2019-TIOL-01-SC-BM

PR CIT Vs Nalini Chidambaram

Having heard the parties, the Supreme Court condoned the delay and issued notices to respective parties directing their appearances for further hearing on the issue of offences and levy of penalty u/ss 49 & 50 of Black Money Act. However, interim stay sought for by assessee on the judgment of High Court, was denied on the ground that it will amount to grant of final relief.

- Notice issued : SUPREME COURT OF INDIA

Facts: Petitioner is a generating company and is primarily engaged in the business of setting up solar power plants and generation of electricity - they have filed a petition u/s 79 of the Electricity Act, 2003 r/w Article 12 of the PPA making the following prayers inter alia , to hold and declare that the imposition of the Integrated Goods and Services Tax Act, 2017, Central Goods and Services Tax Act, 2017, Karnataka/Telangana/Maharashtra Goods and Services Tax Act, 2017 is an event under 'Change in law' under Article 12 of the Power Purchase Agreement (PPA) for the purpose of claim for adjustment/recovery in tariff on account of aforesaid 'change in law' event; restore petitioners to the same economic condition prior to occurrence of the changes in law by way of adjustment in tariff in terms of Article 12 of the PPA by increasing the tariff as prayed for - Petitioners submitting that they had sent notice to the Respondents regarding the 'Change in law' event that took place after applicability of GST w.e.f 01.07.2017 but no response was received and, therefore, the present petition - It is further submitted that in view of the GST laws w.e.f 01.07.2017, a tax slab of 5% to 28% has been introduced with respect to goods and services required for execution, construction and operation of Solar Power Plants; that the said goods and services were previously either exempted or fell under lower tax slabs; that the GST laws' Acts have led to the levy of taxes impacting the project cost of the petitioners.

Held:

++ Commission observes that the 'Effective date of PPAs' is before the date of coming into effect of the 'GST Laws' i.e. 01.07.2017 - further the SCoD of all the projects related to the petitions are after the promulgation of the GST laws - Commission further observes that as per Article 12, 'Change in law' means the enactment/coming into effect/adoption/promulgation/amendment/modification or repeal of any Law in India; change in the interpretation of any Law in India; Imposition of a requirement for obtaining any consents or Change in tax or introduction of any tax made applicable for supply of power by the Solar Power Developers (SPD) as per the terms of this agreement, resulting into any additional recurring/non-recurring expenditure of any income to the SPD - Commission is of the view that harmonious construction of the bullet points under Article 12 makes it clear that bullet point one is wider in scope and refers to the enactment, coming into effect, adoption, promulgation, amendment, modification or repeal of any Law in India, including rules and regulations framed pursuant to such law whereas bullet point fifth in seriatim refers specifically to any change in tax or introduction of any tax made applicable for 'supply of power' by the SPD as per the terms of the agreement - it implies that the bullet point fifth in seriatim would be applicable as 'Change in law' to the cases where the change in tax or introduction of any tax directly impacts 'supply of power' only - thus ambit of the fifth bullet point is limited in that if any change in Tax is made or any tax is introduced having its impact specifically on the 'supply of power', in that case the remedy 'Change in law' is available to the petitioners under bullet point number five only - GST laws enacted are not in the nature of a mere change in the tax having limited applicability on supply of power, rather it is in the nature of an enactment having wide ranging implication on the entire indirect taxation regime in India - various laws were subsumed and repealed - It is clear from the order of the Appellate Tribunal for Electricity in the case of GMR Warora Energy Limited vs. Central Electricity Regulatory Commission & Ors where it is held that any tax levied through an Act of Parliament after the cut-off date which results in additional expenditure by the Petitioner, the same is covered as 'Change in law' - GST laws have been enacted by the Act of Parliament and the State Legislative Assemblies - change in duties/tax imposed consequent upon these Acts has resulted in the change in cost of the inputs required for generation and hence the same is to be considered as 'Change in law' - Commission, therefore, holds that the enactment of 'GST laws' is squarely covered as 'Change in law' under the first and fifth bullet in seriatim of Article 12.1.1 of the Power Purchase Agreement (PPA): CERC [para 78 to 81]

++ In cases where the invoice is raised or consideration for the goods/supply of services have been received before 01.07.2017 and the tax has already been paid under the earlier law, GST will not be applicable - it is immaterial whether the consideration for supply has been paid fully or partly - Commission is of the view that there has to be a clear and one to one correlation between the projects, supply of goods or services and the invoices raised by the supplier of goods and services - Commission directs the parties to reconcile the accounts - Commission is of the view that since the quantum of compensation on account of introduction of GST w.e.f 01.07.2017 is not large, it should be discharged by the respondent-procurers as one-time payment and in a time bound manner - It is directed that the GST bills shall be paid within 60 days failing which it shall attract late payment surcharge - alternatively, the petitioners and respondents may mutually agree to adopt a mechanism for payment of such compensation on annuity basis spread over such period not exceeding the duration of the PPAs as a percentage of the tariff agreed in the PPAs and this would obviate the hardships of the respondents for one-time payment: CERC [para 86, 95]

++ Commission is of the view that the 'Operations and Maintenance' stage can be construed broadly to be 'post-construction stage' which is covered under services under GST laws - Outsourcing of O&M services is not the requirement of the PPAs/bidding documents - concept of Outsourcing is neither included expressly in the PPAs nor it is included implicitly in the Article 12 of the PPAs - being a pure commercial decision of the petitioners, taken for its own advantage, any increase in cost including on account of taxes etc. in the event the petitioners choose to employ the services of other agencies, same cannot increase the liability of the respondents - Commission, therefore, holds that claim of petitioners on account of additional tax burden on O&M expenses is not maintainable: CERC [para 99]

++ Claim of 'Carrying Cost'for delay in reimbursement by respondents - If there is a provision in the PPA for restoration of the Petitioners to the same economic position as if no Change in Law event has occurred, then the Petitioners are eligible for 'Carrying cost' for such allowed 'Change in Law' event(s) from the effective date of Change in Law event until the same is allowed by the Commission - Commission observes that the PPAs do not have a provision dealing with restitution principles of restoration to the same economic position, therefore, Commission is of the view that the claim regarding separate carrying cost is not admissible: CERC [para 105, 108, 113, 114]

- Petition disposed of : GST

2019-TIOL-859-HC-AHM-GST

Garden Silk Mills Ltd Vs UoI

GST - The petitioner company manufactures Polyester Filament based Yarns, Textilegrade Polyester Chips, Grey Fabrics and Finished Fabrics - These products are cleared for home consumption as well as cleared to SEZ - During the relevant period, the petitioner filed 6 applications u/s 54(3) of the CGST Act, claiming refund of accumulated input tax credit on account of inverted duty structure; refund of accumulated ITC on account of supplies made to SEZ without payment of tax & refund of accumulated ITC on account of exports without payment of IGST - The petitioner claimed that the formal refund claim was filed manually, wherein the petitioner submitted copies of RFD-01A, ARN receipt, copy of Electronic Credit Ledger (ECL) and GSTR-3B filed for the relevant period - The Revenue issued deficiency memos pointing out discrepancies in the claims & advised filing fresh refund application - The petitioner claimed that no acknowledgments for the submissions were provided - No acknowledgment was received when the petitioner provided each document sought for - Later, the Revenue rejected the refund claims on grounds that the petitioner failed to file fresh applications - The petitioner's entreaties to the Revenue bore no fruit - Hence the present writ.

Held - It is an admitted position that the petitioner filed no appeal, hence the question of rejecting the appeal does not arise - From the status report, it is clear that the amount has not been recredited, on grounds that there is no mechanism for recrediting the amount to the Electronic Credit Ledger - The denial of refund is not on on account of non compliance with the provisions of the Explanation to rule 93 of the CG&ST Rules - Hence the petitioner is entitled to the alternative relief prayed for - Thus the officer concerned is directly to recredit the amount to the Electronic Credit Ledger on the basis of Form GST RFD-PMT 03 - Hence the petitioner shall file an undertaking to comply with the provisions of Explanation to Rule 93 of the CGST Rules - Such exercise be carried out before 19.04.2019: HC (Para 3,4-10,15-17)

2019-TIOL-858-HC-AHM-GST

Lalitbhai Natvarlal Patel Vs Additional Director General

GST - The petitioner filed the present writ petition contesting the attachment of his bank accounts u/s 83 of the CGST Act - The petitioner offered a property held by him to be attached in place of the ban account - The petitioner also claimed that the attachment of the bank account was making it difficult for him to manage his day-to-day affairs - Hence as interim relief, the High Court in an earlier order had directed that the attachment of the bank account be lifted, conditional upon the petitioner maintaining a minimum balance of about Rs 50 lakhs.

Held - In pursuance of the earlier order, the attachment over the bank accounts stand lifted - This effectively resolves the grievance raised by the petitioner, leaving nothing else to be done in this case: HC  

- Writ petition disposed of : GUJARAT HIGH COURT

2019-TIOL-857-HC-AHM-GST

GST - The petitioner's bank accounts were provisionally attached u/s 83 of the CGST Act - By an order dated 20.12.2018 the High Court had set aside the order of attachment - However, despite the same, the same bank accounts were provisionally attached all over again u/s 83 - Both orders were found to be identically worded, with the words - Hence it is clear that the officer concerned passed an identical order by merely changing the dates - The High Court directed the Department to present the relevant files before the court for its perusal - It also stayed the attachment order.

Held - In compliance with the earlier order, the files were presented - Perusal of the same revealed there to be no satisfaction being recorded by the officer concerned, that attachment of property was necessary so as to protect the interests of the Revenue - Thus it becomes clear that the officer concerned once again proceeded to attach the bank accounts despite an earlier order of the court setting aside the attachment on the first occasion - This too was done without recording requisite satisfaction - Hence such actions are in disobedience of the earlier order - The officer concerned is called upon to show cause as to why the officer concerned should not be called upon to personally bear the costs of the petition & as to why the matter should not be referred to the appropriate bench to take up contempt matters for disobeying directions of this court - Stand over to April 26, 2019: HC

- Case deferred : GUJARAT HIGH COURT

CTT Vs Asian Polymers

Having heard the parties, the SC granted leave to the Revenue Department to defend their case on the issue of 'notice of default assessment of tax' and limitation period for passing of 'reassessment'.

- Leave granted to Revenue: SUPREME COURT OF INDIA

SERVICE TAX

2019-TIOL-1079-CESTAT-AHM

Jayshree Impex Vs CCE & ST

ST - The appellant availed services of promotion of products by an agent outside India, during the relevant period - Such service was provided by the agent outside India and was used solely for export of goods outside India - The Revenue issued SCN raising duty demand after invoking extended period of limitation - On adjudication, the demand pertaining to period prior to 18.04.2006 was dropped - However, the duty demanded for the period post 18.04.2006 was sustained as were the penalties imposed u/s 76, 77 & 78 of the Finance Act 1994 - Hence the present appeals.

Held: The vires of Section 66A were disputed until finally clarified by the Apex Court in Indian National Shipowners Association vs. UOI - In the present case, the period of dispute is 18.04.2006 to 30.09.2007 - Moreover, in the instant case the service provider located abroad procured orders for the appellant located in India - Such service falls under clause (iii) of Rule 3 of Taxation of Services (Provided from outside Indian and received in India) Rules, 2006 - Thus if the service recipient is located in India, the service received in India would be taxable in India - In such circumstances and considering the Apex Court's decision in Indian National Shipowners Association vs. UOI the demand is sustainable on merits as well as on limitation - Regarding the penalties, it is settled law that penalty u/s 76 & 78 of the Finance Act cannot be imposed simultaneously - Hence the penalty imposed u/s 78 is quashed - The appellant is also allowed the option of paying 25% of penalty imposed u/s 78 subject to such amount being paid along with duty & interest within one month's time: CESTAT (Para 2,4,5)

- Assessee's appeal partly allowed : AHMEDABAD CESTAT

2019-TIOL-1078-CESTAT-DEL

All India Management Association (AIMA) Vs CST

ST - The issue at hand is whether educational programmes conducted by the appellant are taxable as 'Commercial Training & Coaching Service' - Also whether the amount received for publishing advertisements from other educational institutes in the Business School Directory attracts service tax - Whether stall fees collected for educational exhibition are taxable under BAS - Also whether rating of business school done by the appellant is taxable as BSS - Whether remuneration paid for conducting lectures/seminars to faculty from abroad is taxable under RCM as Management Consultancy Service - During the relevant period, the Revenue issued SCNs raising duty demand after invoking extended period of limitation and proposing penalty u/s 77 & 78 of the Finance Act 1994.

ST - Service tax liability of post graduate short term courses - These are professional development programmes/continuous education programmes for development of manpower - Hence they are not taxable as Commercial Training or Coaching service - The appellant is not a Commercial Coaching or Training Centre: CESTAT (Para 5)

ST - Service tax on advertisement in bulletin of management institutes - The same is published periodically by the appellant - Hence is is not taxable, being advertisement made in print media as per exception given u/s 65(105)(zzm): CESTAT (Para 6)

ST - Service tax on stall fees received - It is seen that the exhibition is held by the appellant for educational purposes, the same does not qualify as business exhibition u/s 65(105)(zzo) r/w Section 65(105)(19a), which provides for business exhibition so as to promote, market, advertise or show any product or service intended for growth of the provider of such product or service - As the present circumstances cannot be brought within the scope of this definition, the duty demand raised is untenable: CESTAT (Para 7)

ST - Payment received by appellant for rating of business schools, the same merits being set aside - Moreover, the service tax charged on lectures given by foreign experts and professors at workshops for various management programmes, are of the nature of lectures delivered and speaking at the workshops, which are for the intellectual development of the professors - Hence the same are not taxable under Management of any business u/s 65(105) of the Finance Act r/w Section 65(105)(r) - Hence the order in challenge warrants being quashed: CESTAT (Para 9)

- Assessee's appeal allowed : DELHI CESTAT

CENTRAL EXCISE

2019-TIOL-1077-CESTAT-DEL

Ajay Kumar Malhotra Vs CCE

CX - M/s Shri Rathi Steel (Dakshin) Ltd. is engaged in manufacture of TMT bars - On the basis of search at the business premises of M/s. Pahalwan Goods Carrier, Bhiwadi and M/s Shree Transport, Bhiwadi, a SCN has been issued for demanding Central Excuse duty and imposing penalty alleging that on comparison of documents recovered from the transporter with the sales shown by the assessee in their statutory records, it was found that the assessee had issued invoices and paid duty only on some of the consignments and in many cases, the clearance of goods were not found entered in their statutory records - Neither the factory premises of assessee has been searched nor any discrepancy in the stocks of finished goods & raw materials has been found by Central Excise Officers - No investigation has been conducted by officers at assessee's end, as to whether they have the capacity to produce alleged quantity of TMT bars, electricity consumption, purchase of raw materials, its transportation and payment to the suppliers - There is no investigation about buyers of goods involving duty of more than Rs.4.53 Crores - The entire case has been made upon recovery of some documents from the third party premises - It is well settled law that allegations and findings of clandestine removal are required to be made upon cogent and positive evidence which corroborate unaccounted production and clearance of finished goods - In the present matter, no such evidence is available on record at all, except the third party records which cannot be relied upon as admissible piece of evidence - The impugned order has been passed in gross violation of principles of natural justice inasmuch as the cross-examination of Shri Mahipal Yadav, Proprietor of transport firm was not allowed though the statement recorded from him has been relied upon by Adjudicating Authority - Accordingly, the impugned Order is set aside: CESTAT

- Appeals allowed : DELHI CESTAT

2019-TIOL-1076-CESTAT-MAD

CCE Vs Australian Foods India Pvt Ltd

CX - The assessee company manufactures cookies - While examining the ER-1 returns for the relevant period, it was noted that the assessee availed Cenvat credit of service tax paid on rent, license fee, rental fee, maintenance charges for accommodation of retail outlets situated elsewhere apart from the factory of manufacture - The Department opined that the assessee was ineligible for such credit - Hence demands were raised for recovery of credit with interest - On adjudication, it was held that activity of renting could not be construed as activities relating to business since the clause 'as such' specified the definite limit of interpretation - Hence duty demands were raised with interest and penalty was imposed u/r 15 of CCR 2004 - On appeal, the Commr.(A) set aside the order passed by the adjudicating authority - Hence the Department's appeal.

Held: The period of dispute is Dec 2008 to Nov 2009, which is well before the date of amendment to the definition of input service in Rule 2(l) of CCR 2004 w.e.f., 01.04.2011 - Hence it is seen that the scope of input service prior to 01.04.2011 was much wider - It is not disputed that the premises for which rent/licence fee/rental fees, maintenance charges were incurred were all retail outlets of the assessee - They were not outlets of dealers appointed by the company but were run by the company itself - The company follows a policy of having own outlets to further its sales - Thus the rent incurred is purely for business-related activities - Hence the activities of renting are eligible input service falling within the ambit of Rule 2(l) - Hence there is no infirmity in the O-i-A which should warrant any interference: CESTAT (Para 1,5,6)

- Revenue's appeal dismissed : CHENNAI CESTAT

CUSTOMS

2019-TIOL-1081-CESTAT-MUM

Marathwada Cancer Hospital And Research Centre Vs CC

Cus - Notification 64/88-Cus - Exemption was availed by the importer under the notification on the basis of Certificate issued by the Director General Health Services (DGHS) - Alleging that the appellant importer had not fulfilled the conditions as prescribed by the notification, the said certificate issued by DGHS was cancelled and withdrawn - SCN issued and Customs duty confirmed, imported equipment confiscated with option to redeem the same on payment of redemption fine, penalty imposed along with interest - appeal to CESTAT.

Held: Importer had challenged the cancellation of the DGHS certificate by way of Writ Petition no. 3634 of 2005 before the Bombay High Court, Aurangabad Bench and the High Court had by its order dated 28.06.2007 dismissed the Writ Petition - Since the conditions of the exemption notification are not fulfilled, the benefit of exemption notification 64/88-Cus is not admissible to the appellant and accordingly the goods are liable for confiscation u/s 111 of Customs Act, 1962 - following the decision of the apex Court in the case of Mediwell Hospitals - 2002-TIOL-69-SC-CUS , the order of the Commissioner confiscating the goods and imposing redemption fine is upheld - similar is the decision of the apex court in the case of Jagdish Cancer & Research Centre - 2002-TIOL-119-SC-CUS-LB - since the issue under consideration is squarely covered by the apex court decisions (supra), no merit in the appeal, hence dismissed: CESTAT [para 4, 5, 6]

- Appeal dismissed : MUMBAI CESTAT

2019-TIOL-1080-CESTAT-MUM

Rajesh Gandhi Vs CC

Cus -Undervaluation - Declared value has been rejected on the basis of admissions made in statements recorded from the partner of the importer-appellants - Bench cannot fail to observe that the statements are founded on documents and evidence unearthed by the DRI from a premises other than that of the appellants -Such statements do not possess relevancy in these proceedings - Bench has no hesitation in rendering the finding that de hors the statements, no other evidence is on record to validate the show cause notice - It is also clear from the records that the appellant had not been able to produce any evidence that would counter the grounds for discarding the declared value and to that extent the declared values can be found to be unacceptable - provisions of Customs Valuation Rules, 1998 require that sequential application to be apparent in such proceedings - impugned order is bereft of such a sequential finding and has, on the contrary, fallen back on rule 6 pertaining to import of similar goods, and rule 8, the residuary provision, relying entirely upon the now discredited statements to determine the differential duty liability - As the statements are no longer reliable, the duty liability, arising from recourse to rule 8 does not have the support of law and is set aside - insofar as valuation of the goods based on the applicability of rule 6 of the Valuation Rules is concerned, it is seen that the bills of entry pertaining to those imports had not been made available to the appellants and are also not available on record and, therefore, it is impossible to ascertain if these were 'similar goods' within the definition to the said rules - redetermination of value fails the test of law - impugned order set aside and appeals allowed: CESTAT [para 10, 11, 15, 16, 17]

- Appeals allowed : MUMBAI CESTAT

TII

TP - Substantial differences in turnover filter renders two companies unfit for purposes of comparison: ITAT

TP - Mere differences in financial year is not enough for exclusion of entity concerned from list of comparables: ITAT

TIOLCORPLAWS

PMLA - Attachment of property without establishing 'proceeds of crime' is not legally sustainable: Tribunal

PMLA - Attachment of property is beyond jurisdiction in absence of proceeds of crime: Tribunal