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SERVICE TAX
2019-TIOL-1022-CESTAT-MUM + Case Story
CCE Vs Narsinha Engineering Works
ST - Subject line to the notification has come from private publication, however, for purpose of consideration of exemption, the text of notification was considered - subject line given in the order is deleted - no error apparent on record - reference to Tribunal decision in paragraph 8 of order is amended - no reason for recall of the order - ROM application by Revenue disposed of: CESTAT [para 3.2, 3.3, 4.1] - Application disposed of
: MUMBAI CESTAT
2019-TIOL-1015-CESTAT-MAD
Siemens Ltd Vs CGST & CE
ST - The assessee is engaged in manufacture of Accesses Control System, Fire Control Systems and parts thereof - They are registered for providing erection, commissioning and installation services and were paying service tax on such services - During verification of records, it was noticed that assessee have entered into a master agreement with M/s. Europlex - Ireland for receiving R&D services - M/s. Europlex provided such R&D service from October 2007 and also issued invoices for receiving the payment from assessee - The department was of the view that assessee is liable to pay service tax on said amount paid to M/s. Europlex under 'Scientific or Technical Consultancy Service' - The foremost argument of assessee is that the amount paid by them to M/s. Europlex is in the nature of reimbursable expenses and therefore is not subject to levy of service tax as per the decision of Supreme Court in case of Intercontinental Consultants & Technocrats - 2018-TIOL-76-SC-ST - From the records, Tribunal is not satisfied that the amount paid are actual reimbursable expenses and therefore the decision of Supreme Court in said case is not applicable - Undisputedly, M/s. Europlex is engaged in design, development and manufacture embedded control and communication products and software - They have taken up the responsibility of putting up a separate department for research and development of the projects and products of assessee and therefore it can be strongly inferred that they have the capacity for such research and development activities - The amount paid by assessee to M/s. Europlex is also for the services of such assistance rendered in R&D activity - The definition of taxable service included not only advice, consultancy but also technical assistance rendered in any manner, either directly or indirectly, in disciplines of science or technology - It can be concluded that the assistance given by M/s. Europlex to assessee for its research and development activity is nothing but technical assistance for improvement of its projects / products - The appeal fails on merits - As regards to limitation, it is correct that during the impugned period there was no embargo in availing credit on service tax paid reverse charge mechanism - The Scientific or Technical Consultancy services being input services, assessee would be eligible for credit - When assessee is eligible to take credit, there can be no intention to evade payment of tax - The SCN for the period October 2007 to April 2008 has been issued on 24.4.2010 - Being a revenue neutral situation, the demand raised invoking extended period is not sustainable - Apart from a bald allegation that assessee suppressed facts there is no positive act on the part of assessee brought out in SCN or impugned order as to suppression - Appeal succeeds on limitation coupled with revenue neutrality: CESTAT
- Appeal allowed : CHENNAI CESTAT
2019-TIOL-1014-CESTAT-MAD
Sify Technologies Ltd Vs CGST & CE
ST - The assessee is registered for providing various taxable services under category of on-line information and database access / retrieval, internet café and franchise services - They are having centralized service tax registration and are a member of Large Taxpayer Unit - They are also rendering exempted services such as software development, e-learning for corporates and companies during the period prior to 16.5.2008, after which date these services became taxable - The main contention put forward by assessee is that the SCN itself cannot sustain for the reason that it invokes Rule 3 of CCR, 2004 to disallow the credit whereas the demand is made under Rule 14 of said Rules disallowing credit attributable to trading as envisaged under Rule 6 - Undisputedly, assessee was availing common input services for both taxable service and trading activities and did not maintain separate accounts - In the reply to intimation given prior to issuance of SCN, they have stated that they reversed an amount of Rs.44,68,272/- and informed the department that they have reversed the proportionate credit pertaining to common input services used for trading as under Rule 6(3)(ii) treating trading activity as an exempted service - In SCN, the department has stated that trading activity cannot be considered as exempt service and therefore Rule 6 of CCR, 2004 is not applicable and the reversal cannot be accepted - In the present SCN, the credit availed on trading is sought to be disallowed - The main contention put forward by assessee is that the department having not invoked Rule 6 of CCR, 2004, cannot disallow the proportionate credit availed on trading - The SCN invokes Rule 3 to disallow the credit for the reason that no credit can be availed on trading as per this provision - Undisputedly, assessee have availed credit on trading activities - Therefore, the demand raised disallowing the credit on trading is legal and proper - In the present case, the assessee have split their books of accounts into different Business Units so as to demarcate the taxable/ exempted service to be availed by a specific unit - These type of separation of accounts is not envisaged in Rule 6 of CCR, 2004 - The earlier proceedings have held the issue against assessee, so the decision does not assist the assessee - The impugned order calls for no interference: CESTAT
- Appeal dismissed : CHENNAI CESTAT
2019-TIOL-1013-CESTAT-HYD
CC, CE & ST Vs Vignan Tutorials
ST - The main issue is regarding taxability of an amount collected by assessee towards the cost of text books and study materials or otherwise - The assessee is conducting the service of "Commercial Training and Coaching" centre and the separate invoices are prepared for services rendered for coaching and separate bill is prepared for EAMCET textbooks - This issue is not disputed by Revenue - On specific query from the bench as to EAMCET textbooks are available to any other person who is not joining in coaching and training service centre, assessee answered that these textbooks are freely available in the market - On identical issue, the Bench of Tribunal in case of Chate Coaching Classes Pvt. Ltd. - 2012-TIOL-714-CESTAT-MUM , Pinnacle and Cerebral Learning Solutions Pvt. Ltd - 2013-TIOL-834-CESTAT-DEL has held that the cost of study materials and textbooks cannot be included in the value of services rendered for commercial coaching and training centre - The said decisions apply in its full force in the case in hand - Accordingly, no reason found to deviate from such a view already taken accordingly, the impugned order is correct and legal and does not require any interference: CESTAT
- Appeal rejected : HYDERABAD CESTAT
CENTRAL EXCISE
2019-TIOL-1012-CESTAT-MAD
Priya Constructions Vs CGST & CE
CX - The assessee is rendering services under category of Construction of Commercial Residential Complex - The period involved is from 10.9.2004 to 31.10.2008 - The demand has been raised in SCN under construction of complex services - The contracts entered between the assessee and the service recipient is a composite contract which involves both supply of materials as well as rendering of service - The Tribunal in case of Real Value Promoters Ltd . - 2018-TIOL-2867-CESTAT had occasion to analyse the issue regarding demand of service tax under construction of residential complex services, commercial or industrial construction service and construction of complex service - The Tribunal has held that prior to 1.6.2007, levy of service tax can be under the above categories only for contracts which are purely for services - That after 1.6.2007, the above categories would be applicable only if the contracts are purely services and which are not composite contracts - Further, it was held that after 1.6.2007, demand in respect of composite contracts would fall under works contract service only - The demand of service tax under commercial or industrial construction service (residential complex) cannot sustain after the period 1.6.2007 - The levy of service tax prior to 1.6.2007 cannot also sustain by application of the decision of Supreme Court in case of Larsen & Toubro Ltd. - 2015-TIOL-187-SC-ST - The impugned order cannot sustain and the same is set aside: CESTAT
- Appeal allowed : CHENNAI CESTAT
2019-TIOL-1011-CESTAT-HYD
Divis Laboratories Ltd Vs CCE, C & ST
CX - The appellant is a 100% EoU engaged in manufacturing bulk drugs named 'IOPAMIDOL' - During the relevant period, the appellant cleared the product to DTA at nil rate of duty by claiming exemption for manufacture for which appellant was using certain common inputs on which Cenvat credit has been availed - As the appellant did not maintain separate accounts for recording consumption of common inputs used in dutiable & exempted goods, SCN was issued seeking reversal of 5% of value of exempted goods - On adjudication, such findings were confirmed - On appeal, the Commr.(A) upheld the O-i-O.
Held: It is undisputed that the bulk drug in question is eligible for exemption if cleared in DTA & that the appellent availed Cenvat credit on common inputs used, without maintaining separate accounts as required u/r 6(2) of CCR 2004 - In such circumstances, both lower authorities correctly upheld the demands raised - The arguments raised by the appellant's counsel not tenable - The payment of Customs duty on inputs used in such bulk drugs cleared to DTA unit by claiming exemption is not equivalent to discharging liability u/r 6(3) - Thereby, the demands confirmed u/r 6(3) of CCR 2004 for an amount equivalent to 5% of the value of exempted goods are correct and do not warrant any interference: CESTAT (Para 2,5)
- Assessee's appeal allowed : HYDERABAD CESTAT
CUSTOMS
2019-TIOL-1010-CESTAT-DEL
MCT Deluxe Honour Industries Pvt Ltd Vs CC
Cus - The assessee filed a shipping bill containing 70 packages and on examination, 6 packages were found of red sanders, which is prohibited item and cannot be exported - The 6 packets of red sanders were absolutely confiscated - Remaining goods, namely, handicraft furniture of woods /metal were held liable for confiscation and allowed to redeem on redemption fine of Rs.2.00 Lakhs - Penalties under Section 114 (i) & 114 (iii) of the Customs Act, 1962 were imposed of Rs.5.00 Lakhs and 3.00 Lakhs respectively - On being asked about the invoice, assessee failed to produce the invoice before the Bench for proper examination of contents of invoice - Therefore, adverse view has been taken against the assessee and it is observed that in the guise of handicraft furniture and woods/ metals the assessee intended to export red sander - Therefore, red sander is absolutely confiscated - For that part of the order, no infirmity is found - The other goods are also liable for confiscation as in the guise of these goods, the assessee sought export of red sander - As goods are held liable for confiscation, but these goods are not contravened goods, therefore, allowed to be redeemed on payment of redemption fine of Rs.1,50,000/- - With regard to penalty of Rs.3.00 Lakhs imposed on assessee, as it has been held that goods are liable for confiscation, therefore, penalty under Section 114 (iii)) is rightly imposed on assessee - With regard to penalty of Rs. 5.00 Lakhs imposed on assessee under Section 114 (i) of the Customs Act, 1962 for attempting to export prohibited goods, the said penalty imposed on assessee is on higher side; therefore, the same is reduced to Rs.3.00 Lakhs: CESTAT
- Appeal partly allowed : DELHI CESTAT
2019-TIOL-1009-CESTAT-KOL
CC Vs B S Impex
Cus - In view of the reasons as explained in the applications, the delay in filing the appeals before this Tribunal, is condoned - The disputed duty involved in this case is below the monetary limit of Rs.20 lakhs which has been notified by the Government vide Circular 390/Misc./163/2010-JC and F.NO.390/Misc./116/2017-JC - Accordingly, the appeal is dismissed under National Litigation Policy - Stay Petition also gets disposed off: CESTAT
- Appeal dismissed : KOLKATA CESTAT |
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