SERVICE TAX

2019-TIOL-810-CESTAT-MAD

Mckinsey Global Services India Pvt Ltd Vs CGST & CE

ST - The issue is with regard to the rejection of refund claim in respect of short-term accommodation service and air travel agency service - The assessee has pleaded that these services were used for accommodation of employees when they were undertaking business travel and therefore is eligible for refund - The Commissioner (A) has rejected the refund claim holding that the assessee has not proved the nexus of input service with output service and that there is no value addition of these services for output services - In fact, there has been no SCN issued by the department alleging that assessee is not eligible for credit of these services - When department has not raised any allegation by issuing SCN that the assessee is not eligible for credit, they cannot go into the admissibility of credit during process of refund claim - Further, as per amended provisions of Rule 5, it is not necessary to establish the nexus with the output service - The Board circular clarifies the same - In assessee's own case also, the said issue has been held in favour of them - Following the same, the rejection of refund claim is without any basis and unjustified - The impugned order rejecting the refund claim on these services is set aside: CESTAT

- Appeals allowed: CHENNAI CESTAT

2019-TIOL-809-CESTAT-HYD

CC, CE & ST Vs Larsen And Toubro Ltd

ST - During the relevant period, the appellant company received a contract from M/s Reliance Industries for construction of an Onshore Terminal, for receiving, processing, purification and transportation of natural gas extracted from the Godavari basin - As per the agreement, the scope of the work included constructing onshore terminal and infrastructure, construction of civil works for comprehensive Protected Water Supply Scheme, Haul Road work, Access Bridge to Workman Colony, Flyover bridge, Road widening work & other infrastructure facilities - The appellant was to execute such work and RIL was to provide the requisite machinery and equipment - The appellant did not pay tax on such contract, being under the impression that the onshore terminal is exempted from tax - The Revenue issued SCNs proposing to raise duty demand under Commercial or Industrial Construction Services - On adjudication, such demands were confirmed with interest & penalties.

ST - Jurisdiction - The appellant itself applied for and obtained centralized registration with the Hyderabad commissionerate - Hence it has the jurisdiction to raise demand even if services are provided outside outside its territorial jurisdiction - Besides, all the records and accounts pertaining to the RIL project are maintained by the appellant at its office in Hyderabad - Thus the jurisdiction of the Hyderabad commissionerate cannot be questioned: CESTAT (Para 6)

ST - The appellant claimed that it provided taxable as well as non-taxable services - Hence it claimed that the Finance Act had no mechanism for taxation of such composite contracts & so the entirety of such contract could not be made taxable - Such submissions do not hold much weight since the provisions u/s 65A of the Finance Act provides the necessary guidelines for determining specific taxable category as well as classification as taxable & non-taxable services - Thus a composite service can be held to be non-taxable only upon establishing that the essential character of composite contract is imparted - Hence the appellant's argument of the entire composite contract being non-taxable must be rejected: CESTAT (Para 9)

ST - Demand raised under CICS - It must be noted that many times, parties describe a contract in a manner which is not determinative of its true character, as is seen in the present case, where the contract is titled as one for Construction of onshore terminal and associate facilities - Hence it is clear that on standalone basis, some of the service provided were in the nature of ECIS services while others on standalone basis fell under the headiong CICS or were non-taxable services - As both sides unanimously contend that the contract is composite & indivisible and not amenable to being broken down to its separate components, it was necessary for the adjudicating authority to examine which of the two taxable services between ECIS & CICS imparted the essential character to the contract as a whole - However, no such exercise was carried out - Also considering the shortage of material, it cannot be said as to which of the two services impart the essential character to the contract in question - Hence this aspect requires consideration - Thus the matter warrants remand - Claim regarding extended period of limitation and benefit under Notfn No 1/2006-ST are not being dealt with as the matter is remanded: CESTAT (Para 12,13)

ST - Demand raised under WCs - The same is unsustainable since the contract awarded to the appellant is a pure service contract & does not involve any transfer of property in goods, for its execution - Thus the pre-requisite condition for raising demand under WCS is not satisfied: CESTAT (Para 14)

- Case remanded: HYDERABAD CESTAT

2019-TIOL-808-CESTAT-BANG

Microsoft Global Services Center India Pvt Ltd Vs CCT

ST - The assessee had filed two applications for refund of unutilized and accumulated CENVAT credit of Service Tax on various inputs services under Rule 5 of CCR, 2004 and under the provisions of Notfn 27/2012-CE-(NT) - The Original Authority sanctioned both the refund claims in full but did not grant the interest on account of delayed sanction of refund claim amount - On appeal, Commissioner(A) rejected the appeal on the ground that since the assessee had not challenged the O-I-O dated 23.10.2017 sanctioning the refund, same had attained finality and accordingly no interest, arising out of the same, can be granted to assessee - The impugned order is bad in law as it has traveled beyond the O-I-O and rejected the prayer of interest on altogether new ground which was not there in the O-I-O which is not permitted under law - Further, the Tribunal in case of Netapp India Pvt. Ltd. - 2018-TIOL-1295-CESTAT-BANG has already granted interest for delayed payment of refunds after following the judgment of Apex Court in case of Ranbaxy Laboratories Ltd - 2011-TIOL-105-SC-CX - In view of settled position of law, the impugned order is not sustainable in law and the same is set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT

CENTRAL EXCISE

2019-TIOL-807-CESTAT-DEL

CGST & CC, CE Vs Ultratech Cement

CX - The assessee is engaged in manufacture of white cement and are availing cenvat credit - Department observed that assessee have wrongly availed cenvat credit of service tax in respect of commission paid to their agents denying the said commission to be a input service, SCN was issued proposing the recovery of said amount alongwith interest at the appropriate rate and the proportionate penalties -

NO doubt the decision of Cadila Health Care is a later decision but perusal of the decision shows that Gujarat High Court had not referred to a CBEC Circular dated 29.04.2011 in accordance whereof the cenvat credit is admissible on the services of the sale of dutiable goods on commission basis - It is this Circular only which has been endorsed by Central Excise vide Notfn 02/2016 - Accordingly, the Notfn is not precisely an amendment but a clarification to the already existing Circular of Department - Tribunal in case of Essar Steel - 2016-TIOL-520-CESTAT-AHM has clarified that said Notification has to be considered as declaratory in nature only and therefore has to be given the retrospective effect - Further, the issues is no more res integra - It has been decided by Tribunal itself vide Final Order dated 09.10.2017 wherein the previous decision bearing Final Order dated 28.07.2017 was held upon wherein was examined the issue alongwith he decision of Gujarat High Court and Punjab & Haryana High Court - Vide another Final Order dated 05.09.2017 the Tribunal came to the conclusion that assessee is entitled to avail cenvat credit on commission paid to agent who has effected the sale on behalf of the assessee - Commissioner(A) has committed no error while allowing the assesees' appeal, in the light of the various decisions of Tribunal in this respect, Order is therefore upheld: CESTAT

- Appeal dismissed: DELHI CESTAT

2019-TIOL-806-CESTAT-HYD

Prajapati Developers Vs CCT

CX - The assessee is engaged in construction of residential complexes mainly in Mumbai and also in Hyderabad and availing CENVAT credit - A SCN was issued seeking reversal of CENVAT credit under Rule 6 holding that the input services were used both for provision of taxable services and also for activities which do not amount to service under Sec. 65B(44) of FA, 1994 - There was no provision during the relevant period for reversal of credit where common inputs or input services were used for provision of taxable services and also activities which do not amount to services at all - It is nobody's case that assessee has availed credit on inputs and input services used exclusively in activities which do not amount to service - If that be so, they would not have been entitled to credit of service tax paid or duty paid in view of Rule 2(l) and Rule 3 of CCR, 2004 - There was a gap in law during relevant period inasmuch as one could have availed complete credit of the common inputs and input services which are used in providing taxable services and not activities which do not amount to service at all and the assessee could have used only a small fraction of common inputs/ input services in providing taxable services and rest in activities which do not amount to service at all and still would have been entitled to full credit of the tax paid - This was rectified by insertion of explanation (3) to Rule 6(1) w.e.f. 01.4.2016 vide notfn 13/2016-CE (NT) - This explanation however was not given retrospective application in the notification - It is a well settled legal position that taxing statutes should be read as such without any intendment in it regardless of the consequences - It may result in an unfair taxation or an unfair benefit to the tax payer - Either way, the taxing statutes have to be interpreted as they exist regardless of the consequences - During relevant period Rule 6(1) did not provide for reversal of CENVAT credit in respect of input services used both in provision of taxable services and for activities which do not amount to service - Therefore, impugned order is not sustainable: CESTAT

- Appeal allowed: HYDERABAD CESTAT

2019-TIOL-805-CESTAT-AHM

Zydus Healthcare Ltd Vs CCE & ST

CX - The issue involved is that whether the Cenvat Credit can be denied to manufacturer Exporter who could not realize Foreign Exchange due to rejection of export goods, when the goods have been physically exported outside India - The lower authorities have denied the Cenvat Credit only on the ground that against the export of goods, the Foreign Exchange remittance was not received by assessee - As per plain reading of Rule 6(6) of CCR, 2004, the Cenvat Credit is allowed in respect of goods cleared without payment of duty for export - The goods have been taken out of India to a place outside of India - Therefore, the supply of goods by assessee clearly qualifies as 'export of goods' - Once the export of goods is not under dispute, in terms of Rule 6(6) of CCR, 2004, the assessee is entitled for Cenvat credit - Moreover in the Cenvat Credit Rules, 2004 in respect of export goods there is no condition stipulated that against the export, the Foreign Exchange remittance should be received in order to allow the Cenvat Credit - The issue has been considered by Tribunal in case of P&P Overseas - 2015-TIOL-262-CESTAT-DEL - The assessee is clearly entitled for Cenvat Credit in respect of inputs contained in export goods - Accordingly, the impugned order is set aside: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

CUSTOMS

2019-TIOL-804-CESTAT-MAD

Hdfc Bank Ltd Vs CGST & CE

Cus - Due to continuous absence of assessee and counsel, it is presumed that assessee is not interested in prosecuting the matter - Further, the amount involved is only Rs.76,000/- and as per the provisions of Section 35B of CEA, 1944, the appeal is liable to be dismissed on monetary limits - Hence, the appeal is dismissed: CESTAT

- Appeal dismissed: CHENNAI CESTAT