Asean Aromatics Pvt Ltd Vs ACGST

GST - Petitioner challenges the order dated 08.11.2018 cancelling his registration for non-filing of returns, on the ground that GSTR 3B returns have been filed upto December 2017 and GSTR-1 only UPTO August 2018.

Held: Overall impression that is obtained is that the authorities, both the Centre and State have taken into consideration the fact that the Goods and Services Tax is nascent in its application and is an evolving regime; that the interests of the small traders have thus weighed with the authorities in granting the relaxation in time limits - Bench is inclined to direct the Principal Secretary/Commissioner of Commercial Taxes, Chennai, to consider and pass orders upon the application of the petitioner dated 18.12.2018 wherein the petitioner seeks leave to pay pending GST dues in six (6) monthly instalments, a sum of Rs.10,00,000/- having been paid as first instalment on 14.12.2018 - Principal Secretary/Commissioner of Commercial Taxes should bear in mind the technical difficulties faced by the assessee, the fact that the petitioner has not engaged in any business transactions, on account of the cancellation of registration, for the last four (4) months as well as relevant circulars issued by the authorities till date, in disposing the application - petitioner will appear before the Principal Secretary/Commissioner of Commercial taxes on 04.03.2019 and orders to be passed within two weeks thereafter - Writ petition is disposed of: High Court [para 7 to 9]

- Petition disposed of: MADRAS HIGH COURT

2019-TIOL-15-NAA-GST

Director General Anti-Profiteering Vs Abbott Healthcare Pvt Ltd

GST - Anti-profiteering - Section 171 of the CGST Act, 2017 - Allegation is that the respondent has not passed on the benefit of reduction in the rate of tax as he had increased the MRP of 'Melaglow Rich (Niacinamide) Depigmentation & Glow Restoration Cream' from Rs.365/- to Rs.415/- per unit post implementation of GST; that on the label, MRP was mentioned as Rs.365/- per unit, however, another pasted sticker on the label indicated that the “MRP post GST” was Rs.415/- per unit i.e. an increase of Rs.50/- per unit - Applicant alleges that the respondent had indulged in profiteering in contravention of s.171 of the Act and appropriate action should be taken - DGAP in its report has stated that that the total tax incidence on the product was 30.06% in the pre-GST period which was reduced to 28% w.e.f 01.07.2017 and later @18% w.e.f 15.11.2017, however, the average base price (excluding taxes) of the product of respondent 1 (M/s Abbott Healthcare) was Rs.202.06 which was increased to Rs.230.90 (during 01.07.2017 to 31.07.2018) and thus it was clear that the MRP had been increased by respondent 1 and respondents 2 & 3 were not responsible for profiteering; that by increasing the base price of the product and also by increasing the cum-tax price charged from the recipients post GST the benefit of GST rate reduction was not passed on to the customers; that, therefore, during the period between 01.07.2017 to 31.07.2018, the DGAP concluded that in the respect of the impugned product the amount of profiteering comes to Rs.96,59,716.26.

Held: It is clear from a plain reading of the provisions of s.171 of the Act that any reduction in the rate of tax should result in commensurate reduction in the price w.e.f 01.07.2017 so that there is no profiteering by the suppliers at the expense of the consumers - It is also clear from section 174 of the CGST Act and s. 173 of the SGST Act that the Central and State Acts which imposed CED, CST as well as VAT have been repealed and the above duty/taxes have been subsumed in the GST and the new rates of GST have been fixed near to the net incidence of the above three taxes which were in force before coming into effect of GST - in case the net effect of the above taxes was more than the rate of GST fixed on 01.07.2017, the same would have to be construed as reduction in the rate of tax as per the provisions of s.171(1) of the Act and the consequent benefit in the shape of commensurate reduction in the price has to be passed on, otherwise it would result in earning undue profit by supplier - the term 'rate of tax' used in s.171(1) has a much wider scope and, therefore, cannot be restricted only to the GST rate reduction - any benefit of reduction in the rate of tax given by the government by sacrificing their own revenue must be passed on to the customers by commensurate reduction in the prices by the suppliers and any other interpretation would be illogical and unreasonable - respondent is trying to mis-interpret the provisions of s.9 of the CGST/SGST Acts and section 5 of the IGST Act by stating that the term 'tax' employed therein does not apply on the Central Excise duty, CST or VAT as it applies only on the 'supply' of goods and services - provisions of s.171 are not at all ambiguous and are rather very clear in their scope and intent, therefore, respondent's argument of invoking the legal maxim of contemporanea exposito to arrive at the 'contemporary exposition' of the statute is not tenable, hence case laws cited are inapplicable - no fault found in the DGAP calculation - There is no evidence to suggest that the respondent had increased the base price due to withdrawal of the CE duty exemption, the benefit of which he was earlier giving to his customers as discount or due to inflation - if the respondent had not increased the price annually, it was his own business call for which he cannot claim any allowance - respondent has failed to explain the coincidence why he had increased the base price on the date from which the rate of tax was reduced which leads to the only conclusion that he wanted to appropriate the benefit of tax reduction by such increase - respondent also cannot increase his base price to cover the losses at the expense of the tax concession given to customers - respondent has in his submission dated 24.12.2018 to the Authority has specifically admitted that he had resorted to profiteering and agreed to deposit the entire amount of Rs.96,59,716.26 along with applicable interest, therefore, there is no doubt that he has contravened the provisions of s.171(1) of the Act and is hence liable for its consequences -Perusal of the records indicate that respondents nos. 2 & 3 did not have any role regarding increase in the base price as well as the MRP of the product as it was solely done by respondent no.1, who is primarily responsible for the benefit of reduction in the tax rate not having been passed on to the recipients - as the applicant has not produced the invoice vide which he had purchased the impugned product, the amount to be refunded to him cannot be determined, however, the Authority places on record its appreciation of the efforts made by the applicant to bring to notice this case of profiteering - respondent is directed to deposit, within three months, the profiteered amount of Rs.96,59,716.26 along with interest, in the Consumer Welfare Fund of the Central and the State governments concerned as per rule 133(3)(c) of the Rules, 2017 in the ratio of 50:50 - DGAP to further investigate the quantum of profiteering on all the products - as the respondent has deliberately and consciously acted in contravention of the provisions of the CGST Act by issuing incorrect invoices, which is an offence u/s 122(1)(i) of the Act, he is also liable to penalty under the said section read with rule 133(3)(d) of the Rules - SCN to be issued accordingly: NAPA

- Application disposed of: NAA

SERVICE TAX

NOTIFICATION

stnot19_001

CBIC issues Sec 11C notification to grant ST exemption to training provided by Deen Dayal Upadhyaya Grameen Kaushalya Yojana

CASE LAWS

John Energy Ltd Vs UoI

ST - Petitioners have challenged the constitutional validity of rule 3 of the Place of Provision of Services Rules, 2012 and Serial No.10 of Notification No.30/2012-ST as being ultra vires sections 64(1), 66B, 65B(44) and (52), 66C and 94(2) (hhh) of the Finance Act, 1994 and ultra vires Articles 14, 19(1) (g) and 265 of the Constitution of India - they have also challenged the order dated 08.01.2019 passed by the Additional Commissioner of CGST & CEX, Gandhinagar - Petitioner contends that service tax can be levied and collected if the "service" was received and consumed in India; that when service provider and service receiver both were located in India, no service tax can be levied and collected if the "service" was rendered and used in a foreign country; that the clarifications and guidelines issued by the CBEC for these provisions are contrary to this legal position, and hence, they are illegal and ultra vires the provisions of the Finance Act, 1994.

Held: Having regard to the submissions, Issue Notice returnable on 20th March, 2019 - By way of ad-interim relief, the respondents are restrained from making any coercive recovery against the petitioners pursuant to the impugned order-in-original: High Court [para 5]

- Ad interim relief granted: GUJARAT HIGH COURT

2019-TIOL-692-CESTAT-BANG

Bharath International Travels Vs CCE & ST

ST - The appellants were registered under the category of Tour Operator - The department conducted audit and found that the appellants were rendering services ranging from making tour itinerary and booking hotel accommodation and received certain commission on basis from the hotels on the payment made by the customers - The Revenue alleged that the service rendered by the appellants falls under sub clause (ii) of 'Business Auxiliary Services' of Section 65(19) of FA, 1994 - SCN issued - Asst. Commissioner confirmed them - On appeal, Commissioner (A) upheld the O-i-O.

Held: the appellants are suggesting the names of the hotels to their customers to whom they are also booking travelling facilities and arranging for the itineraries - This activity certainly falls in the category of 'Promotion or Marketing of service provided by the client' - Thus, the original adjudicating authority has correctly found that "the amount received by the appellants is monetary benefit in turn to the service rendered, by giving lead to their guests or clients to various hotels" - Hence, the definition of Promotion and Marketing submitted by the appellants would be categorical and clear mention of Promotion or Marketing of service under Business Auxiliary Services - Thus, no merit in the appeal filed by the appellant and do not find any necessity to interfere with the impugned order: CESTAT ( paras 1, 4.2 )

- Appeal dismissed : BANGALORE CESTAT

CENTRAL EXCISE

2019-TIOL-711-CESTAT-MAD

Needle Industries India Pvt Ltd Vs CCE

CX - Appellants manufactured two types of needles for sutures, one having horizontal punch and the another having vertical punch - the horizontal item was cleared on payment of duty, however, the second item having vertical punch were cleared on payment of duty as "parts of needle for suture" by claiming exemption under Sl.No.59 of Notification No.6/2006-CE dt. 1.3.2006 - Revenue disallowed the classification - held that there cannot be two classifications for minor variations in the products - thus not eligible for exemption under Notification No.6/2006-CE - Commissioner confirmed the classification of item as per the horizontal item - Also confirmed the duty demand and penalty imposed - appeal to CESTAT.

Held: - It is important to note that the classification of "Atraumatic Needled Sutures" have been held to be classifiable under CETH 9018 by the Apex Court in the case of Johnson & Johnson Ltd. Vs CCE - What is required to be adjudged is whether disputed goods are complete Atraumatic Needled Sutures or whether they are only parts and accessories - Notwithstanding the stand of the department, the fact is that they cannot be used as such for suturing purposes - while the cleared "needles having vertical punch", may well be final goods for the appellants - it can only be considered as a part or accessory for the manufacturer who would eventually be manufacturing "Atraumatic Needled Suture" - The item being part / accessory of the "Atraumatic Needled Suture" would fall within the beneficial scope of Sl.No.59 of Notification No.6/.2006-CE and be eligible for the exemption provided - Impugned order set aside and appeal allowed with consequential benefits: CESTAT [para 5.1, 5.2, 5.5, 5.6, 6]

- Appeal allowed: CHENNAI CESTAT

2019-TIOL-695-CESTAT-AHM

Gandhar Oil Refinery India Ltd Vs CCE & ST

CX - The appellant-company manufactures various grades of industrial oils and lubricants covered under Chapter 27 of the CETA 1985 - The appellant also has a second unit - During the relevant period, the appellant transferred imposed goods used as inputs to their second unit, without reversing proportionate credit of SAD - The Department conducted physical verification of stock & alleged shortage of raw material & packaging material, upon comparison with balance sheet - It was alleged that such inputs were cleared without reversing credit - Duty demand was raised & penalty u/s 11AC was imposed - On appeal, such findings were upheld.

Held - Regarding demand raised towards SAD, it is seen that the inputs were removed from one unit to another & the recipient unit is entitled for credit - Hence the entire exercise is revenue-neutral - There cannot be any mala fide intent to remove inputs without reversing SAD as there is neither gain nor loss to the Revenue in reversing the credit - Hence the duty demanded is unsustainable - Regarding demand raised for shortage of raw material, it is based on the statements of one person - However, such statement was retracted shortly, explaining the reasons for shortage - Besides, the appellant submitted a letter from its software company, clarifying about a technical snag in the ERP system in which the stock account was maintained - Thus stock maintained on defective ERP system cannot be taken as correct and it cannot be said that there is shortage or excess of stock - Statements recorded from some transporter do not reveal the actual co-relation of alleged clandestine removal - Moreover, the depositor of the statements was not examined as per mandate of Section 9D of CEA 1944 - No evidence was produced regarding clandestine removal of total quantity of stock allegedly found short - No evidence such as acceptance of goods by customer or payment transaction, was put forth - Hence the duty demand raised is unsustainable: CESTAT (Para 1,6)

- Assessee's appeal allowed : AHMEDABAD CESTAT

2019-TIOL-694-CESTAT-AHM

CCE & ST Vs Nemlaxmi Books India Pvt Ltd

CX - CENVAT - Refund - Rule 5 of CCR, 2004 - Respondent exported exempted ‘Notebooks and Exercise books' under Bond/LUT - CENVAT credit availed on inputs used in the manufacture of exempted goods and lying accumulated since not utilisable for home consumption was claimed as refund u/r 5 of CCR, 2004 - original authority rejected the claim but the appeal was allowed by Commissioner(A) relying upon the Tribunal decision in respondent's own case cited as 2008-TIOL-2012-CESTAT-AHM - Revenue in appeal before CESTAT.

Held: There is no dispute that the Revenue accepted the proposal of the respondent to export the goods under Bond/LUT and allowed the export - As per Rule 6(6)(v) of CCR, 2004, it is provided that if the goods are exported under Bond/LUT Rule 6(1), (2) and (3) are not applicable - It is also observed that as per notification 42/2001-CE (N.T.) , manufacturer exporter is required to export all excisable goods under Bond/LUT, therefore, even though the finished goods are exempted, the same is allowed to be exported under Bond/LUT - Therefore, availment of CENVAT Credit by the respondent is not objectionable - Consequently, refund of the same is also admissible in terms of Rule 5 of CCR, 2004 - no infirmity in order of Commissioner(A), therefore, same is upheld and Revenue appeal dismissed: CESTAT [para 4]

CX - Revenue appeal - Monetary limit - Except the one appeal no. E/11633/2018 which involves refund amount of Rs. 20,22,895/-, in all other appeals, the amount involved is less than 20 lakhs, therefore, all those appeals are also not maintainable in view of Government's litigation policy issued vide Circular no. F.No. 390/Misc/116/2017-JC dated 11.07.2018: CESTAT [para 4]

- Appeals dismissed : AHMEDABAD CESTAT

CUSTOMS

NOTIFICATION/ INSTRUCTION

dgft18pn077

Amendments in Appendix 4J of Hand Book of Procedures 2015-20

cnt20_2019

India-Singapore CECA - Origin of Goods - Word 'certifying' substituted by 'Issuing'

[F.No.276/206/2018-CX.8A]

Writs on Safeguard Duty on solar cells - CBIC issues fresh directions

CASE LAW

2019-TIOL-693-CESTAT-MAD

Madras Metals Vs CC  

Cus - The assessee had filed the refund claims of 4% SAD paid by them against 9 Bills of Entry in terms of Notfn 102/2007-Cus. as amended by Notfn 93/2008-Cus. read with Board Circular Nos. 06/2008 , 16/2008 and 18/2010 - This Bench in case of Goyal Impex & Industries Ltd. 2018-TIOL-3791-CESTAT-MAD after considering the rival contentions, has ruled that the assessee is eligible for refund, despite the fact that its claim of refund was belated (by 10 days) - The said ruling squarely applies to the facts of the case on hand - On the contrary, Revenue was unable to produce any Orders/judgements contrary to or distinguishing the above Order of this Bench - Going therefore by the ratio laid down in said case, the impugned order is unsustainable for which reason same is set aside - The appeal is therefore allowed with consequential benefits: CESTAT

- Appeal allowed : CHENNAI CESTAT