SERVICE TAX

2018-TIOL-3749-CESTAT-MAD

Rakindo Kovai Township Ltd Vs CGST & CE

ST - Appellant is a JV formed to develop a township at Coimbatore -as a part of preparatory work for the development of the proposed township, appellant engaged some foreign companies - Appellant, therefore, got themselves registered on 03.01.2008 under the category of ‘Consulting Engineer Service' for discharging service tax under reverse charge mechanism - department viewed that appellant is not entitled to take credit of such service tax paid by them for the input services received from foreign company on the ground that at the time of availing such services, they had not registered themselves for providing any output service - SCN issued for the period April 2009 to March 2010 and demand of Rs.79,26,871/- confirmed along with interest and penalties - Also, the Appellant had availed CENVAT credit of Rs.1,58,89,282/-for the period March 2008 to March 2009 and the department was of the view that the said credit which are availed on various input services are not eligible for the reason that the appellant has not obtained service tax registration for their output service which is works contract service / construction of complex service - That since the appellant had registered for their output service of works contract service only on 23.10.2009, the credit availed prior to this date is not eligible - demand on this count also confirmed with interest and penalties - appealsagainst both these orders before CESTAT.

Held: During the disputed period, there was no bar for taking the credit of the service tax paid under reverse charge mechanism - following the decision in Aravind Fashions Ltd. [2011-TIOL-748-HC-KAR-ST] disallowance of credit is incorrect and the impugned order to the said extent is set aside - As for denial of credit on the ground that the appellant has not started providing ouput service and have taken registration under WCS/Construction service only w.e.f 23.10.2009, said issue has been sufficiently analysed by the Karnataka High Court in the case of Tavant Technologies [2016-TIOL-441-HC-KAR-ST] by following the decision in mPortal India Wireless Solutions Pvt. Ltd. [2011-TIOL-928-HC-KAR-ST] and where it is held that for availing as well as refund of unutilized credit, registration is not required - There is no rule or statutory provision which makes registration a condition precedent for availing credit - similar view was taken by Tribunal in the case of Spandana Spoorthy Financial Ltd. [ 2016-TIOL-2284-CESTAT-HYD ] - following the said decisions, disallowance of credit on both counts in unjustified - impugned orders are set aside and appeals are allowed with consequential relief: CESTAT [para 6, 6.1, 6.2, 6.3]

- Appeals allowed: CHENNAI CESTAT

Travancore Titanium Products Vs CC

Cus - The assessee is a State Government entity, engaged in manufacturing Titanium Dioxide, Sulphuric Acid & Potassium Nitrate - The assessee sought to install Pollution Control Equipments & so obtained 7 EPCG licenses for importing such capital goods at concessional rates of duty - However, due to financial difficulties, the assessee was unable to install some of the machinery - When it sought extension of time limit for installation of goods, the same was denied by the Revenue, which then proceeded to demand duty foregone on such imported machinery - Demand for interest was raised too - The Commr.(A) upheld the demands - Later, the Tribunal granted the time extension to the assessee, considering the bona fide reasons behind delay - However, the assessee was yet unable to complete the installation work - Further extension of time was denied on grounds that the assessee failed to comply with the Tribunal's directions.

Held: The assessee is primarily dependent on State Govt funds - It is seen that such equipment is being installed upon insructions of the Apex Court - Besides, the assessee's funds had been utilized towards another project - In light of the genuine difficulty faced by the assessee in completing the installation in time, the extension sought by the assessee is allowed up to Dec 31, 2018: CESTAT (Para 4,8)

- Assessee's appeal allowed: BANGALORE CESTAT

2018-TIOL-3747-CESTAT-KOL

SK Samanta And Company Pvt Ltd Vs CST

ST - The assessee, consequent to award of job/project as per tenders, had entered into agreements with their clients for supply of equipments and accessories and forworks and services - Assessee divided the job-project by entering into two separate agreements with each of said client, one for supply of plant, machinery, equipments and the second agreement for works & services, namely, erection, installation and commissioning services - They discharged service tax w.e.f. 01.04.2006 on the second set of agreements relating to erection, installation, and commissioning services by availing benefit of Notfn 19/2003- ST and Notfn 1/2006-ST - A SCN was issued denying the abatement availed under said Notfns and demanded service tax on entire taxable value of erection, installation and commissioning services w.e.f. 01.07.2003 to 30.09.2007 - Considering the nature of contract entered by assessee and services rendered to their clients, it is beyond doubt that they are engaged in providing EPC contracts, which falls under category of Works Contract Acts - The exclusion of two separate agreements by assessee with their clients, will not alter the fact that this is part of one contract and also for the cross fall breach condition, which makes both the contracts related as per condition of contract, the failure in one, will lead the cancellation of other assessee - The levy of service tax on works contract, has been the subject matter of appeal before Supreme Court in case of Larsen & Toubro Ltd. - 2015-TIOL-187-SC-ST - In the said judgement, it has been held that leviability of service tax prior to 1st June, 2007, whereafter FA, 2007, expressly made such contracts liable to service tax is not as per the Scheme of FA, 1994 - It was held in this case that it has been also held that the service contract referred in charging Section 65 (105), refers only to the contracts simpliciter and not to composite works contracts - The service tax is not leviable on assessee prior to 01.06.2007 and therefore, the demand is only left for the period from 01.06.2007 to September, 2007.

In the earlier classification of assessee, the erection, installation and commissioning services, would not preclude them from the benefit under Works Contract Service - Even otherwise, as per the decision of Supreme Court in case of Safety Retreading Co.(P) Ltd. - 2017-TIOL-28-SC-ST wherein it has been held that assessee was not liable to pay service tax on total amount for retreading including value of materials/goods that have been used and sold in execution of contract - The service rendered by assessee will squarely fall under category of Works Contract Service classifiable under Chapter Heading 65(105)(zzza) of FA,1994 and liable to service tax only w.e.f. 01.06.2007 - In this case, Tribunal is guided by decision of Bombay High Court in case of Indian National Shipowners Association - 2009-TIOL-150-HC-MUM-ST wherein it has been held that creature of new entry in the Act, makes it clear that the earlier service rendered was not covered under the previous legislative under FA, 1994.

As far as the Department’s Appeal is concerned, the same is not sustainable in view of the fact that the appeal of assessee is upheld - Accordingly, the contract covered by second agreement is appropriately classifiable under the Work Contract Service under FA, 1994 and not under the Erection, Commissioning and Installation Service, and therefore not chargeable to service tax prior to 01.06.2007 - However, for the period starting from 01.06.2007 to 30.09.2007, assessee has paid the service tax under Erection, Commissioning and Installation Service after availing the benefit of Notfns 19/2003-ST and 1/2006-ST, the same is required to be recomputed and any excess or short payment is required to be adjusted as per extant provisions under the Act/the Rules - In the result, the appeal filed by assessee is allowed partially with consequential relief and the appeal filed by the Revenue is dismissed: CESTAT

- Assessee's appeal partly allowed: KOLKATA CESTAT

CENTRAL EXCISE

2018-TIOL-3746-CESTAT-DEL

GP Global Industries Pvt Ltd Vs CCE & ST

CX - The appeal has been filed from impugned order wherein the Commissioner confirmed the demand of Central Excise Duty along with interest and penalty on assessee for clandestine removal of MS ingots - Penalty has also been imposed upon Shri Sapan Khetan in terms of Rule 26 of CER, 2002 - So far as the statement of Shri Sapan Khetan is concerned, while going through the same, he nowhere acknowledge the clearance of MS ingots - Therefore, apart from the third party statement, no other corroborative evidence has been produced by Department - The SCN is mainly based upon the entries recorded in diary of third party i.e. one Sh. S.K. Pansari proprietor of M/s. Monu Steel - The entire case of Revenue is based upon the records recovered from said Sh. S.K. Pansari proprietor of M/s. Monu Steel - The assessee did not admit the liability and rather submitted that Revenue has not adduced any corroborative evidence to show the movement of goods from premises of assessee to the premises of any buyers or the customers nor they brought on record any evidence as to who is buyers of goods allegedly sold through M/s Monu Steel - In the impugned order nowhere it has been discussed as to how the demand of duty is sustainable in the absence of any clinching evidence of clandestine manufacture and removal of goods - The entire demand is based upon the records recovered from Sh. S.K. Pansari proprietor of M/s Monu Steel - There is no evidence except the said statement and private diary entry of 3rd party i.e. of Sh. S.K. Pansari which contains the name of the assessee - The High Court of Judicature at Allahabad in Continental Cement Company - 2014-TIOL-1527-HC-ALL-CX and also this Tribunal in Raipur Forging Pvt. Ltd. - 2016-TIOL-1121-CESTAT-DEL and Anand Founders & Engineers - 2015-TIOL-2655-HC-P&H-CX have categorically held that the findings of clandestine removal cannot be upheld based upon the third party documents unless there is clinching evidence of clandestine manufacture and removal of the goods - Recently also this tribunal in a batch of matters vide common order set aside the demand since the entire case of the Revenue is based upon the entries made in the records of M/s. Monu Steel without there being any corroborative evidence - The impugned order is set aside - As a result the penalty imposed on Sh.Sapan Khetan, Director is also set aside: CESTAT

- Appeals allowed: DELHI CESTAT

2018-TIOL-3745-CESTAT-HYD

CCE & CC Vs Shivganga Industries Ltd

CX - The assessee is an SSI unit manufacturing Plywood & Veneer - It was established after purchasing the assets of another company - The erstwhile company was liable to pay Excise duty & had defaulted in repaying loans taken from Andhra Pradesh State Financial Corporation - Hence its assets, plant & machinery had been seized by the APSFC & then auctioned, whereupon the assessee purchased the same - During period of dispute, the Revenue demanded from the assessee that duty which was payable by the erstwhile company - As the assessee did not pay the same, the Revenue proposed to attach the plant, machinery & finished goods - On appeal, the Commr.(A) set aside the attachment order, on grounds that the erstwhile company did not continue operations and that the assessee could not be held liable for its tax dues.

Held: Section 11 of the CEA 1944 pertains to recovery of sums payable to the Govt - While the Apex Court in Macson Marbles Pvt. Ltd. vs. Union of India did hold that the tax liability would continue even if the assets are taken over & resold by the State Financial Corporation - However, such judgment referred to Rule 230(20) of Central Excise Rules 1944 - Hence this case is inapplicable to the present case & so the duty demand was correctly set aside by the Commr.(A): CESTAT (Para 1,2,5)

- Revenue's appeal dismissed: HYDERABAD CESTAT

2018-TIOL-3744-CESTAT-AHM

CCE & ST Vs Fitwell Technologies Pvt Ltd

CX - Question of law involved is that whether the goods manufactured by job worker and cleared to principal which subsequently sold by principal after certain activity would be valued in terms if Rule 10A (ii) or otherwise - Commissioner (A) has heavily relied upon the decision in case of Rolastar Pvt. Ltd. - 2012-TIOL-23-CESTAT-AHM and in case of Advance Surfactants India Ltd. - 2011-TIOL-757-CESTAT-BANG - Ongoing through these judgments, it is found that firstly in all these judgments, the period involved is prior to insertion of Rule 10A(ii) - Moreover, in said judgments, the facts was totally different as the goods manufactured on job work basis were cleared to the principal and the principal have used such job worked goods in the manufacture of their final product, therefore, the goods manufactured on job worked basis were not sold as such, whereas in the present case, the goods manufactured by the job worker were sold by the principal - The only point involved in the present case is that whether the activity carried out by the principal has changed the nature of goods cleared from the job workers premises - If there is no substantial change in the product then the goods cleared from the job workers premises will remain the said goods which is subsequently sold by the principal - However, adjudicating authority has not properly verified the nature of activity carried out by principal that whether such activity brought a substantial change in the product so that the identity of the product is changed - This is a vital issue to be verified before going to the conclusion that whether the goods manufactured and cleared by job worker and the same was sold by the principal falls under the term of "Said Goods" then only the obligation of Rule 10A (ii) can be decided - Therefore, matter remanded to adjudicating authority for deciding the matter afresh: CESTAT

- Matter remanded: AHMEDABAD CESTAT