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SERVICE TAX
2018-TIOL-3707-CESTAT-DEL
Shikha Constructions Vs CCE & ST
ST - Assessee is engaged in providing works contract services and errection, commissioning and installation services and are the holders of service tax registration - While scrutinising ST-3 Returns of assessee for the period April 2012 to June, 2012 during course of audit, Department observed that assessee has short-paid the Service Tax for the aforesaid period - Accordingly, a SCN was served upon assessee alleging that he was liable to pay Service Tax at the rate of 12.36% for the impugned period - There is no dispute about the fact that rate of Service Tax till 1st April, 2015 for rendering the work contract service and errection, commissioning and installation service was at the rate of 10.30%, which got enhanced to 12.36% w.e.f. 1st April 2016 It was incumbent duty of assessee to make good the deficiency for disputed period since when the said enhancement had come into effect - But the assessee opted to not to make good the short levy even at the time of filing his ST-3 Return in November, 2012 - The said short payment was never subsequently informed by assessee on his own to the Department - Resultantly, the same was never in notice of Department unless and until they conducted the audit of assessee's record and observed the impugned short levy - The assessee could have well complied with the provision at the time of filing his return for the disputed period in November, 2012 - The failure on his part amounts to violation of provisions of the Act - Non-disclosure of impugned admitted short-levy till the audit conducted by Department is definitely a suppression of relevant fact arising out of assessee's own fault - The possibility of said suppression with clear intention to evade said short payment cannot therefore be ruled out - It is rather held that the assessee despite acquiring knowledge of rate of duty being enhanced has failed to make good the deficiency for disputed period - Assessee had deliberately not made the payment for impugned period - There is no infirmity in the order under challenge - The demand has rightly been confirmed with appropriate interest and proportionate penalties: CESTAT
- Appeal dismissed : DELHI CESTAT
2018-TIOL-3703-CESTAT-MAD Hyundai Motor India Ltd Vs CGST & CE
ST - The assessee-company is a leading manufacturer of automobiles - It has a separate division which sells spare parts - It also procures parts from vendors - The items manufactured & procured were sold by the spare parts division to their dealers - Such spare parts division was sold off by the assessee - A trade mark licensing agreement was forged with the buyer, who would pay a part of its annual sales, to the assessee as fee for trademark license granted to the buyer - On audit for the relevant AY, it was noted that the buyer had carried out valuation of their goodwill by an independent valuator - The Department opined that the amount received as consideration for the transfer of the business included transfer of goodwill also - It was also reasoned that the goodwill was intangible property & classified as intellectual property & that the transfer of the same would fall u/s 65(105)(zzr) of the Finance Act, 1994 - Besides, the Department recomputed the value of the goodwill at a figure considerably lower than the original amount - Duty demand was raised with interest to recover the remaining amount - Penalties were imposed as well.
Held: The mandate of Section 65(55b) is that only transfer of intellectual property recognized under Indian law is taxable - Moreover, the Karnataka High Court in Commissioner of Income Tax Vs. Associated Electronics and Electrical Industries (Bangalore) Pvt. Ltd. found that trademark & goodwill were distinct concepts - Hence goodwill of business has no existence except in connection with the continuing business - In Alstom T&D Ltd. the Tribunal held that transfer of such trademark which has not been recognized or registered within India will not fall within the ambit of Intellectual Property Right Service - Therefore, transfer of goodwill will not fall within the definition of IPR service u/s 65(55b) of Finance Act, 1994 - Besides, the valuation derived by the Department for the goodwill is also without any logic or basis - Hence the demands merit being set aside: CESTAT (Para 1,5.1-5.3)
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Assessee's appeal allowed
: CHENNAI CESTAT
2018-TIOL-3702-CESTAT-MAD
Philips Electronics India Ltd Vs CST
ST - Assessee is engaged in manufacturing and marketing of lighting consumer life style and healthcare products - They entered into several agreements with their overseas group entity in the Netherlands under which they avail infrastructure services for which payment was made by the former - SCN was issued to assessee inter alia demanding service tax on such payments made to the overseas group entity under category of "Online Information and Database Access or Retrieval" (OIDAR) services - The main take away from the definitions is that services provided should facilitate not only online information but also Database Access or Retrieval - It appears to reason that the infrastructure services are nothing but a spider web group which connects Philips Netherlands to all its locations worldwide through the Wide Area Network (WAN) of internet protocol - For such Philips Global Network Services, payment is made on the basis of invoices raised by Philips Netherlands towards maintenance of server/portal, license fees, server software maintenance cost, infrastructure for global platform, hiring of web space for storing data, management and maintenance of web portal, licence cost for access for wireless WAN environment and Directory services for listing - Some of these services which can be availed by Philips locations and employees are of the nature of "Calendaring and Scheduling Directory, Philips e-mail and file back up - In any case, all these infrastructure services are only in the nature of providing intra connectivity between Philips locations worldwide and the payments made are obviously then for sharing of the maintenance cost between the Philips' units and not as fees for supply of online information or retrieval of data from the portal - The impugned infrastructure services cannot by any stretch of imagination be brought within the fold of "Online Information and Database Access or Retrieval" - Hence the impugned order to the contrary will therefore not sustain: CESTAT
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Appeal allowed
: CHENNAI CESTAT
2018-TIOL-3701-CESTAT-AHM
Jmc Projects Ltd Vs CST & ST
ST - The assessee-company claimed refund of tax, on grounds of having provided services to an SEZ developer & that such services had been consumed in the SEZ itself, due to which no service tax was payable on them - The assessee also claimed that service tax had erroneously been paid by them & so merits being refunded - The adjudicating authority rejected such refund on grounds of unjust enrichment - It was held that the assessee had shown the service tax over & above the contract price in the invoice & so did not establish that the burden of tax had not been passed onto the service recipient - Such findings were upheld by the Commr.(A), who however, gave no findings regarding unjust enrichment.
Held: From relevant material on record, it is established that the services had been provided to co-developer of SEZ - Moreover, services provided to approved co-developer of SEZ is exempted from payment of service tax - Hence the service tax paid by the assessee is refundable - Considering the certificate issued by the service recipient, it is seen that the assessee did not recover the service tax from it - Besides, the adjudicating authority must verify the balance sheet as to whether the refund amount shown as receivable on the asset side in the balance sheet - If found receivable, the refund cannot be hit by unjust enrichment - Hence the order denying refund is set aside: CESTAT (Para 1,5,6)
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Assessee's appeal allowed
: AHMEDABAD CESTAT
2018-TIOL-3700-CESTAT-MAD
Tuticorin Gymkhana Club Vs CGST & CE
ST - The assessee is providing recreational services under category of “Club or Association Services” - They are providing these services to its members for a consideration as subscription fees - Apart from this, they are providing the facility of restaurant exclusively to its members and guests and also leased out a part of their premises for the purpose of catering facility on a monthly lease rent - A SCN was issued by Revenue proposing to demand service tax along with applicable interest and penalties - The demand of short payment relates to period 2008-09 to 2010-11 and therefore, the ratio decidendi in the case of M/s. Handloom Export Promotion Council 2018-TIOL-3032-CESTAT-MAD is squarely applicable - Following the same, demand on short payment on the Club and Association Services is not sustainable - With regard to Renting of Immovable Property Services, in the very same case of M/s. Handloom Export Promotion Council 2018-TIOL-3032-CESTAT-MAD , this Bench has taken a view that the same fell within the taxable category and therefore, the demand as well as applicable interest is sustained - With regard to Restaurant Service, assessee's claim was that there was no shortfall whatsoever - The assessee had further claimed that the alleged difference was on account of difference in the abatement rates applicable prior to and post 01.07.2012 which was at 70% and 60% respectively - This issue requires fresh adjudication in the light of the assessee's explanation supported by its income and expenditure statement and other material documents - Therefore, while upholding the leviability of service tax on Restaurant Services, deem it proper to set aside this issue alone to the file of the adjudicating authority to examine afresh in the light of assessee's explanation - On the issue of penalties, issue of taxability under the Clubs and Association Services was mired in litigation and was only laid to rest by the decision of High Courts - With regard to Renting of Immovable Property Services provided by assessee, the assesssee was under a mistaken assumption that there would be no tax liability since the assessee had leased out its own premises and that there was no short payment on Restaurant Service - This being so, there was reasonable cause for the failure to discharge impugned tax liabilities, hence impositions of penalties are unjustified: CESTAT
- Appeal partly allowed : CHENNAI CESTAT
CENTRAL EXCISE
2018-TIOL-3706-CESTAT-DEL
Suncity Strips And Tubes Pvt Ltd Vs CGST
CX - The assessee have established their factories in the State of Rajasthan and were operating under Rajasthan Investment Promotion Scheme which was notified by Government of Rajasthan with the objective of facilitating investment in establishment of new enterprises under the various schemes of Rajasthan Government - The assessee was eligible for subsidies as per the various schemes applicable to assessee and he was required to deposit VAT/CST/SGST at the applicable rate with Government and in terms of the scheme notified, will be entitled to disbursement of subsidy by appropriated authority - The subsidy concern is sanctioned and disbursed in Form 37B and as such challans in form VAT 37B can be utilised for discharge of VAT liability of assessee for subsequent period - The Revenue was of the view that VAT liability discharged by utilisation of investment subsidy granted in Form 37B actually paid, for the purpose of Section 4 of Central Excise Act - Identical issue has come up before the Tribunal in case of Shree Cements Ltd. 2018- TIOL-748-CESTAT-DEL - By following the same, impugned orders set aside: CESTAT
- Appeals allowed : DELHI CESTAT
2018-TIOL-3705-CESTAT-MAD
Sambandam Spinning Mills Ltd Vs CCE
CX - Appeals have been filed by Unit - I & II respectively of M/s. Sambandam Spinning Mills Ltd. - Both these assessees were engaged in manufacture of cotton yarn and also undertaking job work of reeling, rewinding, doubling of cotton yarn received from their sister units / group companies - Department took the view that assessee had not adopted correct assessable vale in respect of such transactions and that valuation should have been done as per Rule 9 r/w Rule 8 of CEVR, 2000; that assessable value will be 115% of the cost of production of such goods - M/s.Kandagiri Spinning Mills Ltd. a sister /group unit of assessee, also had two units under the name and style of M/s. Kandagiri Spinning Mills Ltd. Unit - I & II - These units, in addition to manufacture of cotton yarn on their own account, had also similarly undertaken further processing of reeling, rewinding, doubling of cotton yarn received from their own units on job work basis - Similar allegation was raised by department - The demands in that respect which were confirmed by original authority were set aside by Commissioner (A) - The lower appellate authority therein took the view that adjudication of assessable value by original authority is contrary to the decision of Supreme court in case of Ujagar Prints Ltd. 2002-TIOL-03-SC-CX-CB and also contrary to the CBEC Circular dated 19.1.2002 - There is nothing on record to show that the department has filed appeal against this order of Commissioner (A) - This being the case, ratio laid down by Supreme Court in Marsons Fan Industries 2008-TIOL-59-SC-CX and Jayaswals NECO Ltd. 2006-TIOL-21-SC-CX will apply - Hence, it is not open for the department to take a different stand subsequently in respect of sister unit of assessee on the very same issue on which a contrary stand had been taken earlier - The SCNs have been issued in 2006 invoking extended period alleging suppression of facts - When there were decisions in favour of assessee in case of their group concern (Kandagiri Mills) and also decision of Tribunal in S. Kumar, assessee cannot be saddled with guilt of suppression of facts - If duty is paid, the sister concern would be eligible for credit - The impugned order cannot sustain as the demand is hit by limitation: CESTAT
- Appeals allowed : CHENNAI CESTAT
2018-TIOL-3699-CESTAT-ALL International Tobacco Company Ltd Vs CCE
CX - The assessee-company manufactures cigarettes on job work basis - It availed Cenvat credit on inputs - During period of dispute, some consignment of cigarettes were returned by the principal for their refreshing - The assessee availed Cenvat credit for a certain period - It was utilized for clearance of fresh stock of cigarettes - The Department challenged such availment on grounds that refreshing of cigarettes is not covered under Rule 16 of CER 2002 - Duty demand was raised with interest & imposition of penalty for recovery of such credit. Held: It is seen that the returned cigarettes were were brought back to the factory under circumstances specified u/r 16 of CER 2002 along with Forwarding Challan-cum-Invoice counter signed by the Departmental officer - Rule 16 is wide enough to cover the assessee's case, considering its wordings "...any other reason..." for receiving duty paid goods - As the goods are duty-paid in the present case, the provisions of Rule 16 apply squarely - Hence the availment of credit is correct in law - The duty demands are set aside as is the personal penalty imposed on the manager in the assessee-company: CESTAT (Para 2,5,6,7)
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Assessees' appeals allowed
: ALLAHABAD CESTAT
2018-TIOL-3698-CESTAT-MAD
India Oil Corporation Ltd Vs CCE
CX - The assessee-company utilized Cenvat credit on service tax paid towards Port services when rendering Storage & Warehousing services - The Department challenged such availment of credit on grounds that the assessee received full re-imbursement from the customer - It was also alleged that credit was availed on service tax paid to Tanker Surveyors/Tanker Agencies which are related to import and unconnected with Storage & Warehousing Services - Duty demand was raised with interest for recovery of such credit - Penalties were imposed too - Such demands were sustained by the Commr.(A).
Held: The issue of re-imbursement was not raised in the earlier SCN that had been issued to the assessee - Hence the invokation of extended limitation is legal & proper - However, the assessee was under bona fide belief of being eligible for credit since the earlier SCN only contested eligibility of credit on storage & warehousing services rendered to one client - Hence the equivalent penalty is unjustifed & must be set aside - However, the duty demand & interest is sustained: CESTAT (Para 2,6,7)
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Assessee's appeal partly allowed
: CHENNAI CESTAT
CUSTOMS
2018-TIOL-3704-CESTAT-AHM
Jagson International Ltd Vs CC
Cus - M/s ONGC has floated e-tender for charter hire of off-shore rig under international competitive bidding - The assessee (Jagson) being successful in said bid, accordingly awarded the LOA for period of three years - Conequently, Jagson had imported the rig ‘Deep Sea Treasure' without payment of duty availing benefit of Notfn 12/2012-cus - They have also imported Components and parts of said rig by filing bills of entry at other ports - On the basis of intelligence received by Customs Dept., that the contract for deployment of Deep Sea Treasure was cancelled by ONGC and Jagson had not deployed the said rig for Oil exploration, the Rig Deep Sea Treasure with its parts and components was seized by Customs department and after adjudication, the same was confiscated and duty forgone was confirmed with interest and also penalty imposed on M/s Jagson - There is no difficulty to conclude that by not putting into use the imported Rig Deepsea Treasure for petroleum operation/exploration at the Licensed oil block of ONGC, irrespective of reasons for such non-use, there has been violation of condition of Notfn 12/2012 Cus., consequently, the said Rig Deepsea Treasure has been rightly confiscated by adjudicating authority, under Sec.111(o) of Customs Act, 1962 and the same is upheld; also imposition of penalty under Sec.112(a) of the Customs Act, 1962 is justified, as no mens rea is required for said violation, in view of principle laid down in case of Bansal Industries 2006-TIOL-317-HC-MAD-CUS - Even if the duty has been confirmed under section 28(1) of Customs Act, 1962, but since its payment is referable to Sec.125(2) of Customs Act, 1962, and the assessment and applicable duty needs to be determined before release of goods, accordingly, the confirmation under Sec.28(1) becomes irrelevant, and the duty so determined, is payable under Section 125(2) of Customs Act, 1962, in exercise of the option to redeem the goods confiscated - In directing recovery of the amount of duty, fine and penalty from ONGC, in the event, the sub-contractor M/s Jagson defaults in making such payments, it is worth mentioning that after cancellation of LOA, M/s ONGC immediately enforced the Bank Guarantee executed by sub contractor M/s Jagson and recovered the guarantee amount equal as damages, however, they chose not to discharge the customs duty claimed as an exemption at the time of import of the Rig Deep sea Treasure, on filing necessary certificates of DGHC, affidavit of ONGC on the bonafide of the Sub-contractor and letter of undertaking to discharge the duty, fine and penalty, on cancellation of LOA - On the contrary, without seeking any permission of the department, M/s ONGC kept on insisting the sub-contractor to re-export the rig in absence of any such stipulation in the Notfn - Also, as on date, M/s ONGC has not made it clear whether the said rig would be used in future for oil exploration or otherwise - Thus, the direction of adjudicating authority that in the event M/s Jagson defaults in payment of duty, fine and penalty, the same should be recovered from M/s ONGC is upheld.
Taking note of the fact that imported Rig Deepsea Treasure have not been put to use since the LOA has been cancelled by M/s ONGC and the Rig has been lying idle, as informed by both the assessees, though there was no request for re-export of the goods advanced by M/s Jagson before the adjudicating authority, however, in the interest of justice, in the event, such a request if made by M/s Jagson as the purpose for which it was imported not achieved, the Commissioner consider the same, within framework of the Customs Act, 1962 and the Rules made thereunder: CESTAT
- Appeals disposed of : AHMEDABAD CESTAT
2018-TIOL-2559-HC-MAD-CUS
Vel Enterprises Vs CC
Cus - The writ petitions were filed by the same petitioner-Firm, however, by showing one was filed by the proprietor viz., D.Prasanth and the other by one Mohamed Ameerudeen, claiming to do the business of port consignments, partner of petitioner Firm - The facts would disclose that the petitioner is trying to play fraud with the Court by filing two writ petitions for the same relief represented by two persons with an obvious intention to get some order by suppressing the material facts - The petitioner who filed WP.No.27352 of 2018 sought permission of this Court to withdraw this writ petition and he has also given a letter to the Registry on 31.10.2018 - The conduct of petitioner would show that filing of these two writ petitions, one after another for the same relief in total suppression of the factum of the pendency of earlier writ petition is undoubtedly, an act which cannot be pardoned, by simply dismissing the subsequent writ petition as withdrawn - Therefore, Court is not inclined to entertain both the matters any further and is also of the view that these writ petitions should be dismissed with exemplary costs, so that the petitioner will not indulge in such acts in future - Accordingly, both these writ petitions are dismissed with costs of Rs.50,000/- within a period of four weeks: HC
- Writ petitions dismissed: MADRAS HIGH COURT
2018-TIOL-3697-CESTAT-DEL
Hlpl Global Logistics Pvt Ltd Vs CC
Cus - The assessee, a CHA firm had been appointed by importer viz. Newtex Exim Pvt. Ltd. for clearance of their cargo - The assessee after verifying and satisfying themselves all these documents, have filed the Bill of Entry for clearance of rough diamond imported on behalf of their client - However, the consignment was detained by Commissioner for alleged undervaluation and subsequently the valuation of imported consignment was determined by the jewellery appraiser on 10.2.2010 - The issue is to decide as to whether the assessee has any role in deliberate overvaluation of imported goods by importer and also whether they have failed to verify KYC norm as per CBLR, 2013 - The present SCN is issued in continuation to the earlier SCN issued by DRI where provisions of Section 124 of the Act has been invoked - The assessee has not provided the copies of these orders so as to arrive at the conclusion as to whether the impugned SCN and adjudication order is extension of previous SCNs along with addendum which has been clearly spelt out with adjudicating authority - Therefore, the present SCN in effect has to be treated as having been issued under Section 124 of Customs Act in effect has to be treated as proviso under 110(2) of the Act - Regarding the following of KYC norms by assessee, the statement of Shri Vivek Sharma, the employee of M/s HLPL, has stated that when he went to collect the documents, Shri Uday Bhagat asked him to come in a street at Fatehpuri, wherein he was standing before a building which did not have any sign board or bear a number - It is seen from adjudication order that the declared residential premises of Shri Uday Bhagat and Shri Sunder Prakash Sharma, the Directors of M/s Neotex Exim Pvt. Ltd. that they were not residing at the declared premises - The adjudicating authority also found that IEC of importer revealed that no firm/business enterprises in the name of M/s Neotex Exim Pvt. Ltd. existed at the given address and the enquiries conducted at the declared residential premises revealed that the said address was incomplete or fictitious - CHA helps not properly verified the functioning of the client from at the declared address by using reliable independent and authenticate documents - This was a serious lapse on part of CHA in verifying KYC before taking up the Custom clearance of consignment of rough diamond imported by M/s Neotex Exim Pvt. Ltd. - The assessee considering the nature of imported goods i.e. rough diamond, would have exercised more vigilant approach before taking up the consignment for Customs clearance after verification of KYC norms of the importer, which has not been done in this case - The impugned order is correct, legal and proper under the provisions of Customs Act and merits no interfere: CESTAT
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Appeals rejected
: DELHI CESTAT
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By Dr G Gokul Kishore 
