SERVICE TAX

2019-TIOL-370-CESTAT-MUM + Case Story

Yapp India Automotive Systems Pvt Ltd Vs CCE & ST

ST - Tribunal suo motu rectifies its order by issuance of an addendum - delay of 79 days in filing appeal before Commissioner(A) condoned and matter remanded - Even though no irregularity in dismissing the appeal on ground of limitation may be found from the order of the Commissioner (Appeals) still then the same needs to be adjudicated by him as spirit of the entire formation of Appellate Tribunal precludes the Tribunal to hold a finding directly against the order of the first adjudicating authority without the same being scrutinised by the Commissioner (Appeals) under Section 35A, may be under Sub-section (4), and such scrutinisation by Commissioner (Appeals) cannot be done unless delay is condoned at this end in invoking the principles of saving clause section 29 of the Indian Limitation Act read with Section 5 of the same - Matter remanded: CESTAT [para 1, 6, 8, 12, 13]

- Matter remanded : MUMBAI CESTAT

2019-TIOL-360-CESTAT-MUM

Lavgan Dockyard Pvt Ltd Vs CCGST

ST -CENVAT Credit - Rule 2(l) of CCR, 2004 - definition of ‘Input service' specifically excludes life insurance and health insurance services, which are used primarily for personal use of any employee - in view of the embargo created in the definition, service tax paid on insurance service for insuring the employees should not be considered as input service - so also, security service availed for its guest house which is located outside the factory, there is no nexus between such service with the output service provided - impugned order to the extent it denies the CENVAT credit sustains - in absence of utilisation of credit, it cannot be said that there is loss of revenue to the Government, which can be compensated by way of payment of interest - credit particulars were reflected in the books of accounts, hence appellant had not suppressed material particulars - interest and penalty cannot, therefore, be sustained - appeal is partly allowed: CESTAT [para 4 to 6]

- Appeal partly allowed : MUMBAI CESTAT

2019-TIOL-359-CESTAT-MUM

Juhu Beach Resorts Ltd Vs CST

ST - During the period 01.04.2006 to 17.04.2006, appellant was not liable to pay any service tax as a recipient of taxable service under reverse charge mechanism in terms of s.66A of the FA, 1994 which was inserted in the statute book only on 18.04.2006 -Therefore, non-submission of break up of amount from the total service tax liability cannot be a defensible ground to demand service tax for which no sanctity is provided in the statute: CESTAT [para 6.1]

ST - Reimbusement of expenses - issue as to whether the same should form part of value of taxable service for computation of service tax liability is no more res integra in view of the Delhi High Court decision in Intercontinental Consultants and Technocrats P Ltd. - 2012-TIOL-966-HC-DEL-ST as upheld by the Supreme Court - 2018-TIOL-76-SC-ST - law is well settled that under both the un-amended and amended provisions of s.67 of the CEA, 1944, gross amount charged by the service provider for providing only such service should be considered as taxable value for payment of service tax - since reimbursement of expenses cannot qualify as a separate taxable service, such amount should not be included in the gross value for payment of service ax - impugned order to this extent is not legally sustainable: CESTAT [para 6.2]

- Appeals disposed of : MUMBAI CESTAT

2019-TIOL-358-CESTAT-AHM

Alembic Ltd Vs CCE & ST

ST - The assessee-companies, engaged in development of real estate projects, availed credit of service tax paid on various input services used to construct residential complex - The residential projects developed by both assessees received completion certificates, on the date of which about 32% & 35% of the property remained unsold & for which no bookings were made - Thus if such properties were sold in future, no service tax was payable - The assessees had given intimation that they would avail proportionate credit on input services after obtaining completion certificate & on square feet area basis - Later, upon CERA audit, the assessees were made to reverse proportionate credit till obtaining completion certificate, upon which their output would be fully taxable - Such amount was reversed under protest & no SCN had been issued in this regard - Hence the assessees claimed refund of the tax paid - Pursuantly, separate SCNs were issued demanding 6%/8%/10% on sale of immovable property after obtaining Completion certificate where no Service Tax was paid - The Revenue alleged that the assessees availed credit & provided both taxable & exempt services - The demands were confirmed u/r 6 of CCR 2004 - Such demands were sustained by the Commr.(A).

Held: In light of Rule 3 of CCR 2004, the assessees cannot avail full credit on input services received after obtaining completion certificate - But they also cannot be expected to reverse 8%/10% of the sale price of immovable property after obtaining such Completion Certificate where no Service Tax is paid, as if it is sale of immovable property since Rule 6 per se does not apply to the present case - Post 01.04.2016, as the assessees availed proportionate credit only, they cannot be asked to reverse such amount u/r 6(3) as they can be said to have maintained separate accounts as required u/r 6(2) - Regarding the issue as to whether the assessees were required to reverse proportionate credit, it is seen as per the Apex Court's verdict in Dai Ichi Karkaria that Modvat/Cenvat credit is a vested right & cannot be denied or recovered unless specific provisions for the same exist - It is settled principle that entitlement for credit is on the date of receipt of inputs when the output activity was taxable - Merely because some finished goods become exempt later, the credit availed on inputs contained in semi-finished/finished goods cannot be denied - Besides, a harmonious reading of Rule 3 of CCR r/w Rules 6 & 11 suggest that eligibility for credit must be examined only upon receipt of input service & if found to be availed at time when output service is taxable, then such credit is legitimately availed & cannot be denied without there being any specific provision in this regard - Hence the assessees need not reverse any credit availed by them till obtaining completion certificate - Therefore, if no credit is to be reversed, then the amount paid under protest cannot be retained by the Revenue & must be refunded to the assessees - The demand seeking reversal of 8%/10% of the sale of immovable property is unsustainable as the assessees maintained separate accounts: CESTAT (Para 1.1-1.6,11-16)

- Assessees' appeals allowed : AHMEDABAD CESTAT

 

 

CENTRAL EXCISE

2019-TIOL-361-CESTAT-MUM

CCE Vs Glenmark Pharmaceuticals Ltd

CX - Export - Goods for the purpose of export under bond were cleared from the factory after following due procedure - however, the goods instead of being taken to port directly for exportation were stored in their warehouse at Bhiwandi (not an approved warehouse) from where they were finally exported - after completion of export, appellants would submit proof of export - in a large number of cases, the proof of export was not submitted, therefore, appellant paid Central Excise duty of Rs.2.63 crores along with interest of Rs.57.38 lakhs due for the period 2003-04 to September 2007 - later, SCN issued for imposition of penalty u/r 25(1)(d) of CER r/w notification 42/2001-CX(NT) and para 13.6 of Chapter 7 of CBEC Manual - penalty imposed was reduced to Rs.1 crore by Commissioner(A) and, therefore, appellant before CESTAT contending that failure to export goods and submit proof thereof occurred because of reasons beyond their control viz. natural calamity like flood.

Held: Appellant has contravened various provisions of law as referred to in their order by the lower authorities and, therefore, penalty is rightly imposable u/s rule 25(1)(d) of CER - exports under rule 19 of CER, 2002 is a well documented process - however, it cannot be the case of the department that the appellant had clandestinely cleared the goods for exportation from their manufacturing unit - exports should have been properly accounted and monitored by Revenue also - in case of delay in submission of proof of export, Revenue itself should have asked for recovery of duty in terms of bond executed - appellant, therefore, cannot be saddled with the allegation of suppression of fact with intent to evade payment of duty - penalty is, therefore, imposable but not equivalent to the amount of duty short paid - since provisions of s.11AC of CEA, 1944 are not attracted, ends of justice will be met if the penalty imposed is reduced to Rs.5 lakhs only - Revenue appeal seeking enhancement of penalty dismissed and appeal of assessee partly allowed: CESTAT

- Assessee appeal partly allowed : MUMBAI CESTAT

 

 

CUSTOM

2019-TIOL-363-CESTAT-MUM

CC Vs Micro Clearing Agency

Cus -Adjudicating authority held that the CHA was guilty of non-observance of the procedures laid down in the CHALR, 2004 but has taken a lenient view of ordering only forfeiture of security deposit and allowed the licence to become operative on making fresh deposit -Revenue in appeal before CESTAT.

Held: Section 129A of the Customs Act provides for filing of appeal to the Tribunal against a decision or order passed by the Commissioner of Customs as an adjudicating authority - present order is passed by Commissioner in an administrative capacity and not in context with matter relating to levy of tax - since such order was passed under CHALR, 2004, the author of such order cannot be termed as an adjudicating authority, whose order can be appealed against before the Appellate Tribunal - in absence of specific provisions made in the Customs statute, present appeal of Revenue is not maintainable - appeal dismissed: CESTAT [para 7, 8]

- Appeal dismissed : MUMBAI CESTAT

2019-TIOL-362-CESTAT-MUM

Rishad Shipping And Clearing Agency Pvt Ltd Vs CC

Cus -Smuggling of prohibited Red Sander wood - consignments were attempted to be fraudulently exported on forged documents - investigation revealed that the appellant CHA had filed nine shipping bills in the name of different parties - in adjudication, Commissioner has held the appellant guilty and forfeited the entire amount of security deposit and ordered that the CHA licence shall become operative only on making fresh security deposit as per regulation 10(2) of the CHALR, 2004 - appeal before CESTAT.

Held: Adjudicating authority has furnished the reference of shipping bills which were filed on behalf of the CHA-appellant, therefore, it cannot be said that no shipping bills were filed in respect of export of Red Sanders - adjudicating authority has also made specific observations that Facility Notice 41/09 has not been followed diligently by appellant - since appellant is strictly guided under such instructions, in order to safeguard revenue and misuse of licence by the offenders, non-observance of such Facility Notice cannot be termed as a technical breach of law - order of Commissioner cannot be interfered with - moreover, disputed shipping bills were filed over a period of 60 days by unscrupulous persons in the name of appellant, using the PAN - since appellant did not take any precautionary measures to stop the process of fraudulent export, no infirmity in the order forfeiting the entire security deposit amount and directing fresh deposit in terms of CHALR, 2004 - appeal dismissed: CESTAT [para 5, 6]

- Appeal dismissed : MUMBAI CESTAT