2019-TIOL-NEWS-120, Dated: Wednesday, May 22, 2019

Taxability of the service of access to a road or bridge in the period 8-11-2016 to 1-12-2016

ST - Issue is whether the appellant is entitled for the refund of Swachh Bharat Cess paid on the Input services used for providing Export service.

Held : From the provisions of s.119 of the Finance Act, 2015, it is clear that SBC is levied and collected for the purpose of financing and promotion of Swachh Bharat initiatives or for any other purpose relating thereto but in the nature of service tax - from time to time issues were raised qua Education Cess, Secondary and Higher Education Cess and Sugar Cess, Automobile Cess etc. which have also been imposed under different statutes at different points of time as to whether they are in the nature of cess or tax/duty and ultimately those issues were settled in favour of the assessee by the apex court/high court and those were held to be tax/duty - a tax recovered by the government goes into the Consolidated Fund of India (CFI) which is utilized for all public purposes and no money out of the CFI shall be appropriated except in accordance with law and for the purposes and in the manner provided in the Constitution - whereas a cess or fee does not become part of the CFI and are earmarked for the purpose of services for which it is levied - A cess can never become part of the CFI - as per s.119(4) ibid the proceeds of SBC shall be first credited to the CFI - SBC may be considered as a separate levy from the service tax but the same legal framework as applied for service tax are to be applied for levy and collection of SBC since the provisions of Chapter V of the FA, 1994 and the Rules made thereunder are applicable to SBC - similarly, as per s.119(5) of FA, 2015, rules notified under the FA, 1994 which includes CCR, 2004 also shall be applicable for SBC as they apply to Service Tax - Therefore, SBC paid on Input services has to be held available as CENVAT Credit and the same can be discharged by utilizing CENVAT credit and the applicant is, therefore, entitled for the refund of the same - insofar as filing of two separate claims are concerned, it is only a procedural lapse and substantial benefit of refund cannot be denied to the appellant on this ground - appeal is allowed with consequential relief: CESTAT [para 8, 9]

ST - The assessee-company provides output service which was exported without payment of service tax - As the assessee was entitled for Cenvat credit, it filed an application claiming refund - Such refund was rejected on grounds that the assessee failed to fulfil the conditions in Notfn No 27/2012 - It was alleged that details of Cenvat credit did not appear in the ST-3 returns and that no concrete evidence was submitted to prove the claim that credit is availabe to the assessee - On adjudication, such rejection of refund was upheld - Hence the present appeal by the assessee.

Held: Perusal of relevant conditions in Notfn No 27/2012 clarifies that balance of credit lying with assessee as on the last date of quarter as well as on date of filing refund, is what must be determined when ascertaining eligibility for refund - ST-3 cannot be the only reliable record to verify the balance cenvat credit at the end of the quarter - Rule 7B of Service Tax Rules is inapplicable in a case where the assessee has cogent documentary evidence to support the proposed revision of ST-3 returns - Presently, where the ST-3 returns show nil balance and voluminous documents show a different balance lying in account, then Rule 7B becomes procedural in nature - Hence the Range Superintendent erroneously rejected the assessee's request to revise the ST-3 return despite availability of documents justifying revision mainly on the ground of it being proposed beyond the stipulated period - So has been done by Commissioner (Appeals) while endorsing such finding - Hence the O-i-A is quashed: CESTAT

ST - The assessee is manufacturer of wind operated electricity generator having factory at Puducherry - It was noticed that the assessee had engaged transporters for transporting their goods from their factory to the site and from the port of import to the site - Further, that they had taken over the Wind Energy Division from NEPC India Ltd. vide Slump Sale Agreement - As per Slump Sale Agreement effective from 16.1.2006, the freight charges involved from January 2006 to April 2006 as per the details furnished by NEPC is payable by assessee - Though the assessee had discharged said freight charges, they had not paid service tax upon such freight charges - The main contention put forward by assessee is that as per Slump Sale Agreement, they have taken up only the 'assumed liabilities' as contemplated in agreement - The assumed liabilities include payment of freight charges as well as consulting engineering charges - It is contended by assessee that there was no stipulation to pay up the service tax in connection with these payments and therefore they are not liable to pay service tax - When assessee has taken up the business of NEPC, which includes assets as well as liabilities, they have to establish with concrete evidence that the liability to discharge service tax is retained by NEPC - As agreed by Slump Sale Agreement, assessee have to pay up the amount to clients under GTA service as well as Consulting Engineering Service - Therefore, they are liable to pay service tax on these amounts under reverse charge mechanism - On merits, the assessee fails - The services were availed by NEPC and thereafter the payments were made by assessee pursuant to Slump Sale Agreement - It is also seen that there is no specific stipulation in agreement with regard to the burden to discharge service tax liability - Further, in all the letters issued by assessee to the department, they have given the details of payments made and also clarified that they are making the payments in accordance with Slump Sale Agreement - The assessee cannot be saddled with the guilt of suppression of facts with intention to evade payment of service tax - Therefore, the SCN issued invoking the extended period cannot sustain - In the result, the impugned order is set aside on the ground of limitation: CESTAT

ST - The assessee was providing Services to Uttar Pradesh Power Corporation Ltd. - It was noticed by Revenue that the assessee did not register themselves with Service Tax and were also not filing ST-3 Returns till 2014 - The assessee had entered into an agreement with Service Receivers in year 2009 - They are contesting the Classification of Services decided by Revenue and claiming that if the Classification of Services provided is considered to be Manpower Supply Services then they will be eligible for threshold exemption, whereas it is contended by Revenue that the assessee was not only providing "Manpower Services" but they were undertaking the "Repairs & Maintenance Work" in as much as they were replacing the Old & Burnt Transformers, which were not working with the Transformers which were in working condition and therefore it was not a case of supply of Manpower - At no stage the assessee have disclosed copies of invoices to Revenue to establish the actual work being done by them and consideration being received - Even after providing services since 2009 assessee had not registered themselves with Service Tax till 2014 do not find any case to interfere with the impugned order and hence reject the appeal filed by assessee: CESTAT

2019-TIOL-1454-CESTAT-CHD

Vishal Gupta Vs CCE & ST

CX - The appellant/M/s P.S. is engaged in manufacture of Stainless Steel Pipes & Tubes having their head office at Hisar and also having their trading office at Motia Khan, Delhi - The offices of M/s P.S and M/s SSPL located in Delhi were not registered with the central excise department - The head office of M/s P.S and M/s SSPL is located in Hisar and the records of the both were maintained M/s P.S's office at Hisar - On 11.04.2013, a search was conducted at the premises to the M/s P.S and M/s SSPL - The factory of M/s P.S was found working - It was also alleged that assessee was also engaged in issuing goodless invoices enabling to avail in admissible cenvat credit and it was also alleged that M/s P.S had undervalued their goods - During investigation, neither stock variations were found nor any incriminating documents were recovered during search of factory premises of appellants - Only two pen drives were recovered from the possession of Ms. Priyanka Jain in the joint office of appellant and data has been retrieved and on that basis, the case has been made out against the appellant - Section 36B of CEA, 1944 deals with situation of admissibility of documents and computer print outs as evidence - In this case, the procedure laid down under Sub-sections 2, 3 & 4 of section 36B, has not been followed, in that circumstances, the data gathered from pen drives relied in toto and some of the invoices, are not admissible evidence - Therefore, on this sole ground, the SCN is not sustainable - As per ER-7 returns, appellant has shown their production capacity during impugned period and as per ER-7 returns it is clear that the maximum production capacity of appellant is 3500 MT without any break - By no stretch of imagination, such quantity of clandestinely cleared goods by the appellants could be manufactured during the impugned period - No efforts have been made by the Revenue that how the raw material was procured by the appellants and how the goods were manufactured and how much electricity is used to manufacture such quantity of goods, if it is to be alleged that whatever quantity of goods they have shown cleared as per invoices then the investigation was required to be done with regards how the raw material was procured, how much labour was employed, how much a huge quantity can be manufactured - As all the elements cited herein are missing, therefore, it cannot be alleged that the appellants are indulged in the activity of clandestine clearance of the goods - With regard to the issue of undervaluation, which the appellant has conceaded and stated that on that account, the duty of Rs. 8,49,099/- is payable, therefore, examining the issue in detail - As the appellant has shown invoices, the price of the goods and corresponding invoices has been recovered which is having higher price to the same party of the same quantity, in that circumstances, the issue of undervaluation has been proved, therefore, on account of undervaluation, the appellants are liable to pay duty alongwith interest: CESTAT

- Appeals disposed of: CHANDIGARH CESTAT

2019-TIOL-1453-CESTAT-MAD

Thiagarajar Mills Ltd Vs CCE

CX - The appellant-company is engaged in manufacturing Cotton Yarn - It availed cenvat credit of various inputs & capital goods & then cleared goods on payment of duty - From 01.08.2006, the appellant began availing exemption on final products as per Notfn No 30/2004 - Upon audit, the Revenue noted that the appellant removed Cenvat availed on capital goods as such to its other units, under invoice/delivery challan & without reversal of credit pertaining to such capital goods as per Rule 3(5) of CCR 2004 - SCN was issued proposing to raise duty demand for reversal of credit with interest & proposing to impose penalties - On adjudication, the proposals in the SCN were upheld - Hence the present appeal.

Held: The appellant's contention that the present proceedings are hit by time bar, hold merit - The appellant had written to the Department vide a letter dated 07.05.2007, informing the jurisdictional Dy Commr that they would be shifting all their machinery from one unit to another - Certified copy of Board of Directors' resolution had been enclosed - The SCN records that such letter was received by the Range Office only on 20.02.2008 - Statements taken from the appellant's Director of Marketing & Finance reveals that though the letter was drafted for delivery in person, they had been advised that such letter was not required to be submitted - Hence they had despatched the letter on 19.02.2008 - Nonetheless, it remains unclear as to on whose authority did the appellant hold back the despatch of the letter - Even after 20.02.2008, the Department could have issued SCN with alacrity - However, it still took over a year & a half to do so - Thus when such facts as disclosed in the letter were known to the Department, no suppression of facts can be alleged against the appellant - Hence as the SCN is hit by limitation, the adjudication order issued consequently is vitiated too: CESTAT (Para 1,5.1)

- Assessee's appeal allowed: CHENNAI CESTAT

Cus - The assessee is aggrieved by imposition of redemption fine and penalty by the authorities below - The allegation is that the assessee mis-declared the goods by attempting to claim benefit of SAD refund as per Notfn 21/2012 - The assessee has vehemently argued that the said error had occurred only due to oversight as they were carried away by the description of the goods in Sl. No. 394 of Notfn 12/2012 - On perusal of these notifications, Tribunal do not find that assessee is in any way eligible for SAD refund in respect of goods imported by them - Even in Sl. No. 394 of said Notfn, the goods which are eligible for exemption are goods imported by or on behalf of Security Printing and Minting Corporation of India Ltd. - Thus, if there was no examination conducted by department, the goods would have been cleared and assessee would have succeeded to claim the SAD refund - Therefore, the goods are liable for confiscation as held by authorities below and the same requires no interference - However, the redemption fine and penalty imposed are on the higher side - It is deemed fit to reduce the redemption from Rs.4,50,000/- to Rs.1,00,000/- and the penalty from Rs.50,000/- to Rs.25,000/-: CESTAT

Cus - Issue in dispute involves duty demand to the tune of Rs. 40 crores - The dispute involved is on the relevant date on which Bill-of-Entry is considered as filed and in consequence, the rate of duty that would be applicable on imported goods - Considering that the amount in dispute is to the extent of Rs. 40 crores and that the matter involves interpretation of date of filing the Bill-of-Entry, the request for early hearing is acceded to - The Miscellaneous Application for early hearing of the appeal is allowed: CESTAT