SERVICE TAX

2019-TIOL-685-CESTAT-DEL + Case Story

Delhi International Airport Ltd Vs CGST

ST - Advance development cost is not consideration for any services rendered - Development of common infra outside asset area cannot be said to be in relation to renting of immoveable property as no interest in common area is transferred under IDSA to developer - A quid pro quo has to be established before levying service tax, therefore, the recovery of cost cannot be made liable to service tax - taxable event having occurred earlier to the point of levy of service tax, the same cannot be levied: CESTAT [para 11 to 20]

ST - Limitation - Matter involved both physical verification as well as examination of legal issue on which even within the Department, different sets of opinion existed - All agreements IDSA and Development Agreement were entered from June, 09 to Feb, 2010 i.e prior to date of lease rent of vacant land becoming taxable - Renting of vacant land was brought under service tax net w.e.f. 1.07.2010, therefore, no tenable assertion can be made that the appellant, with deliberate intent, entered into two sets of agreements on same date, as alleged by the department - extended period of limitation cannot be invoked in the facts and circumstances of the case in hand – Impugned order set aside and appeal allowed: CESTAT [para 19, 20]

- Appeal allowed : DELHI CESTAT

2019-TIOL-674-CESTAT-HYD

Valmiki Consultants Pvt Ltd Vs CC & CT

ST - The assessee provides referral services to various foreign universities for which they receive an amount as commission/referral fees - The activity of assessee is to locate the candidates who wants to study abroad, make a data base and refer the student's name to foreign universities; propagate to the future candidates the advantages of specific universities and studying in them - For rendering these services assessee gets paid by foreign universities as per the contractual agreement - A departmental investigation occurred and it was viewed by Department that assessee rendered taxable services under category of "Intermediary Agent" and received commission/referral fee from foreign universities and failed to discharge service tax on consideration received as per the "Place of provision of services Rules, 2012" during period 2014-15 to 2015-16 - he issue is no more resintegra - In case of Sunrise Immigration Consultants Pvt Ltd 2018-TIOL-1849-CESTAT-CHD , identical issue arose as to whether referring the students and the amounts received as referral commission would get covered for tax purposes under Rule 2(f) of point of provision of Service Rules 2012 and whether such services would fall under the category of intermediary services or otherwise - The Bench after considering the submissions made recorded the following order which covers the issue in favour of assessee - The impugned order is unsustainable and same is set aside on this ground only: CESTAT

- Appeal allowed: HYDERABAD CESTAT

2019-TIOL-673-CESTAT-ALL

Neon News Pvt Ltd Vs CCE & ST

ST - The assessee is engaged in providing ‘cable operator services' and space or time selling service for advertisements - SCN was issued for extended period of limitation for period from 2010-11 to 2013-14 proposing the demand of service tax on forward charge basis including Rs.7,411/- on reverse charge basis on legal services to disallow Cenvat Credit on input services on the ground that credit has been taken after one year from the date of duty paying documents imposed penalties under various sections and demand of late fee - Earlier there was no time limit prescribed in Cenvat Credit Rules for taking credit - The time limit of 6 months was introduced w.e.f. 01.09.2014 which has got perspective effect as held by Allahabad High Court in Ram Swarup Electricals Ltd. - It cannot be applied to the period prior to 01.09.2014 - Accordingly, the disallowance of Cenvat Credit is set aside and it is held that the whole Cenvat Credit is available to assessee - So far as differential tax is concerned, in the SCN for the financial year 2011-12 the gross receipt is computed as Rs.5,51,73,149/- which comprises of signal fee Rs.3,77,39,469/- but in SCN it has been erroneously taken at 3,83,39,469/- thus there has been a difference of Rs.6 lacs - The said clerical mistake in final account was noticed by assessee subsequently - Appreciating the mistake as same is evident from record and books of account maintained on ordinary course of business, the demand of difference amount of Rs.61,997/- is set aside - The demand has arisen mainly due to disallowance of Cenvat Credit which have now allowed - There is no deliberate defiance of provision of law nor there is any act of suppression on the part of assessee and the transaction was recorded in books of accounts ordinarily maintained in course of business, therefore, the penalties under Sections 77(1)(b), 77(1)(c)(i), 77(1)(c)(iii), 77(2) and Rule 15(3) of CCR, 2004 are set aside - Penalty under Section 70 is retained, however it reduced to Rs.14,400/- in terms of Section 70 and Rule 7C of FA, 1994: CESTAT

- Appeal partly allowed: ALLAHABAD CESTAT

2019-TIOL-672-CESTAT-MAD

Indian Overseas Bank Vs Commissioner of GST & CE

ST - The appellant is a public bank - It maintains Nostro/Vostro accounts with foreign banks to help customers with import/export business as well as for paying and collecting bank charges for such service - For this, it utilized the services of SWIFT, Belgium for exchanging financial information regarding banking services - Such services are taxable under 'Banking or Other Financial Services' u/s 65(12) of the Finance Act 1994 - The appellant paid service tax on Nostro transactions but did not pay tax on the Vostro and SWIFT transactions - The Revenue proposed to demand service tax on Vostro and SWIFT transactions, both as service provider and service recipient - On adjudication, duty demands were raised with interest & penalties were imposed - The same were sustained by the Commr.(A).

Held - It is seen that the issue of levying service tax in Vostro and SWIFT accounts was settled in the assessee's own case for a preceding period, wherein it was held that Vostro transactions amounted to export of service - Hence the demand raised in this regard had been set aside - Following such findings, the demands raised in the present case are quashed - Regarding SWIFT transactions, the same were held to be classifiable under Banking or Other Financial Services u/s 65(12) of the Act - Following such findings, the duty demanded on SWIFT transactions in the present case must be sustained, with interest - Regarding penalty, it is seen that the issue was contentious for a long time and was subject matter of dispute before varrious High Courts and Tribunals - Since the issue is interpretational in nature, no penalty can be imposed in either case - Hence the appeal is partly allowed: CESTAT (Para 2.1,2.2,7,8.1,8.2)

CENTRAL EXCISE

2019-TIOL-509-HC-AHM-CX + Case Story

CX - Attachment of property over unpaid dues – Petitioner has challenged the notice issued by the Assistant Commissioner, GST & Central Excise u/r 9 and rule 10 of the Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995, requiring the petitioner to pay a sum of Rs.52,39,752/- with interest - HC directs petitioner to deposit Rs.40 lakhs in cash towards principal and penalty and two bank guarantees of Rs.55 lakh each towards interest for seeking release: HC [para 7, 8]

- Petition disposed of: GUJARAT HIGH COURT

2019-TIOL-677-CESTAT-MAD

Pepsico India Holdings Pvt Ltd Vs Commissioner of GST & CE

CX - The assessee is engaged in manufacture of aerated water, beverages and fruit pulp or juice based drinks and are availing the facility of CENVAT credit on various input services - The issue is with regard to disallowance of credit on outdoor catering service / canteen service - Undisputedly, assessee is a factory coming within the ambit of Factories Act - The assessee has made detail submissions with regard to statutory requirement for providing canteen facility to employees within the factory premises - The Tribunal in case of Hindustan Coca-Cola Beverages 2016-TIOL-2223-CESTAT-HYD had observed that if such services are provided as per the statutory requirement, they are eligible for credit - The Tribunal thus noted that outdoor catering services are availed primarily as per requirement of assessee in order to engage in manufacture of finished product and is not for personal consumption or personal use of employee - However, said decision was referred to Larger Bench and vide decision in case of Wipro Ltd. 2018-TIOL-3256-CESTAT-BANG-LB , the Larger Bench of Tribunal held that since outdoor catering services are specifically mentioned in exclusion clause of the definition, credit is not eligible - The decision in Wipro Ltd. would be applicable to the issue in this appeal - Following the same, credit is not available to assessee - However, taking note of the fact that the issue is interpretational one and that the assessee have disclosed the details of credit availed in their ST-3 returns, penalty imposed cannot sustain and the same is set aside - The impugned order is modified to the extent of setting aside the penalty imposed without disturbing the demand or interest thereon under outdoor catering service: CESTAT

- Appeal partly allowed: CHENNAI CESTAT

2019-TIOL-676-CESTAT-KOL

CCE Vs Tata Steel Ltd

CX - The assessee is engaged in manufacture of various iron and steel products in their factory at Jamshedpur - The goods manufactured by them are sold through distributor/dealers situated at different parts of the country - The assessee comes up with advertisements for their products in various press/electronic media - The department came to the conclusion that distributors had borne a part of the advertisement cost which otherwise would have been incurred by assessee - This valuation dispute has at its centre, the agreements executed by assessee with their distributors/dealers - The Clause 2.12 (c) makes it clear that distributor ‘shall' advertise the product of assessee - There is a further stipulation that advertisements will have to be approved by assessee - However, after going through the entire agreement, Tribunal do not see any clause which deals with expenditure on such advertisement - On the basis of agreement, it cannot be stated that assessee has obligated the distributors to incur advertisement expenses - Even the letter dated 05.05.2004 cannot be said to create such an enforceable legal right for assessee against the distributor - The Tribunal had occasion to consider a similar matter in case of Maruti Suzuki India Ltd. 2008-TIOL-1713-CESTAT-DEL - The Tribunal was considering, in that case, joint advertisements whose expenses were shared between the manufacturer and the dealer - The yardstick stipulated by Supreme Court in case of Surat Textitle Mills Ltd. 2004-TIOL-40-SC-CX has not been satisfied - Consequently, the impugned order needs no interference and the same is sustained: CESTAT

- Appeal rejected: KOLKATA CESTAT

2019-TIOL-675-CESTAT-AHM

Welspun Corp Ltd Vs CCE

CX - The assessee is engaged in manufacture of excisable goods namely, Hot Rolled Steel Plates, Hot Rolled Steel Coils and MS Pipes - For the purpose of manufacture of said final product, assessee set up their own Captive Power Plant within the same premises - The assessee consumed substantial amount of electricity and Steam generated by them in manufacture of final product and sold balance amount of electricity to independent buyers - The limited issue to be decided is that in a case where at the time of receipt of input services, assessee availed cenvat credit on entire service and on pointing out by audit party they reversed the cenvat credit in respect of input services attributed to exempted goods/non excisable goods along with interest, whether the demand confirmed by Revenue under Rule 6(3) i.e. 5%/10% on value of exempted goods is legal and proper - The assessee is not disputing that cenvat credit in respect of input services attributed to exempted goods namely Steam, Fly-Ash and non excisable goods i.e. electricity sold outside their factory, is not admissible and they have admittedly reversed the proportionate cenvat credit and also paid the interest from the date of taking credit till the date of reversal - The assessee rightly availed the option of Sub Rule 3(A) of Rule 6 of CCR, 2004, the only lapse on the part of assessee is that the payment of cenvat credit was made belatedly, however they have paid interest for period right from availing the cenvat credit till the payment/reversal of proportionate cenvat credit which create a position as if assessee have not availed cenvat credit right from the date when cenvat credit was availed - Therefore, there is no reason for imposing option under Clause (i) of Rule 6(3) i.e. payment of 5%/10% of value of exempted goods - The issue is no longer res-integra, therefore, the demand confirmed equal to 5%/10% of value of exempted goods is not sustainable - As regard the submission of assessee regarding limitation, firstly, assessee had not utilized cenvat credit attributed to exempted goods, secondly the fact regarding the availment of credit and manufacture and clearance of exempted and non excisable goods are very much on record, therefore, the suppression of fact cannot be attributed on the part of assessee - Since the issue regarding reversal of cenvat credit under Rule 6(3) is contentious and various cases on the same issue have been made out which can be seen from such of judgment given above, therefore, on the issue related to Rule 6(3) it cannot be said that assessee had malafide intention to evade payment of duty - Therefore, demand for extended period is also hit by limitation for same reason, the penalties imposed are also unsustainable - Proportionate credit paid by assessee along with interest is sufficient compliance under Rule 6(3), accordingly the same is maintained - The demand under Rule 6(3)(i) i.e. 5%/10% of value of the exempted goods and all the penalties are set aside: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

CUSTOMS

2019-TIOL-671-CESTAT-MAD

Network Industries Ltd Vs CCE & ST

Cus - The appellant companies filed shipping bills during the relevant period, indicating exports made against EPCG license issued to a third company, for export of garments - Revenue's investigations revealed that the license pertained to such third company and that the appellants had mis-declared the third company as supporting manufacturers in documents to fabricate evidence that the third company actually manufactured the export goods - This would enable the third company to fraudulently avail benefit under EPCG by getting credit of exports made by the appellants - SCNs were issued, proposing to confiscate the goods attempted to be exported, to disallow value of goods towards non-fulfilment of export obligation under EPCG license & to impose penalties on all three companies, u/s 114(iii) & Section 112 - Penalty was also imposed on the CHA for allegedly abetting mis-declaration - Upon adjudication, the proposals in the SCN were confirmed vide an O-i-O - Against such order, the appellants & the CHA filed appeal, as did the Department, on grounds that while the confiscation of the goods had been upheld in the O-i-O, the adjudicating authority had not proceeded to confiscate the goods.

Held - It is undisputed that the third company did not have any claims over the goods sought to be exported - The appellants' claim to have made mistake due to misundestanding of law cannot be sustained - Hence penalty u/s 114(iii) imposed on both appellants is sustained - Nonetheless, considering that there is no discrepancy or mis-declaration in the value of the goods, the quantum of the penalty merits being reduced - Regarding the allegations made against the CHA, it is seen that the Department did not adduce evidence to support its allegations of mis-declaration - Besides, the Department presumed that the CHA failed to exercise due diligence - Such presumption is insufficient to establish abetment u/s 114(iii) - Hence no penalty can be imposed on the CHA - Regarding the Department's appeals, it is seen that the adjudicating authority should have correctly proceeded to order confiscation of the goods and impose redemption fine u/s 125 - As the same has not been done, the O-i-O must be modified to such effect - Besides, the redemption fine should be commensurate to the gravity and incurability of the offence alleged - Considering that there is no mis-declaration in the nature, description or value of the goods and also keeping in mind that the appellants were not the beneficiaries of the entire modus operandi , an amount of redemption fine merits being imposed - Hence the assessee's appeals are partly allowed, whereas the Department's appeals are partly allowed by way of modification to the O-i-O: CESTAT (Para 1,6.1-6.3)

- Assessees' appeals partly allowed: CHENNAI CESTAT

2019-TIOL-670-CESTAT-ALL

CC, CE & ST Vs L G Electronics India Pvt Ltd

Cus - The assessee has imported certain items and cleared the same on payment of duties of Customs including SAD - They were entitled to refund of SAD paid in terms of Notfn 102/20007-CUS subject to fulfillment of certain conditions - Accordingly they filed four refund claims - The issue before original adjudicating authority was claim of refund of SAD which stands denied by him - As such, there was no occasion for original adjudicating authority to deal with interest aspect - Further Commissioner (A) though had allowed the refund claims, but rejected the interest amount by one line observations - There was no discussion or observations by Commissioner (A) as regards interest claimed by assessee - As such, the matter should be remanded to original adjudicating authority for deciding the assessee's claim of interest, in the light of declaration of law by Delhi High Court and followed by Tribunal - Accordingly he would decide the interest liability of Revenue by referring to the decisions as also by referring to the facts of the case - The assesse's entitlement to interest would be considered by treating the original date of filing of refund as the relevant date in terms of provisions of section 27A of Customs Act: CESTAT

- Appeals disposed of: ALLAHABAD CESTAT