SERVICE TAX

2018-TIOL-3644-CESTAT-MUM + Case Story

Idea Cellular Ltd Vs CST

ST - Free airtime usage given by telecom service provider for employees is taxable - That the amount is first billed and thereafter written off is categorical evidence of a service having been rendered to an individual recipient and liable to tax - Tax liability crystallizes when the debt of the employee is erased - Demand and applicable interest stands - Billings are not attributable to business activity but entirely to personal use by the employees - In the absence of entitlement to such credit, the exercise cannot be claimed to be revenue neutral - Penalty imposed under section 78 of Finance Act, 1994 is confirmed - Owing to the statutory exclusion of simultaneous imposition of penalty under section 76 of Finance Act, 1994, penalty u/s 78 (for a small portion of the demand) is set aside - impugned order upheld with modification in penalty imposed u/s 78 of FA, 1994: CESTAT [para 6 to 9]

- Appeal partly allowed : MUMBAI CESTAT

2018-TIOL-3635-CESTAT-MUM

Sinic Electronics Pvt Ltd Vs CC, CE & ST

ST - Appellant's records were scrutinized which revealed that they were engaged in the activity of providing repair and maintenance service of automation machines installed in banks and collecting service charges on which no service tax was being discharged - it was further learnt that the appellant besides collecting service charges also collected service tax but failed to deposit the same with the government - SCN issued for recovery of ST of Rs.78,00,587/- along with interest and penalty - demand confirmed and appeal filed - apellant submitting that due to severe financial constraint during December 2007 to June 2012, they failed to discharge service tax although collected from service recipients; that later the entire service tax has been paid with interest and, therefore, no penalty u/s 78 of FA, 1994 is imposable.

Held: Findings given by the Commissioner in paragraphs 4.4 and 4.5 have not been rebutted by the appellant by producing any evidence - since during the relevant period, appellant had collected service tax but not deposited the same with the Government, Bench finds no reason not to invoke the extended period of limitation - penalty imposed u/s 78 of FA, 1994 is proper - impugned order upheld and appeal dismissed: CESTAT [para 6, 7]

- Appeal dismissed: MUMBAI CESTAT

2018-TIOL-3634-CESTAT-MAD

STC Technologies Pvt Ltd Vs CST

ST - Assessee is engaged in conducting courses of software testing viz. CATE, CSTP, ADST for various students and other clients - Pursuant to an audit, it appeared to department that assessee was paying service tax only on 50% of gross amount representing training fees; however, not discharging tax liability of remaining 50% amount representing sale value of course material - It appeared that value of course materials would form part of taxable value and hence assessee had not discharged tax liability for the period April 2005 to November 2008 - In respect of amounts related to Franchise service and short payment, conceded by assessee, the said demands as confirmed in impugned order are not interfered with - However, with regard to issue of inclusability of value of course material supplied to assessee, it has been held in a number of Tribunal decisions that the value of such course material is not includible in taxable value - Following the ratio laid down in Tribunal in case of Chate coaching Classes Pvt. Ltd. - 2012-TIOL-714-CESTAT-MUM, the demands made in respective SCNs on value of course material cannot sustain and will require to be set aside - Coming to penalties imposed, as the major amount of demand involved has already been set aside and since in respect of the balance amount conceded by assessee, the predominant portion was already paid up by assessee on being pointed out, all the penalties imposed in the impugned order set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2018-TIOL-3633-CESTAT-HYD

Inventaa Chemicals Ltd Vs CCCE AND ST

ST - The assessee company manufactures bulk drugs & drug intermediates - It is registered under GTA & BAS services & paid service tax on freight inward and outward and service tax on the commission paid under RCM - The Revenue alleged that service tax was not paid on transportation charges paid for procurement of husk - The assessee claimed that the tax liability for the same lay with the supplier - It also claimed exemption under Notfn No 34/2004-ST, claiming that the gross amount of each consignment of husk transported, did not exceed Rs 1500/- & that such goods had been ferried by trucks owners without issuing consignment notes.

Held - It is not clear from the O-i-O as to whether consignment notes were issued by the individual truck & lorry owners - In case of no consignment notes being issued, the case can be excluded from scope of GTA services & no tax is payable - Hence the matter warrants remand back to the original adjudicating authority to examine such issue: CESTAT (Para 1,4)

- Case remanded: HYDERABAD CESTAT

CENTRAL EXCISE

2018-TIOL-3631-CESTAT-MUM

Mahindra And Mahindra Ltd Vs CCE

CX - CENVAT credit of Rs.64,56,066/- availed on inputs procured during the period 2005-06 to 2006-07 denied along with penalty and interest on the ground that exempted goods were manufactured by appellant - Appellant claims that they are not manufacturers of “exempted goods” as they are required to discharge automobile cess and education cess - adjudicating authority held that this claim is not maintainable as appellants, by their own admission, had stopped availing CENVAT credit on inputs after insertion of Explanation III in rule 6(3) of the CCR, 2004 w.e.f 16.05.2005 and had reversed the credit availed on inputs till 1 st June 2005 - appeal to CESTAT.

Held: Finding of the Tribunal in appellant's own case cited as - 2007-TIOL-534-CESTAT-MUM where it is held that reference to ‘duty of excise' in any other law, even if deemed to be ‘duty' for the purposes of the CEA, 1944 does not extend to CCR, 2004 which has been established as the machinery provision for eliminating the cascading effects of taxation, would continue to guide the Bench till it is set aside by appropriate superior court - accordingly, erasure of CENVAT credit in the impugned order cannot be faulted and interest liability in accordance with law would be applicable -as regards imposition of penalty, it is only with the insertion of Explanation III in rule 6(3) of CCR, 2004 that the ineligibility became unambiguously clear - issue was also not free from doubt, hence availment of credit should not be viewed through the prism of attempted evasion or to seek undue benefit - imposition of penalty is, therefore, not warranted - Appeal partly allowed: CESTAT

- Appeal partly allowed: MUMBAI CESTAT

2018-TIOL-3630-CESTAT-MUM

Vidyut Metallics Pvt Ltd Vs CCE

CX - Clearance of semi-finished goods to sister-unit, job workersby discharging duty liability on the AV worked out under rule 8 of Valuation Rules, 2000 at 110% of the cost of production - valuation questioned as well as benefit of notification no. 67/95-CE was denied on the ground that the two units were operating separately.

Held: Single registration in respect of the two units was granted only after intervention by the Bombay High Court, on 23 rd January 2008 - Certificate of single registration, though issued only in 2008 should be deemed to to have been issued from the date of their entitlement to such single registration - with single registration becoming effective from 1st July 2001, the clearances effected thereafter for internal consumption would be exempt as per notification no. 67/95-CE - impugned order to the extent of ordering recovery of CE duty on clearance effected between two units set aside along with penalty - differential duty paid on clearances to job workers is confirmed along with penalty of like amount - appeal is disposed of: CESTAT [para 6, 7]

- Appeal disposed of: MUMBAI CESTAT

2018-TIOL-3629-CESTAT-MUM

Emerson Process Management India Pvt Ltd Vs CCE

CX - Appellant is engaged in the manufacture of Distributed Control Systems (DCS) - Issue in dispute is whether the value of software supplied separately at the option of the buyer is includible in the Assessable value of the DCS - Apex Court has in the case of Grasim Industries Ltd. - 2009-TIOL-108-SC-CX referred the matter to the Larger Bench - It is, therefore, apparent that the matter is not free from doubt and one could hold a bonafide belief that the said value of optional software is not includible in the Assessable value for the purpose of section 4 of the CEA, 1944 - In the instant case, extended period of limitation has been invoked - appeal is, therefore, allowed on the ground of limitation without going into the merits of the case: CESTAT [para 4]

- Appeal allowed: MUMBAI CESTAT