SERVICE TAX

ST/GST - By the impugned notice dated August 24, 2018 and the two subsequent reminders, the authorities are proposing to conduct an audit under the provisions of the Chapter V of the Finance Act, 1994 – Petitioner challenges these communications on the ground that they were issued without jurisdiction as the Central Goods and Services Tax Act, 2017 repeals Chapter V of the Finance Act, 1994; that an audit contemplated under Chapter V of the Finance Act, 1994 is not saved by the provisions of Section 174 of the Act of 2017.

Held: Provisions of Chapter V of the Finance Act, 1994 stands omitted by Section 173 of the Act of 2017 save as otherwise provided under the Act of 2017 - Therefore, if any provision of the Act of 2017 allows the applicability of the Chapter V of the Finance Act, 1994, then notwithstanding the omission of the Chapter V of the Finance Act, 1994 under Section 173, the same continues to apply – On a prima facie reading of Sections 173 and 174 of the Act of 2017, it appears that an enquiry or an investigation or even a legal proceeding under the Act of 1994 is permissible notwithstanding the coming into effect of the Act of 2017 - The authorities are proposing undertake an audit for the period when the Act of 1994 was applicable, the authorities are entitled to do so – no interim stay can be granted – Parties permitted to file affidavits – Petition to be listed in March 2019: High Court [para 8, 10, 11, 14]

- Petition to be listed : CALCUTTA HIGH COURT

2019-TIOL-215-CESTAT-MUM + Case Story

Saraswati Golani Vs CST

ST - Renting of immovable property - tax is liable to be paid on receipt of consideration towards rent - due to litigation in the matter of lease deed between appellant and State Bank of India, rent amount deposited with High Court Registrar - AR informing that appellant has received rent from February to August 2010 and tax is payable - in view of contrary findings, matter remanded to original authority for ascertaining factual aspect: CESTAT [para 6, 7]

- Matter remanded: MUMBAI CESTAT

2019-TIOL-206-CESTAT-AHM

ST - The revenue filed the appeal seeking imposition of penalty under Section 76 and 77 - The adjudicating authority in impugned order did not impose penalty under Section 77, however, the penalty under Section 78 was imposed - It is settled law that penalty under Section 78 as well as 76 cannot be imposed simultaneously - In case of Bajaj Travels Ltd - 2011-TIOL-896-HC-DEL-ST , the High Court has held that the amendment in Section 78 whereby it is provided that when penalty under Section 78 is imposed, no penalty under Section 76 should be imposed is of clarificatory nature hence, it is effective retrospectively - This judgment was followed by Gujarat High Court in case of Raval Trading Company - 2016-TIOL-112-HC-AHM-ST - Accordingly, the penalty under section 76 is set aside by the adjudicating authority is legal and proper - As regard penalty under Section 77 since the adjudicating authority despite giving clear finding, has not passed any order, therefore, the said issue to be decided by the adjudicating authority, hence, the matter relates to penalty under Section 77 is remanded to the adjudicating authority for passing an order: CESTAT

- Appeal partly allowed: AHMEDABAD CESTAT

ST - This appeal has been filed by assessee in respect of demand of service tax for period 01.07.2002 to 09.09.2004 for the activity of collection of toll under category of BAS - Government of Gujarat and Infrastructure Leasing and Financial Service Ltd. (ILFS) jointly promoted a company then known as Ahmedabad Mehsana Toll Road Company Ltd. (AMTRCL), now known as Gujarat Toll Road Investment Company Pvt. Ltd. for the purpose of, inter alia, construction of Ahmedabad-Mehsana Toll Road on Build, Own, Operate and Transfer (BOOT) basis - The said AMTRL selected the assessee for design, construction, operation and maintenance of Ahmedabad-Mehsana Road Project - Perusal of contract shows that assessee is , inter alia, required to maximize the collection of toll and they are also required to minimize the incidents and duration of any period during which the facility or any part thereof is accessible to use - They are also required to maintain the facility against damage or deterioration and to ensure that all the services provided under the contract comply with prudent utility practices - In these circumstances, it can be said that assessee is engaged in promotion or marketing of service provided by AMTRL - The assessee is also required to arrange and liaison with road transport facilities and local police for the traffic arrangements - In these circumstances, every user is a customer of AMTRL and the assessee is providing services to the customers (the users) on behalf of AMTRL and thus the activity would also be covered under clause (iii) of the definition of BAS - The decision in case of Intertoll India Consultants (P) Ltd. - 2011-TIOL-1005-CESTAT-DEL is per incurium as it ignores the common parlance definition of term ‘Customer' - As described, the activity of assessee would be squarely covered by definition of BAS and would be chargeable to service tax during period prior to 10.09.2004 also - The assessee have sought benefit of limitation - Assessee is providing BAS and there is no doubt regarding the same - Merely, because they are collecting the said amount on behalf of the corporate entity backed by Government it does not constitute a bonafide belief for exemption - Thus, they cannot be given any benefit on account of limitation: CESTAT

- Appeal dismissed: AHMEDABAD CESTAT

ST - The assessee-company is engaged in manufacturing & trading in Electronic Cash Registers, Banking Automation Products, Electronic Surveillance Systems - It also provides Management, Maintenance and Repair services - During the period in dispute, the assessee issued FCCBs in the global capital market, for raising capital in London, to be used in Mauritius - The assessee availed the services of a foreign company & paid commission abroad - The Revenue opined that these services were taxable under reverse charge u/s 66A of the Finance Act 1994 r/w the Taxation of service (Provided from Outside India and Received in India) Rules, 2006, under heading Banking & Financial Service - Duty demand was raised with interest & penalties u/s 77 & 78 of the Act.

Held: The assessee is covered under the mandate of Section 66A, being incorporated in India - Since the taxable service provided from abroad must be received in India for taxation as per Rule 3 of the Taxation of service (Provided from Outside India and Received in India) Rules, 2006 - In this case, the loan was raised outside India and was also used outside India, even though the parent company is located in India - Simply because the assessee is located in India & that transactions made globally also figure in its books of accounts, this does not imply that services have been received in India - In this case, the service was rendered in London & received in Mauritius - Hence it will not be covered u/s 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - Thus no service tax liability arises - Consequently, the demands for interest & the penalties imposed must be set aside: CESTAT (Para 1,7,8)

- Assessee's appeal allowed: HYDERABAD CESTAT

 

CENTRAL EXCISE

CX - The assessee is engaged in manufacture of sponge iron, ingots, billets and silicon manganese - They are availing credit of Cenvat duty paid on inputs, capital goods and Service Tax paid on input services in terms of CCR, 2004 - The assessee was transferring the Silicon Manganese so manufactured by them to their Depot for further sales to their customers but were paying duty at the time of removal - The question for adjudication therefore is as to whether the assessee have paid duty at the time of removal from the factory with intention to resort to under valuation of excisable goods and with intent to evade the payment of cenvat duty for the respective period in dispute - It is apparent and admitted fact that before removing goods from assessee factory in Raipur to their Depot in Nagpur, assessee have paid the Excise Duty - It becomes clear that the value is a normal price that is the price at which such goods are ordinarily sold by the assessee to a buyer where the buyer is not the related persons and the price is the sole consideration as it was held by Apex Court in case of Tata Iron and Steel Co. Ltd. - The Silicon Manganese is simultaneously sold from the factory/place of manufacture itself that too the major portion of the manufacture and it is only the part produced which has been shifted to Depot for further sale to the buyers - The question of invoking Rule 7 of Valuation Rules, 2000 is absolutely irrelevant and also illegal - The Tribunal in case of Bharat Petroleum Corporation Ltd. - 2009-TIOL-2111-CESTAT-MAD while relying upon a Larger Bench decision of Tribunal in Ispat Industries Ltd. - 2007-TIOL-245-CESTAT-MUM-LB has held that the transfer of part of production to another plant of same assessee and balance production sold to independent buyers would not attract Rule 7 of Valuation Rules when the manufactured product is also sold to the customers even at the time and place of removal - It was held that not even Rule 8 of the Valuation Rules is applicable to the situation as the said Rule is also applicable only in a situation where entire production of a particular commodity is captively consumed - The Larger Bench had held that in a case as the one in hand the value as per Rule 4 of the Valuation Rules has to be accepted - The Department has wrongly invoked Rule 7 of Valuation Rules - The transaction value is the value at which Silicon Manganese has been sold by assessee at its factory gate, while transferring the unsold portion thereon to the Depot - Apparently and admittedly, the excise duty has been paid by assessee at the said value - The question of alleged short payment does not at all arise: CESTAT

- Appeals allowed: DELHI CESTAT

CX - The assessee manufactures cement clinker and cement - During erection and installation of machinery in the factory, they have procured various steel items such as plates, angles, channels and sheets used in factory as supporting structures for capital goods and installation of certain machinery and claimed CENVAT credit on inputs as input credit on these products - It is not disputed that assessee used inputs for manufacture/maintenance of various components of the parts - It is also been recorded in O-I-O itself that whatever material was used in the construction of civil structures has already been reversed by assessee - Following the ratio of decisions in Lloyds Metals & Engineering Limited - 2014-TIOL-1517-CESTAT-MUM and Bellary Steel & Alloys Ltd. - 2005-TIOL-290-CESTAT-BANG - The assessee is entitled to input credit on the items mentioned in terms of Rule 2(k) of CCR, 2004 read with Explanation 2 thereof and therefore the demand is liable to be set aside along with the interest and penalty: CESTAT

- Appeal allowed: HYDERABAD CESTAT

CX - The assessee is engaged in business of manufacture of machinery and machinery parts - A SCN was issued for alleged wrong availment of Cenvat Credit on Service Tax - The assessee's claim is that having included expenses for cost of production, they are entitled to avail Cenvat Credit - The Supreme Court, High Courts and the Tribunal in various decisions have specifically held that any expenditure incurred by an assessee, if it forms part of the price of the final product, on which Excise Duty is paid, Cenvat Credit must be allowed on the said Service Tax, if the manufacturer can demonstrate that the said expenses are in relation to the manufacture of final product - The Central Excise Duty paid by assessee on their finished goods is on ad-velorom which has been arrived at after considering all the expenses that had gone into manufacturing of finished goods - It is not in dispute that credit of Service Tax has been availed on various services which were received and used by assessee for purpose of manufacture of the final product and these cost formed part of the excisable value on which Excise Duty was discharged - The factories are generally set up at remote location which are several hundred kilometers away from big towns and cities - Given this fact, most companies are compelled to create an integrated township within the factory, either in same campus of factory or at some distance so that they are able to attract and retain qualified personnel as also workmen at such remote locations - The maintenance and repair service of various civil and electrical work, carpenter work has been availed at the school, colony and the club maintained by assessee for its employees - However, Cenvat Credit of Service Tax Paid on service availed at the club premises cannot be allowed - The period involved is prior to 01/04/2011, when the definition of input service during relevant period had wide ambit as it included the words "activities related to business" - The assessee is eligible for availing credit of Service Tax paid on Services availed for purposes of its business activities except the services availed in respect of club premises: CESTAT

- Appeal partly allowed: KOLKATA CESTAT

 

 

 

 

CUSTOMS

Cus - Against Advance license, appellant had imported goods duty free, however, since they had not exported the entire quantity required to fulfill the export obligation, they paid duty as directed and the DGFT issued redemption letter - Customs authorities issued SCN demanding Anti-dumping duty on Alpha Dane Salt for excess quantity - appellant contending that since the LUT/bond did not cover Anti-dumping duty, the said duty could not be recovered by enforcing the bond and, furthermore, period of limitation prescribed u/s 28 of the Customs Act, 1962 cannot be overlooked - appellant before CESTAT as lower authorities confirmed the demand.

Held: It is quite evident that the exemption under notification 43/2002-Cus has been granted from the payment of "whole of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975, and from the whole of the additional duty, safeguard duty and antidumping duty leviable thereon respectively under sections 3, 8 and 9A of the said Customs Tariff Act" - For availing the said exemption importer is required to execute a bond "binding himself to pay on demand an amount equal to the duty leviable, but for the exemption, on the imported materials in respect of which the conditions specified in this notification have not been complied with" - Bond that is thus executed binds the importer to pay an amount equal to the duty leviable, but for exemption, on the imported material in respect which conditions as specified in the notification have not been complied with - bond executed does not make any distinction between the duty leviable, but prescribes that whatsoever duties that have been exempted in terms of this notification including the anti-dumping duty is required to be paid in case the conditions of notification are not fulfilled - plain reading of Section 2(15) and Section 12 of the Customs Act make it evident that the duties of custom include all the duties that are levied under the Customs Tariff Act, 1985 - Bench is not in position to agree with the contention of the appellant that the Bond/ LUT executed by them do not cover the anti dumping duty leviable on the imported material at the time of importation/ clearance of the imported material - In the present case, no duty has been short levied or short paid at the time of clearance of goods as the same have been cleared in terms of exemption notification after fulfillment of the conditions of exemption notification - Case is also not a case of provisional assessment under Section 18 or case of demand of amount erroneously refunded, therefore, period of limitation for the purpose of section 28, accordingly shall have to be computed from the date of payment of duty - demand of anti dumping duty is sustainable in terms of the bond executed by the appellant - Appeal dismissed: CESTAT [para 5.3, 5.4, 5.7, 5.8, 5.11, 5.12]

- Appeal dismissed: MUMBAI CESTAT

Cus - The assessee had imported consignment of Processed Betel Nuts from Bangladesh to India during period from 13.05.2013 to 06.06.2013, when the declared invoice value was U.S. $ 680-690 per MT - In view of DGFT Notfn 12(RE-2013)/2009-14, the said import consignments were assessed provisionally since the minimum import price was fixed at Rs.110 per Kg. under the said Notfn - The authorities below entertained a view that in as much as the value of betel nuts in question was below 110/- per Kg., their import was hit by Notfn in question - However, authorities allowed the betel nuts to be cleared on payment of duty, but confiscated the same in terms of provisions of Section 111(d) of Customs Act, 1962 with an option to assessee to redeem the same on payment of redemption fine - The issue is no more res-integra in view of decision of Tribunal in case of International Seaport Dredging Ltd. - 2017-TIOL-486-CESTAT-HYD - The Tribunal has taken the view that as the goods were cleared after collecting duty on the basis of tariff rate, it cannot be held that the goods are prohibited - In the present case also it is the Revenue's contention that the goods being of lesser value, required a licence and thus has to be considered as prohibited - However, the said decision is squarely applicable to the facts of the present case - As such, no justifiable reasons found to confiscate the betel nuts in question - In as much as goods are not liable to confiscation, imposition of penalty upon assessee is also not justifiable and the same is accordingly set aside - Redemption fine imposed under Section 125 of Customs Act, 1962 is set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT