|
SERVICE TAX
2019-TIOL-832-CESTAT-MAD + Case Story
CGST & CE Vs Redington India Ltd
ST - The appellant company is engaged in distribution of computer hardware and software of various manufacturers as well as in maintenance & repair of such products during warranty and post warranty period - The Department received intelligence that the appellant did not pay service tax on services rendered to M/s HP India Ltd and so visited the assessee's premises, whereupon documents were seized and statements of various persons were taken - It was then noted that the appellant acted as authorized distributor for products manufactured by M/s HP - It was also observed that the appellant received 1% volume discount on the total turnover made in respect of HP products and that the same was not a trade or sales discount, but a commission received for providing strategic market information to M/s HP which helped maximize the sale of HP products - Hence the Department opined that the appellant provided Business Auxiliary Service to M/s HP - SCN was issued proposing duty demand with interest & penalty - On adjudication, the proceedings were dropped on grounds that such 1% discount is not consideration received for service & hence was not taxable - Hence the present appeal.
Held - Considering the differing nature of assessable value, it is seen that the purpose for levy of Central Excise duty & that for levying Service Tax, are two different and distinct entities - The purpose of levying Excise duty is to levy tax on production or manufacture of excisable goods, whereas the purpose of service tax is to levy tax on services - The very intrinsic nature of the former is that it cannot be an activity amounting to manufacture & be subject to levy of Excise duty - Moreover, it has been laid down in several judgments that some consideration which is subject to levy of Excise duty cannot be made liable for payment of service tax - Moreover, in the post-Negative list regime, "any process amounting to manufacture or production of goods" also falls under one of the Negative List of services - The appellant was previously served an SCN proposing to include such 1% commission amount as part as assessable value for levying Central Excise duty - Such proposition was confirmed by the Tribunal and eventually sustained by the Apex Court - Hence the Department erroneously took a stand completely opposite to that taken by the Apex Court, more so where the findings of the Apex Court were not reviewed or overturned - Hence the proceedings initiated through the SCN are incorrect & the demand raised is incredulous - Moreover, all facts were presented before the Department without there being any suppression & no intent to suppress can be attributed here: CESTAT (Para 1,2,6.10-6.15)
- Revenue's appeal dismissed: CHENNAI CESTAT
2019-TIOL-831-CESTAT-ALL
HCL Technologies Ltd Vs CST
ST - Various SCNs were issued to assessee to deny the cenvat credit on 'Errors & Omissions Liability Insurance Policy' - The assessee is a Global IT Service Company and is engaged in providing taxable service, namely, Information Technology Software Service (ITSS) to its subscribers located in India as well as abroad - The subsidiary companies are different and they are having separate registration - Moreover, the certain subsidiary companies are located in outside India providing output service to the foreign clients - It is also a fact on record that assessee has debited the proportionate amount of insurance policy in account of subsidiaries on cost basis, in that circumstances, whatever amount attributable to said apportionment to subsidiary companies, assessee has not received the services, therefore, not entitled to take cenvat credit in terms of Rule 3 of CCR, 2004 - Admittedly, the amount of insurance policy paid by assessee is not wholly utilized by them but the same includes proportionate amount paid by assessee on behalf of subsidiaries - It is also a fact on record that the amount attributable to the local subsidiaries, the assessee has paid service tax which shows that assessee was having considered view that proportionate amount attributable to the subsidiaries, assessee is not entitled to take cenvat credit, therefore, assessee charged amount of service tax from the subsidiaries located within India - The appellant has taken cenvat credit in the guise of export of services which was well within the knowledge of assessee that for the services which has been provided by Insurance Company on account of third party, assessee is not entitled to take cenvat credit - Therefore, the extended period of limitation is rightly invoked - Consequently, the penalty on assessee is imposable - In these terms, the penalty on assessee is rightly imposed - No infirmity found in impugned orders qua demand on account of reversal of cenvat credit and imposition of penalty - If the assessee is maintaining sufficient balance in their cenvat credit account during intervening period, the assessee is not liable to pay interest: CESTAT
- Appeals disposed of: ALLAHABAD CESTAT
2019-TIOL-830-CESTAT-MAD
NRP Projects Pvt Ltd Vs CGST & CE
ST - The appellant company is engaged in laying pipelines for transportation of petroleum prodicts for various petroleum companies - Upon audit by the Department, it was noted that the appellant availed exemption under Notfn No 15/2004-ST and Notfn No 01/2006-ST - The appellant was required to pay only 33% of the gross amount, while on other projects it paid tax on the entire gross amount - The Department noted that the appellants took credit of duty paid on capital goods & other input goods & services, during the relevant period - It was thus pointed out that exemption under Notfn No 152004-ST was inapplicable if credit of duty on inputs or capital goods had been taken - Hence the Department denied exemption under Notification Nos. 15/2004-ST and 01/2006-ST - Demand for differential amount of duty was raised with interest & equivalent penalty was imposed u/s 78 of the Finance Act 1994 - Hence the present appeal.
Held - An identical issue stands resolved by the Tribunal in Bharat Heavy Electricals Ltd. Vs. C.C.E., Nagpur wherein it was held that the Notfn No 15/2004-ST and Notfn No 01/2006-ST did not stipulate any condition where non availment of credit is to be satisfied uniformly in all cases - Moreover, in C.C.E. Vs. Nebulae Health Care Ltd., the Apex Court held that simultaneous availment of SSI exemption and CENVAT Credit is permissible and that when goods bearing the brand name of others are manufactured, such goods are outside the purview of SSI notification and hence, the embargo contained in the notification is inapplicable - Further, the SCN was issued on the premises that the appellant cannot avail simultaneous benefit of credit of duty paid on inputs and capital goods under CCR 2004 and exemption under Notfn No 15/2004-ST & Notfn No. 01/2006-ST - However, the discussions in the O-i-O proceed upon an entirely different direction and holds that the appellant did not provide any documentary evidence to prove that credit was not availed on those inputs or capital goods on which the appellant has also availed abatement - Hence the O-i-O travels beyond the scope of the SCN - Moreover, the SCN proposes to raise demand for reversal of credit availed Commercial or Industrial Construction Service - It is clear from the Tribunal's decision in M/s/ Real Value Promoters Pvt. Ltd. & Ors. Vs. Commissioner of G.S.T. & Central Excise, Chennai & Ors that for the period post 01.06.2007 duty demand on an indivisible contract is to be raised under Works Contract Service - Hence the O-i-O must be quashed: CESTAT (Para 1-1.3,4.1-4.3)
- Assessee's appeal allowed: CHENNAI CESTAT
2019-TIOL-829-CESTAT-ALL
Ambuj Hotel And Real Estate Pvt Ltd Vs CC, CE & ST
ST - The assessee is providing services of 'outdoor caterers' - Such services are being provided by them to the passengers travelling in Rajdhani/Shatabdi trains and the other mail/express trains - Assessee was discharging its Service Tax liability, after availing the benefit of Notfn 1/2006-ST, which provides for abatement of 50% of Service Tax value, subject to fulfillment of certain conditions enumerated therein - The first dispute relates to the fact as to whether the newspapers supplied by them free of cost to the passengers would form a part of definition of catering services - The assessee have strongly contended that the cost of newspapers @ Rs.2/- is being recovered by them from IRCTC, for whom they are acting as a pure agent - In terms of Rule 5(2) of Valuation of Taxable Services, a cost incurred by service provider as a pure agent is to be excluded from the value of the services - Inasmuch as they have entered into a contractual agreement with M/s.IRCTC to act as pure agent to incur expenditure or cost of newspaper in the course of providing taxable services and neither intends to hold nor holds any title to the said newspaper so procured or provided as pure agent of the recipient of the services and receives only the actual amount of the said newspapers from the Railways, the cost of the same cannot be included in the cost of the catering services.
The second issue relates to the sale of packed confectionary items to the passengers - Assessee explains that the said items are not served to each and every passenger, but are being sold by them to the passengers, who ask for the same - The sale of the said items does not amount to providing of any service and the same is simplicitorly sale which attract VAT and the same stands paid by them - If that be so, the confirmation of Service Tax against the same by including the cost of the same in value of 'catering services' is unsustainable.
Thirdly the Commissioner has denied the benefit of Notfn 1/2006-ST which provides for abatement of 50%, on the sole ground that the value of the sold out items has not been included in the invoices/bills and as such one of the conditions of Notfn stands violated - As providing of newspapers as a pure agent of railways and the sale of packed foods on payment of VAT would not attract Service Tax, the fact of non-inclusion of said values in invoices/bills raised by assessee cannot be adopted as a ground leading to violation of condition of Notfn - The assessee have correctly availed the benefit of Notification in question.
Though it was held in favour of assessee on merits, but the demand is hopelessly barred by limitation - The Revenue has not adduced any evidence of any willful suppression or misstatement on the part of assessee so as to justifiably invoke the longer period - Admittedly the issues are complicated interpretational issues and cannot reflect upon any mala fide on the part of assessee - The demand is accordingly hit by the bar of limitation having been raised beyond the normal period: CESTAT
- Appeal allowed: ALLAHABAD CESTAT
CENTRAL EXCISE
2019-TIOL-828-CESTAT-DEL
Bharti Hexacom Ltd Vs CCE & ST
CX - The appellant company provides telecommunication service, BAS, business support services, GTA service & sponsorship services - It availed credit on capital goods, inputs & input services - Revenue served SCN alleging incorrect availment of credit - Hence duty demand was raised with interest, seeking recovery of such credit - Penalty was imposed as well - Such demands were confirmed upon adjudication - On appeal, the Commr.(A) sustained the same - Hence the present appeal.
CX - Outdoor catering service - The same classifies as input service if such service has not been used for personal use or consumption of an employee - Prior to 01.04.2011, there was no exclusion clause in the definition of 'input service' - Hence the service, irrespective of personal use, is eligible for credit - Hence the credit till March 2011 is admissible - For the period after 01.04.2011, it is seen that the outdoor catering service was used for all employees in general, while holding an event for such employees - In such case, no personal use of the service is made out - Hence credit cannot be denied for this period too: CESTAT (Para 10, 11)
CX - Membership fee of the clubs - The credit was denied on grounds that the appellant produced no evidence showing any nexus of services availed, with the appellant's business activities - The appellant was supposed to produce such material so as to prove who actually paid such fee - Such evidence is the deciding criteria as to whether the fee was paid for the company as a whole under any of its policy for enhancing employee efficiency or those have been born by the individual employee for the sake of their own entertainment - In absence of such evidence, credit must be denied - This follows from the decision in Mudra Port & SEZ Ltd. Vs. CCE wherein it was held that service tax paid on club house fee meant for the recreation of workers is not an eligible credit as it is not used for providing output services: CESTAT (Para 14)
CX - Health checkup of appellant's employees - It is immaterial as to whether the medical check up was availed in the interest of the business or for the personal benefit of the employee - Apparently, the payment for such check up was made by the appellant company - Moreover, the good health of the employee will ensure the employee's availability for rendering the activities related to business - Considering the appellant is engaged in the telecommunication business and that its employees are often required to work for long and odd hours, the same can impact the employees' health - Thus the expense incurred on medical check up of employees definately classifies as a valid input service: CESTAT (Para 17)
CX - Credit on desktop, chairs & fire extinguishers - All these items were used in the provision of output service - Hence credit cannot be denied on them: CESTAT (Para 21)
- Assessee's appeal partly allowed: DELHI CESTAT
2019-TIOL-827-CESTAT-MAD
CGST & CE Vs Siemens Ltd
CX - The tax value involved in this appeal is lower than the prescribed limit as laid down in the Board's Circular in F.No. 390/Misc./116/2017-JC dated 11.07.2018 - Hence dismissed: CESTAT
- Revenue's appeal dismissed: CHENNAI CESTAT
2019-TIOL-826-CESTAT-MAD
Indian Hume Pipe Company Ltd Vs CGST & CE
CX - Assessee is engaged in manufacture of Pre-stressed Concrete Pipes (PSC pipes), Pre-stressed Concrete Cylinder Pipes (PCC pipes) and MS Specials - They availed the benefit of exemption from payment of duty on clearance of PCC pipes to be used in water supply projects as per Notfn 03/2004-CE as amended by Notfn 6/2002 - It was alleged that the assessee had wrongly availed CENVAT Credit on MS Sheets and MS Specials which were used exclusively for manufacture of PCC pipes by availing exemption - Accordingly, a SCN was issued to assessee proposing to recover the wrongly availed Credit - The only prayer of assessee is to be granted the benefit of adjustment of the amount reversed by them - From a perusal of the Order in case of M/s. PSL Ltd. 2018-TIOL-3810-CESTAT-MAD, it is found that the very same issue has been settled by this very Bench of Tribunal - The assessee is liable to reverse the CENVAT Credit, however, the amount of Rs. 21,48,550/- already paid by them being over and above the amount of Credit disallowed, the same is required to be adjusted from the amount already reversed - Therefore, matter remanded for limited purpose of re-quantification of demand on this issue alone after giving adjustment of amount already reversed by assessee - With regard to penalties, however, there is no whisper of any allegation of suppression of facts with intention to evade payment of duty or invocation of any provision pertaining to extended period in SCN and thus the ingredients for invocation of extended period are not present in the case on hand - Imposition of penalties are set aside: CESTAT
- Appeal partly allowed: CHENNAI CESTAT
CUSTOMS
NOTIFICATIONS
cnt24_2019
CBIC notifies Customs exchange rates w.e.f March 21, 2019 dgft18not057 Amendments to Foreign Trade Policy 2015-2020 - Extension of Integrated Goods and Service Tax (IGST) and Compensation Cess exemption under Advance Authorisation, EPCG and EOU scheme upto 31.3.2020 CASE LAW
Saurashtra Fuels Pvt Ltd Vs CC
Cus - The assessee is engaged in import of coking coal - They had imported approximately 50,000 MT of "coking coal" - About 12,000 MT coal was unloaded in Porbandar and balance was unloaded at Mudra port for assessee's own use in their factory - In Mudra port, where bulk of coal was unloaded, assessment was done by extending the benefit of notfn 21/02-Custom and treating the product as coking coal - However, in respect of imports made at Porbandar from the same original consignment, the test report from chemical examiner declared the product as "other than coking coal" - The root of the dispute is if the product imported is "coking coal" or not - The chemical examiners reports or orders of lower authorities do not identify the parameters which are used to differentiate between them - Nowhere in the proceedings, Revenue has produced any concrete literature which describes "coking coal" and identifies parameters that differentiate between "coking coal" and other coals - In these circumstances, it would not be possible to finalize the issue - The impugned order is, therefore, set aside and the matter is remanded to original Adjudicating Authority, to decide afresh after identifying specific parameters duly supported by literature on which they wish to rely on for differentiating between "coal" and "coking coal": CESTAT
- Matter remanded: AHMEDABAD CESTAT |
