverse charge mechanism - while scrutinizing the records, department noticed the same and thereafter the appellant paid the same along with interest - SCN was issued and the matter was adjudicated by confirming the service tax demand of Rs.15,23,858/- and imposition of equivalent penalty u/s 78 of the FA, 1994 and penalty u/s 77 of FA, 1994 - appellant challenges the penalty imposed u/s 78 of FA, 1994.

Held: Period involved is December 2013 to March 2015 - On perusal of the Audit report dated 17/03/2016, it is found that the objections were raised by the department based on the service tax returns, trial balance, ledger and final accounts maintained by the appellants - in case, when the assessee maintains specified records, the proviso appended to s.78 of the FA, 1994 mandates that imposition of penalties should be restricted to 50% of the determined amount of service tax - since the statutory provisions are clear about the quantum of penalty in case of maintenance of records by the assessee, equal amount of penalty imposed cannot stand judicial scrutiny - penalty reduced to 50% of the tax confirmed - appeal partly allowed: CESTAT [para 4, 5]

- Appeal partly allowed : MUMBAI CESTAT

Superior Shared Services India Pvt Ltd Vs CST

ST - The assessee, a service provider under category of Manpower Recruitment and Supply Agency Service, filed an application for refund under Rule 5 of CCR, 2004 - Commissioner (A) while upholding the order rejecting the refund for invoices raised for period October, 2011 to December, 2011, has reversed the rejection of refund claim for the invoices raised for the period January, 2012 to March, 2012 - The assessee's claim with regard to invoice 9/2011-12 satisfies the relevancy test as held by Larger Bench and therefore, refund claim allowed only with regard to this extent - Further, as the claim with regard to invoice 7/2011-12 and 8/2011-12 are not pressed, no finding on these two items is given nor is considered - Hence, appeal is allowed partly on the third invoice with consequential reliefs, if any: CESTAT

- Appeal partly allowed : CHENNAI CESTAT

2018-TIOL-3574-CESTAT-MUM + Case Story

CCE Vs Gaurav Heavy Engineering India Pvt Ltd

ST - Revenue should have, as per the order of Commissioner(A), made the calculation of the Service Tax payable rather than filing the appeal - respondents had substantially complied with the requirements of the Notification No 12/2003-ST and benefit of the said Notification cannot be denied while computing the value for payment of Service Tax on the taxable services provided by them - Revenue should have, as per the order of Commissioner (Appeal), made the calculation of the Service Tax payable after allowing the benefit of Notification No 12/2003-ST and recovered the amounts, if any, that were not paid, rather than choosing to file the present appeal - Revenue appeal dismissed: CESTAT [para 8, 9.2, 9.3, 9.4]

- Appeal dismissed : MUMBAI CESTAT

CENTRAL EXCISE

2018-TIOL-2476-HC-MUM-CX

Tube Products Of India Vs CCE

CX - In the matter of Revenue appeal filed before the CESTAT, notice of hearing was served on appellant but due to a communication gap, the counsel for the appellant could not remain present before Tribunal - Consequently, Tribunal decided matter ex parte and allowed Revenue appeal - Application for rectification filed by appellant was also dismissed and, therefore, appeal filed before High Court - appellant submitting that Tribunal ought to have given at least one chance to allow representation.

Held: High Court notes that the notice of hearing issued by the Tribunal was for the first date and it is not a case that the Appellant had consistently remained absent in past also - In the larger interest of justice, order of Tribunal is set aside and matter remanded for decision on issues after hearing both sides - Appeal disposed of: High Court [para 7 to 9]

-Appeal disposed of : BOMBAY HIGH COURT

2018-TIOL-3585-CESTAT-BANG

Rail Wheel Factory Vs CCE, C & ST

CX - The assessee company is wholly owned by the Indian Railways - It manufactures Wheels & Axle sets for captive consumption by various workshops, loco works and coach works owned by the Railways - Such supplies made to the Railways were exempted from duty by virtue of Notfn No 62/1195-CE - Besides, 98% of clearances were not sales & book adjustments used to be made - 2% was cleared to private entities upon payment of duty - The assessee availed Cenvat credit of both inputs as well as capital goods - The assessee did not maintain separate accounts for inputs used in manufacturing dutiable & exempted goods & so reversed 8% of the value of clearances made to the Railways, as per Rule 57 of CER 2002 & Rule 6 of CCR 2001 - The assessee decided to opt out of the MODVAT scheme & informed the jurisdictional commissionerate about the same - However the assessee omitted to follow the correct procedure for opting out - SCN was issued seeking recovery of credit - Duty demands were raised with interest & were later re-quantified by the Commr.(A) - Meanwhile, the assessee was also eligible to receive refund arising from different set of proceedings - However, such refund amount was appropriated by the Department & adjusted against tax payable by the assessee - When deciding the assessee's stay appeal, the Tribunal later held that the Department could retain such refund amount till final disposal of appeal.

Held: The assessee paid the duty re-quantified by the Commr.(A) - Besides, the Commr.(A) took a fair & judicious view by permitting the assessee to retrospectively opt out of the MODVAT credit scheme - Thus the proposal in the O-i-O to recover full amount of credit was correctly rejected & the re-quantification of duty is correct - Hence the O-i-A in challenge warrants no interference: CESTAT (Para 1,1.2,1.3,5,6,7)

- Assessee's appeal dismissed : BANGALORE CESTAT

CC & CE Vs Salasar Techno Engineering Pvt Ltd

CX - The assessee company, engaged in manufacturing Galvanized Tower, used Zinc as an input - During the process, Zinc Dross & Zinc Ash emerged as waste - The Revenue opined that the assessee did not account for the production or clearance of either Zinc Dross or Zinc Ash or pay duty on either - Hence duty demand was raised - Such demand was dropped by the Adjudicating authority, on grounds that Zinc Dross & Zinc Ash could not be treated as excisable commodities.

Held: The Bombay High Court in Hindalco Industries Limited Versus Union of India held that Dross and skimming of aluminium, zinc or other non-ferrous metal are waste & not dutiable - In light of this decision, the O-i-O in challenge warrants no interference: CESTAT (Para 2,3,6)

- Revenue's appeal dismissed : ALLAHABAD CESTAT

Shree Balaji Furnaces Pvt Ltd Vs CCE & CGST

CX - The assessee company is engaged in manufacturing MS Ingots - It declared input-output ratio in ER-5 returns of 1.1 MT of scrap for manufacture of 1.0 MT of MS Ingots - The Department alleged that during the relevant period, the assessee accounted for production of MS Ingots lesser than what would arise as per the formula by consumption of scrap accounted by the Department - Hence demand was raised for differential amount of duty based on presumption of short accountal of production - On appeal, the Commr.(A) merely reduced the quantum of the duty demanded.

Held: The issue at hand is whether demand raised based on arithmetical calculation can be sustained - The Revenue's allegation of clandestine clearance is unsupported by any evidence & the duty demand is based on presumptions further based on the formula based on the assessee - An allegation of clandestine clearance must be based on tangible documentary evidence & oral evidence, none of which is put forward by the Revenue - The Tribunal in Easter India Chemicals Ltd. and Raj Tandon vs. CCE, Ghaziabad set aside duty demand based entirely on formula declared in the ER-5 returns - Hence the duty demand is unjustified: CESTAT (Para 2,8-11)

- Assessee's appeal allowed : DELHI CESTAT