SERVICE TAX

2019-TIOL-111-HC-KAR-ST

Tyresoles India Pvt Ltd Vs UoI

ST – Assessee is engaged in re-treading of tyres – Issue is whether in a contract for retreading of tyres, service tax is leviable on the total amount charged for re-treading including value of materials/goods used in execution of the contract - Original Authority has held that the petitioner assessee is liable to pay service tax on the entire sum and held that the value of inputs, consumables, chemicals, etc. amounting to Rs.91,90,43,629/- used in providing the re-treading tyres services for the period from April, 2014 to March,2016 should be included in the gross value of services in terms of Rule 5 of the Service Tax (Determination of Value) Rules, 2006 read with Section 67 of the Finance Act, 1944 – Supreme Court in the case of Safety Retreading Company Pvt. Ltd. - 2017-TIOL-28-SC-ST held that an assessee is liable to pay tax only on the service component which under the State Act has been quantified at 30% - Since the Order in Original has been passed without noticing the law laid down by the Apex Court, the Original Authority is required to pass appropriate orders after taking into consideration the law laid down by the Apex Court (supra) – Order-in-Original is set aside and Matter is remitted back to the Original Authority for reconsideration – Petition disposed of: High Court [para 6, 7]

- Petition disposed of: KARNATAKA HIGH COURT

2019-TIOL-144-CESTAT-KOL

Ashoka Sales Vs CCE & ST

ST - The assessee entered into several agreements for providing Clearing & Forwarding Agent Services; Goods Transport Services & Commission Agent Services - During the period of dispute, the Revenue raised duty demand with interest.

Held - The issue revolves around duty demand raised by the jurisdictional Commr., who over-ruled some relief granted to the assessee by the jurisdictional Jt Commr. - Such relief had been granted on account of deduction on amount of reimbursement of certain expenses, selling commission, outward ransportation charges received from clients, opening balance of the ledger account and inter-account adjustment - Considering the nature of the amounts, they cannot be treated as consideration for services rendered as they have no financial effect - Considering relevant facts & circumstances, the order passed by the jurisdictional Jt. Commr. is re-instated: CESTAT (Para 1,6,8)

- Assessee's appeal allowed: KOLKATA CESTAT

2019-TIOL-143-CESTAT-ALL

Bhargava Constructions Vs CCE & ST

ST - The assessee-company provided Erection, Commissioning & Installation Service to M/s BPCL - Although the assessee obtained registration, it did not file ST-3 returns or pay service tax for the period in question - In a subsequent period, the assessee paid some amount as service tax, but no other service tax leviable on the consideration received by them from BPCL was deposited & such payment was not intimated to the Revenue through ST-3 returns - Upon visit by the Revenue officers, the assessee paid a further amount of tax - Hence duty demands were raised, with equivalent penalty u/s 78 of the Finance Act 1994 as well as penalties u/s 76 & 77 of the Act - Later, the Commr.(A) dropped the penalty imposed u/s 76 & offered the option of reducing quantum of penalty to 25% of the total amount.

Held - The assessee's plea of being unable to pay service tax in time due to financial constaints, is untenablem, since it is obliged to pay service tax in time - The assessee could have at least filed the ST-3 returns reflecting their accepted to pay service tax - The present case does not involve delayed payment or deposit of tax, but clearly involves suppression of fact of having provided services - In these circumstances, the penalties imposed are sustainable - Moreover, the assessee cannot at a belated stage claim the option of reduction in quantum of the penalty to 25% of the total amount - This is because while such option was offered by the Commr.(A), the assessee chose not to avail of it - Hence no extension of time can be granted in such cases: CESTAT (Para 2-5,8,9)

- Assessee's appeal dismissed: ALLAHABAD CESTAT

2019-TIOL-142-CESTAT-AHM

CCE & ST Vs Amin Travels

ST - The assessee-company is engaged in the renting of jeeps & cabs to M/s ONGC - This activity is classifiable under 'Rent a cab' service - However, the assessee had not dfischarged service tax liability - Duty demands were raised after invoking extended period of limitation & imposing penalties - These demands & penalties were sustained by the Commr.(A), but the demand for interest for period prior to 01.07.2001 was set aside - Hence the present appeals by both the assessee as well as the Revenue.

Held - It is undisputed that the assessee provided vehicles on rent & such activity is clearly taxable under Rent-a-cab service - Considering that the assessee began paying service tax after some time, the demand for service tax is sustainable - As per the contract, M/s ONGC did not undertake to pay service tax to the assessee - Hence the assessee could not pay tax under a bona fide belief - Moreover, in previous case involving the same assessee, the demand raised under extended limitation was set aside - Hence in the present case, the demand raised under extended period of limitation is liable to be set aside while the demand for the normal period of limitation is sustained - The Revenue's appeals are set aside considering that the tax value involved is lesser than Rs 20 lakhs: CESTAT (Para 1,4,5)

- Revenue's appeals dismissed: AHMEDABAD CESTAT

 

 

 

CENTRAL EXCISE

CIRCULAR

excircular1068

Review of progress of implementation of Scheme of Budgetary Support to eligible industrial units located in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim - clarification reg

CASE LAWS

2019-TIOL-141-CESTAT-AHM

Bombay Minerals Ltd Vs CCE & ST

CX - Appellant is engaged in the mining of Bauxite from the mines - After the process of mining, the mined bauxite is segregated into Low Grade (LG) Bauxite and High Grade (HG) Bauxite at the mines itself - The appellant directly sells Low Grade Bauxite from the mines itself without bringing the same to their factory whereas High Grade bauxite is sent to the factory for calcination - High Grade Bauxite is then cleared from the factory on payment of duty - The appellant has availed cenvat credit on various common input services such as Insurance Service, Telephone Service, Audit Charges etc. which are used for mining as well as manufacturing process carried at factory – Revenue alleged that Low Grade Bauxite is an exempted product under Notification No. 4/2006-CE, therefore, in view of the fact that common input services were used for both dutiable and exempted products, appellant is required to pay an amount @ 10%/ 5% of the value of exempted goods in terms of Rules 6(3) of CCR, 2004 – demand confirmed, therefore, appeals filed by assessee – Revenue has also filed two appeals with respect to reduced penalty.

Held: Once the appellants have opted for reversal of the credit in respect of service attributed to the exempted goods and in case of delay, the interest is also paid then the demand of 5% / 10% under Rule 6(3) cannot be made - In the present case since the Commissioner has demanded 5% / 10% of the value of exempted goods and has not verified the correctness of actual cenvat credit attributed to exempted goods as reversed by the assesse, therefore, only for the purpose of verification of such quantification of reversal, the matter in case of assessee's appeals is remanded to the original authority - As regard the Revenue's appeal since the penalty is consequential to demand and final outcome can be arrived at only after verification of reversal, the Revenue's appeal are also remanded to the original authority - All the appeals are disposed of by way of remand to the original authority in the above terms for passing a fresh de novo order: CESTAT [para 13]

- Matter remanded: AHMEDABAD CESTAT

2019-TIOL-140-CESTAT-BANG

Page Industries Ltd Vs CCT

CX - Penalty - During the relevant period the appellant had taken Central Excise Registration and was availing exemption in terms of Notification No. 11/2013-CX in respect of excisable goods falling under Chapter 61 to 63 manufactured through job-worker and filing 'nil' return - there was delay on some occasions in filing the 'nil' return - Superintendent issued notice and imposed penalty for late filing of return, which order was upheld by Commissioner(A), hence appeal before CESTAT.

Held: Superintendent vide Demand Order dated 21.03.2016 has imposed the penalty for delayed filing of the ER-1 returns without affording an opportunity of hearing and without issuing a show-cause notice which is a mandatory requirement for imposing any penalty - Commissioner (Appeals) has also not considered the violation of the principles of natural justice - observation of the Superintendent in the Demand Notice that there is no need to pass a speaking order is not tenable in law - It is the fundamental requirement of issuing a show-cause notice and affording an opportunity of hearing to the affected party before imposing penalty - Since that fundamental principle has not been followed in the present case, the impugned order imposing penalties for late filing the ER-1 return is not sustainable in law - penalties set aside by allowing all the appeals: CESTAT [para 5]

- Appeals allowed: BANGALORE CESTAT

 

 

 

 

CUSTOMS

2019-TIOL-112-HC-KAR-CUS

Velankani Infrastructure & Projects Pvt Ltd Vs Joint Director of Foreign Trade

Cus – Petitioners have challenged the letter issued by DGFT wherein it is stated that the petitioner is not entitled to get any benefit of Advance Authorisation - specific case of the petitioners is that the first petitioner has imported various components from outside the country, assembled the same in India and supplied the finished product to the second petitioner - To establish their case they have also furnished the relevant documents to the respondents to show that they are ‘manufacturers' as defined in para 9.36 of the Foreign Trade Policy and as per para 8.2 they are entitled for deemed export benefit - The respondents have not given any opportunity to the petitioners to establish their case and they have not considered the documents produced by the petitioners but have unilaterally taken a decision and passed the impugned order/letter.

Held: There is violation of principles of natural justice - To give one more opportunity to the petitioners, the letter dated 15.02.2012 is treated as showcause notice - Petitioners are permitted to submit their reply with the relevant documents to respondent No.3 DGFT within a period of four weeks - third respondent is directed to consider the reply given by the petitioners along with the relevant documents and pass a detailed order in accordance with law – Petition is disposed of: High Court [para 8, 9]

- Petition disposed of: KARNATAKA HIGH COURT

2019-TIOL-145-CESTAT-KOL

CC Vs Evershine Customs C And F Pvt Ltd

Cus - During the period of dispute, the DRI intercepted a truck which was headed to the Kolkata Port under Customs Transit Document - The goods being ferried were destined for export to Korea - The driver stated that the goods included Nepalese Woolen Carpet, clay & handcraft goods - On inspection, Red Sanders wood logs were found, which were tested & confirmed to be as such - As Red Sanders wood is proibited for export, SCN was issued to several noticees including the appellant herein, which is a Customs House Agent - The logs and the vehicle were confiscated & penalties were imposed u/s 114(i) of the Customs Act - On appeal, the Commr.(A) set aside the penalty.

Held - The appellant-CHA failed to ascertain the identity of the exporter, as mandated by Regulation 11(n) of the CBLR 2013 - The proprietor of the export firm cannot be traced - Moreover, the CHA was found to be acting on behalf of the exporter without any authorization - Hence the CHA provided services of enabling export of prohibited goods, more so without verifying identities or antecedents of the client - Hence the penalty imposed on the appellant is sustained - However, the quantum of penalty is excessive & warrants being reduced: CESTAT (Para 1,5)

- Revenue's appeal partly allowed: KOLKATA CESTAT