2019-TIOL-125-SC-VAT

CTO Vs Prasoon Enterprises

Whether wire ropes used in mobile cranes are a part of such cranes and are thus chargeable to tax rate which applies to mobile crane under Entry 155 - YES: SC

- Revenue's appeal dismissed : SUPREME COURT OF INDIA

HIGH COURT CASES

2019-TIOL-675-HC-ALL-GST

DM Advertisers Agency Vs State Of UP

GST - The petitioner company filed the present writ challenging the validity of the Mathura Vrindavan Nagar Nigam (Vigyapan Kar Ka Nirdharan and Wasuli Viniyaman) Upvidhi, 2017 - The same has been claimed to be running contrary to the mandate of the U.P. Municipal Corporation Act, 1959 Central GST Act as well as U.P. GST Act and Articles 14 and 19 of the Constitution of India.

Held - The Entry 55 of List II of Schedule VII of the Constitution, empowering the State Government to frame bye-laws in respect of Advertisement tax, had been deleted vide Section 17 of the Constitution 101st (Amendment) Act, w.e.f. 16.09.2016 - Besides, Section 172(2)(h) of the UP Municipal Corporation Act, which authorized framing of bye-laws in respect to the tax on advertisement, was also omitted by virtue of Section 173 of the UPGST Act - Hence the Municipal Corporation on the relevant date lacked the necessary legislative competence to make and promulgate such bye-laws - Thus, The Mathura Vrindavan Nagar Nigam (Vigyapan Kar Ka Nirdharan and Wasuli Viniyaman) Upvidhi, 2017 is ultra vires merits being struck down: HC

- Assessee's writ petition allowed: ALLAHABAD HIGH COURT

2019-TIOL-676-HC-ALL-GST

Rimjhim Ispat Ltd Vs State Of UP

GST - The petitioner is a company - During the time of the dispute, its office premises as well as factory premises of the petitioner company were subjected to search proceedings, carried out by the UP GST Department - The petitioner claimed that its authorized signatory was called for and was manhandled and then pressurized to admit tax evasion on a large scale - The petitioner also claimed that its authorised signatory was compelled to sign blank sheets of paper which were further used for drawing the panchnama - Hence the petitioner claimed that the panchnama had no legal sanctity - It was also stated that the stock of raw material and finished goods were not weighed by the Department and that the Department recorded highloy exaggerated figures of stock, based on assumptions - It was also alleged that the list attached to the panchnama is based on physical verification and eye estimation, due to which the entries recorded are arbitrary in nature - The petitioner also alleged that the two witnesses to the search proceedings and their addresses are fake and that the said persons do not reside at the addresses given in the panchnama - Hence the petitioner claimed that the entire exercise was arbitrary and mala fide and amounted to abuse of process of law - Besides, the list attached to the panchnama clearly showed over-writing while recording the stocks - The petitioner was served an order of confiscation u/s 130(2) of the UPGST Act - Hence the present writs.

Held - The provisions of the UPGST mandate that any search operation must be backed by valid 'reasons to believe' - It stands settled in several judgments that such 'reasons to believe' must not be fanciful or arbitrary and must be based on reasonable material - However, it is also established that the High Court cannot exercise its writ jurisdiction to delve into the sufficiency of the reasons and cannot act as an appellate court to sit over the reasons recorded - Besides, it is also established that reasons may or may not be communited to the assessee so long as they exist on record - The Departmental counsel submitted certain records which formed the basis for 'reasons to believe', prior to authorizing the search - Moreover, such 'reasons to believe' were fortified by interception of goods belonging to the petitioner & where the accompanying e-way bill was found to be suspicious - In light of the same, it is seen that the Department had valid 'reason to believe' and thus the challenge to the search & seizure process, on grounds of insufficiency of material, must fail - Regarding the challenge to the genuineness of the witnesses, it is seen that chance witnesses cannot be termed as interested witnesses - This view stands fortified by the decision of the Apex Court, holding that when challening the independence of witnesses, it must be established that they were dependent on the investigating agency for their livelihood - This fact has not been established with cogent evidence - Regarding the over-writing in the weighment sheets, the Department claimed that the same had been done due to recordings made by mistake, which had to be corrected & that the corrected sheets had been signed by the petitioner company's partner - Thus the petitioner failed to conclusively establish that the procedure followed during search was tainted or mala fide - Regarding the validity of the confiscation order, it is seen that such order had been passed ex parte - The order acknowledges that the petitioner had contested the validity of the search proceedings before the High Court and had requested for adjournment of the adjudication process till a decision is taken by the High Court - However, the Department proceeded to pass the confiscation order - In such circumstances, even if no stay was granted by the High Court, the authorities concerned should have waited for the outcome of the proceedings pending before the High Court - Hence the confiscation order is quashed & the matter is remanded to adjudicate the question of confiscation afresh: HC

- Assessees' Writ petitions partly allowed: ALLAHABAD HIGH COURT

NAA CASE

2019-TIOL-20-NAA-GST

Kerala State Screening Committee On Anti-Profiteering Vs Win Win Appliances

GST - Anti-profiteering - The rate of tax on Grinder had been reduced from 28% to 12% w.e.f. 15.11.2017 vide the Notfn No 41/2017-CT(R) dated 14.11.2017 - Information was received that the respondent had not passed on to the customers, the benefit of rate reduction - Thus it was alleged that the respondent had profiteered on the supply of 'Matchless Plus TTWG Grinder' - The Standing Committee forwarded the matter to the DGAP - Upon investigation, the DGAP held that the provisions of Section 171 of the CGST Act were attracted & the profiteered amount was calculated accordingly.

Held - Perusal of relevant portions of the DGAP's report clearly establishes that the respondent hiked the base price of the product, when the rate of tax was reduced from 28% to 12% - Such base price was increased further, which is evidenced from the invoices issued during the relevant period - The DGAP report also shows that the profiteered amount as calculated initially was incorrect and that the actual profiteered amount was considerably higher, on account of the subsequent raise in the base price of the product and denial of benefit of rate reduction to the consumers - This clearly establishes that the respondent acted in contravention of the provisions of Section 171 of the CGST Act - The respondent is directed to reduce the price of the product in question, as per Rule 133(3)(a) of the CGST Rules 2017, also keeping in view the reduction in rate of tax so as to ensure that benefit of the same is passed on to the consumers - The profiteered amount be deposited with interest calculated @ 18% from the date on which the amounts were collected & till the same is deposited - Moreover, the respondent has also been found guilty of issuing incorrect invoices when selling the products, having reflected the incorrect base prices, which compelled consumers to pay additional duty - The respondent deliberately contravened the provisions of the CGST Act by issuing fake invoices, which is an offence punishable u/s 122(1)(i) of the Act - Hence the respondent is liable to face penalty u/s 122(1)(i) r/w Rule 133(3)(d) of the CGST Rules 2017 - SCN be issued in this regard: NAA

- Application allowed: NAA

SERVICE TAX

2019-TIOL-859-CESTAT-HYD

ST - Assessee is a manufacturer of canned software and effects sale of this canned software to various parties, most of them to Government authorities; the said canned software which are also on license basis; one transaction of the assessee was to a private client called Reliance Capital Ltd. - Revenue authorities were of the view that sale of canned software with license and condition to upgrade the said software would fall under said category of 'Information Technology software services' under Sec.65(105)(zzzze) of FA, 1994 - The service tax liability confirmed by adjudicating authority and upheld by first appellate authority along with interest seems to be correct for simple reason that assessee had supplied the canned software to M/s Reliance Capital Ltd for commercial exploitation - Tribunal have no hesitation to uphold the tax so raised as the definition of category 'Information Technology Software Services' as per the provisions of Sec.65(105)(zzzze) would cover the canned software sold by assessee - Accordingly the demand of service tax with interest is upheld - During the period entire thing was on flux and the High Court of Madras has decided the issue on 24.08.2010 on which day the canned software was considered as service falling under category of 'Information Technology Software Services' - Assessee may have entertained a bonafide belief that tax is not payable, can be a justifiable reason, for non discharge of service tax liability - Invoking the provisions of Sec.80 of FA, 1994, the penalty imposed by adjudicating authority is unwarranted and needs to be set aside - The demand of the tax with interest is upheld but all the penalties are set aside: CESTAT

- Appeal partly allowed: HYDERABAD CESTAT

CENTRAL EXCISE

CUSTOMS

G And G Enterprises Vs CC

Cus - The assessee is engaged in importing automobile motor parts such as Heat Exchanger, Condenser and magnetic clutch assemble - The Customs entertained a view that assessee had been importing these items at heavily under invoiced price including parts of air conditioner - The assessee had imported the consignment of aforestated parts and the same were cleared after assessment and examination by Customs - Assessee has imported heat exchanger, filter drier, magnetic clutch assembly declaring the value of Rs. 9.40, 14.91 and 497 per piece respectively - The Revenue is attempting and comparing the quality product imported by M/s Sanden which is reputed supplier and the imported goods are branded one - The demand cannot be raised after the gap of 4/5 years on the basis of alleged contemporaneous import price - It is on record that the alleged contemporaneous price of M/s Sanden Vikas was available with the assessing officer at the time of import but the same was not considered at that time considering these to be of different quality - The reliance cannot be placed on the same contemporary price after such a long period - The goods were not liable for confiscation as proposed in SCN - The assessee had also imported Condenser during same period - These imports were also compared with the import price imported by M/s Sanden Vikas India - The aforesaid import made by the assessee travelled to CESTAT in G.R. Batra - 2006-TIOL-1000-CESTAT-DEL - The Revenue's appeal against this order before Supreme Court was dismissed - Thus, the impugned order is not sustainable in respect of all items imported by assessee: CESTAT

- Appeal allowed: DELHI CESTAT