GST/VAT - Petitioners are engaged in the business of manufacture and distribution of Surgical Dressing items such as Bandages, Gauze etc. - respondent GMSCL is a procuring agency of Government of Gujarat which procures the drugs, surgical items etc. from different manufacturers and distributors for the supply of the same to the Government Hospitals throughout the State of Gujarat - GMSCL invited tenders and the petitioners were awarded contracts and asked to supply the items - as per the tender terms, the petitioners were asked to provide rates prepacking unit (without applicable VAT / CST) as well as provide percentage of VAT / CST, if applicable in different columns - according to the petitioners, VAT / CST were to be borne by the GMSCL which although were recovered by the petitioners but was indeed paid to the State Government or appropriate Authority on behalf of the GMSCL - pursuant to introduction of GST, petitioners informed GMSCL that GST was applicable at 12% to the products the petitioner was supplying and, therefore, to make appropriate changes or accommodate the new tax rates which were applicable to the products that were supplied by the petitioner to respondent - petitioners wrote a letter to the GMSCL asking for the payment that was due where the petitioner had also agreed to accept the payment as per 5% tax subject that in future the petitioner gets payment for rest 7% tax - pursuant to its meeting, GMSCL communicated that "since the Finance Department, Government of Gujarat did not agree to revise a rate due to GST effect, the Board decided to seek consent of firms for supply of the items as per rate contract" and that "if the firms do not agree, the GMSCL will float fresh tender and as per the agreement terms and conditions for the existing rate contract for such items" - Feeling aggrieved and dissatisfied with the impugned decision, petitioners have filed the present Special Civil Application under Article 226 of the Constitution of India - counsel for State submits that as per Clause 49 of the Tender Documents, the claim of price revision of finished goods under any pretext or reason including of revision of duty / excise / cost will not be allowed at any stage after the last date of submission of the tenders; that, therefore, there is no clause for variation in case of revision of any tax; that, therefore, the rate quoted by the petitioners were inclusive of VAT, excise duty etc. applicable at relevant time; that instead of VAT, CGST / GST at 12% has been introduced; that in absence of any specific clause for variation of the rate and/or price revision under any pretext or reason including the revision of duty / excise / cost, the State Government is right in not providing the price revision of rate contract.

Held: Merely because the VAT / excise duty has been abolished, which was there at the relevant time when the prices were quoted and the rate contracts were executed and thereafter has been substituted by the GST, the petitioners cannot be permitted to change the rate contract / rates and cannot be permitted to have the price revision - Otherwise the same shall be contrary to the terms and conditions of the relevant tender documents / rate contracts - It is required to be noted that as such so far as the petitioners are concerned, they will have to pay to the Government the same price which was quoted by them and as per the rate contracts, which otherwise they agreed to charge - merely because now the VAT and excise duty have been deleted and instead the same is substituted by GST which may be at 12%, the petitioners cannot claim the price revision on the aforesaid ground - otherwise also the liability to pay VAT / excise duty etc. was upon the suppliers, therefore, the grant of any relief as prayed in the present petitions would tantamount to varying terms and conditions of the tender document / rate contracts which in exercise of powers under Article 226 of the Constitution of India shall not be permissible -  In the present case the decision taken by the respondent GMSCL in not permitting the price revision is after due application of mind and even after considering the opinion of the Finance Department, State of Gujarat and a conscious decision has been taken by the Committee which is neither perverse nor arbitrary and/or contrary to the terms and conditions of the tender documents / rate contracts - the impugned decision since not suffering from any malafides and/or arbitrariness, the same is not required to be quashed and set aside in exercise of powers under Article 226 of the Constitution of India - Special Civil Applications fail and the same are dismissed: High Court [para 9.3, 9.4, 11, 12]

- Petitions dismissed : GUJARAT HIGH COURT

Pacific Roofings Pvt Ltd Vs State of Tamil Nadu

Whether the issue of as to if some transactions classify as consignment sales or inter-State sales warrants remand, if the Sales tax Tribunal omits to examine relevant evidence which formed the basis of the findings recorded by the AO & the Appellate Commissioner - YES: Sales Tax Authority

Whether in such circumstances, the matter warrants remand to the AO instead of the Tribunal, considering that the former is better suited to adjudicate the issue after examining relevant evidence - YES: Sales Tax Authority

- Case remanded : CENTRAL SALES TAX APPELLATE AUTHORITY

Mahindra Cie Automotive Ltd Vs State of Maharashtra

Whether transactions having the facets of inter-State sale can be treated as stock transfer, where the AO classifies them under the former category after thorough verification of facts & evidence - NO: Sales Tax Authority

Whether if the AO fails to investigate certain details in the original assessment order, can such lacuna be cured through written submissions filed subsequently - NO: Sales Tax Authority

Whether the AO is obliged to examine each transaction individually, before determining whether it constitutes inter-State sale attracting duty under the CST Act - YES: Sales Tax Authority

SERVICE TAX

2019-TIOL-272-CESTAT-MUM + Case Story

Hardesh Ores Pvt Ltd Vs CC, CE & ST

ST - Section 65(105)(k) of Finance Act, 1994-Deputing employees, rendered surplus temporarily due to lack of sufficient work, to group company-salary and other compensation settled as inter-company dues since employees continued to be on the rolls of the appellant while operationally deployed in group company-whether tax payable under the category of 'Manpower recruitment or supply agency service'.

Held: There is no allegation in the show cause notice, or in the impugned order, that the appellant had retained any amount from out of the payment received from the group company-No provision in the rules for computing value in the absence of consideration even though provisions exist for monetising consideration other than in money-Absence of consideration is not the same as uncountable consideration requiring rules for conversion-in the absence of any consideration, there is no taxable service and, in the absence of taxable service, leviability of tax would not arise-appeal allowed: CESTAT [para 7, 8]

- Appeal allowed: MUMBAI CESTAT

2019-TIOL-264-CESTAT-HYD

Agarwal Engineering Works Vs CC, CE & ST

ST - The assessee is a sole proprietorship firm which has undertaken certain works for Railways on works contract basis - It is not in dispute that the services rendered by assessee during relevant period involved both supply of materials and rendition of services and therefore are in the nature of works contract - The copies of contracts also clearly indicate that the nature of their contracts was works contracts - Further, SCN itself mentions that they had entered into contracts with Railways for works contract - Lastly, the Railways had deducted VAT on composition basis from their bills towards payment of VAT component on goods supplied by them - Assessee's services were not exigible and they were not required to pay any service tax both before 01.06.2007 and after this date - In consequence, the appeal is allowed in so far as the demand on "management, maintenance & repair services" is concerned as the services rendered by assessee is in the nature of composite works contracts which cannot be charged to service tax under "management, maintenance & repair services" nor can they be charged under works contract services in view of the specific exclusion given to the services rendered to the railways - Appeal on tax on GTA services as held in impugned order is upheld along with interest - The penalties imposed under Sec.77 & 78 get modified accordingly: CESTAT

- Appeal partly allowed: HYDERABAD CESTAT

2019-TIOL-263-CESTAT-MAD

Shriram Epc Ltd Vs Commissioner of GST & Central Excise

ST - The assessee is engaged in supply, erection and commissioning of sewage treatment plant, PVC pipe line for water supply projects to Water and Sewage Board - During audit, it was noticed by department that assessee have not paid service tax for services from 1.4.2008 that is engineering, procurement, erection and commissioning of sewage treatment plant and implementing of water supply projects to various municipal corporations - The department was of the view that said service was classifiable as EPC projects as defined under subsection (ii)(e) of Section 65(105)(zzzza) of FA, 1994 which defines works contract service - Issue to be decided is whether the construction of water treatment plant, sewage treatment plant constructed by assessee is subject to levy of service tax under works contract service - The assessee have argued that they would be exigible to service tax for the reason that service of construction of water treatment plant and sewage treatment plant were rendered to Government/Municipal bodies/Board and therefore are not of a commercial nature - It is the case of department that since the projects were turnkey projects, it would fall under sub-clause (e) of explanation to definition of works contract service and that the said section does not exempt constructions which are not intended for commerce or industry - The assessee has put forward the arguments based on decision in Lanco Infratech Ltd. stating that the exemption given to construction activities which are not commerce or industry envisaged in clause (b) has to be read along with clause (e) of said explanation - The turnkey projects are only in nature of contract which takes in all the works of design, engineering and procurement - The issue thus stands covered by decisions of jurisdictional High Court as well as decision of Larger Bench of Tribunal and the decision in Jyoti Buildtech P. Ltd. - 2017-TIOL-963-CESTAT-ALL - Following the same, the demand cannot sustain - Assessee has also pointed that the refund claim filed by assessee was allowed by Commissioner (A) except for an amount of Rs.7,89,267/- - The Commissioner (A) in said order has relied upon the decisions in cases of Lanco Infratech and Indian Hume Pipes Co. Ltd. - 2015-TIOL-2049-HC-MAD-ST to grant the refund - The impugned orders are set aside: CESTAT

- Appeals allowed: CHENNAI CESTAT

2019-TIOL-262-CESTAT-ALL

Radico Khaitan Ltd Vs CCE & ST

ST - The assessee is engaged in manufacture of IMFL liquor, which is subjected to duty of state excise and were also availing services of a contractor for supply of manpower and were paying Service Tax on the same, on reverse charge basis - Subsequently they filed refund claims of Service Tax so paid by them for different periods on the ground that services received by them from contractor did not fall under category of 'Manpower Supply' inasmuch as said contractor was given complete job of bottling of liquor which amounts to manufacture - The appellate authority has relied upon various decisions of Tribunal - In the case of S.M.Auto Engineering (Pvt.) Ltd. , it stands observed that the terms of contract entered into between assessee and contractor reveals that payments are to be made for labour supply and not for job-work or manufacture - Tribunal have also scrutinized the contract and the rate list entered into between the assessee and their contractor - The same prescribes rates on per shift basis, though the expected standard production in that shift also stands mentioned in said contract - Further, the overtime rates also stands mentioned in said list, thus indicating that if manpower supplied by contractor works overtime, he would be given further wages for the same - This only establishes that the essence of contract is for supply of labour, who is expected to perform a particular task in particular period - This rate list, coupled with the fact that manpower supplied has been made operational under the superintendence or control of the recipient, leads to inevitable conclusion that the contractor was providing manpower services and can by no stretch of imagination be considered as job-worker doing the job of bottling or IMFL - No merits found in assessee's stand and hold that he was receiving "Manpower Supply Services" from the contractor and has correctly discharged the Service Tax on reverse charge basis - Accordingly, impugned order is upheld: CESTAT

- Appeals rejected: ALLAHABAD CESTAT

 

 

 

 

 

CUSTOMS

2019-TIOL-258-CESTAT-HYD

CC, CE & ST Vs National Aviation Company of India Ltd

Cus - The assessee had filed bills of entry to clear Aviation Turbine Fuel (ATF) claiming exemption under notfn 21/2002-CUS S.No. 77C - This exemption notfn exempts duties of customs leviable on the products in excess of rate with respect to Basic Customs Duty and with respect to Additional Duty of Customs - A perusal of notification shows that various rates were specified for different commodities and where full exemption was to be given, the respective column mentioned 'Nil' - The Commissioner (A) has relied on the order in case of Standard Consultants Ltd - 2009-TIOL-341-CESTAT-BANG in extending the benefit of notification available to Basic Customs Duty on ATF to the Additional Duty of Customs as well - Strong force found in the argument of Commissioner (A) that General Rules of Interpretation cannot at all be used to interpret exemption notification - Further, explanatory note in question refers to Column No.4 (Standard Rate) and Column No.5 (Preferential Rate) of the Tariff whereas Column No.4 in the notification refers to the Basic Customs Duty and Column No.5 refers to the Additional Duty of Customs - Simply because the column numbers are the same, the notes meant for the Tariff cannot be applied to the exemption notification - Even if it is assumed that notification can be interpreted both ways, it has to be strictly considered against the assessee as per the judgment of the Constitutional Bench of Supreme Court in case of M/s Dilip Kumar & Co. - 2018-TIOL-302-SC-CUS-CB - The ratio of this judgment prevails over the ratio of decision of Tribunal in case of Standard Consultants Ltd - Impugned order is set aside: CESTAT

- Appeal allowed: HYDERABAD CESTAT

2019-TIOL-257-CESTAT-BANG

Torry Harris Seafoods Pvt Ltd Vs CC

Cus - The assessee is an exporter of marine products and has filed a Bill of Entry through Customs Broker for clearance of wild caught Frozen Cuttlefish whole with a declared value under Advance Authorisation Scheme - The importer has not produced the clearance from Animal Quarantine - Animal Quarantine office has rejected the clearance vide endorsement in single window - The Larger Bench decision in case of Hemant Bhai R. Patel is squarely applicable in the facts and circumstances of the present case - The Larger Bench of Tribunal in said case has held that Section 111 of Customs Act gives power to customs officer to confiscate the goods imported, if any, all the provisions contained in sub-clauses is specific and Section 112 authorises the imposition of penalty - The Larger Bench has categorically held that it is open to the adjudicating authority to impose redemption fine as well as penalty even when permission is granted for re-exporting the goods - However, in the present case, imposition of fine of Rs. 10 lakhs and penalty of Rs.1 lakh, appears to be on the higher side, therefore redemption fine is reduced to Rs. 5 lakhs and penalty from Rs.1 lakh to Rs.50,000/-: CESTAT

- Appeal dismissed: BANGALORE CESTAT