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SERVICE TAX
2019-TIOL-1119-HC-MUM-ST
CCE Vs NP Earth Movers Pvt Ltd
ST - The existence of contract between assessee and WCL for excavation and removal for overburden is not in dispute - Question, however, was about nature of that contract - If it is held to be a 'mining' contract, the assessee would not have been required to pay service tax for period prior to 01.06.2007 - If it is held to be a contract for "site formation", the assessee can be reached by the department - CESTAT, in all matters find contract to be for site formation - It is not in dispute that assessees have also accepted the interest factor and hence, consideration now is limited only to penalty - Contention of respective assessee is, as there was a bonafide dispute in relation to nature of activity, the assessee cannot be held at fault and therefore, the penalty cannot be demanded - They also claim that in contract reached with WCL, there was no provision casting burden upon assessee to pay service tax - This extra burden therefore, was the bone of contention between contractors like assessee and employer WCL - WCL was seeking guidance from Ministry and necessary clarification has been issued for the first time on 12.11.2007 - The assessee therefore, contend that on 12.11.2007 the position was not clear and hence, charging penalty upon them is unjust - Additionally, it is pointed out that this challenge ought to have been looked into by Tribunal first, and CESTAT has totally overlooked it - Insofar as the order which took converse view and assailed by assessee in other matters are concerned, there the consideration ends with a finding on nature of contract - The Tribunal holds that contract of assessee with WCL is for a site formation - There the provisions of Section 80 of FA or then circular dated 12.11.2007 are totally omitted from consideration - The said order, therefore, also show non application of mind - Respective appeals are therefore, restored back to file of the CESTAT for its further consideration as per law: HC
- Matter remanded : BOMBAY HIGH COURT
2019-TIOL-1514-CESTAT-CHD
DLF Commercial Projects Corporations Vs CST
ST - It was alleged that the appellant had transferred development rights, therefore, they are liable to pay service tax on the said activity - demand of service tax of Rs. 183,78,48,265/- confirmed alongwith interest and penalty of Rs. 137,66,55,912/- imposed - appeal before CESTAT.
Held: Sole issue that emerges before the Bench is whether the appellant has transferred any land development right in favour of M/s DLF Ltd. or not? - Agreement which is based in this case dated 02.08.2006 does not say that the appellant have actually transferred the development rights - It is a fact on record that the appellant is not the owner of the land, therefore, how can he transfer development rights to M/s DLF Ltd. and as per the records, the amount given by M/s DLF Ltd. has been transferred by the appellant to various Land Owning Company (LOCs) for purchase of the land - land owning company have not transferred any development right in favour of the appellant, therefore, it cannot be said that the appellant has transferred any development right of land to M/s DLF Ltd - Therefore, it is mere transaction of the sale and purchase of land or purchase of land by the appellant for DLF Ltd. for further development - As appellant did not get any ownership of the land, in that circumstances, transfer of development right does not arises - There is no such agreement placed on record that any LOCs (who are the owner of the land) has transferred any development rights to the appellant - If so, how much the consideration paid by the appellant and in that circumstances, the land owning company (LOCs) are liable to pay service tax - Admittedly, LOCs were never issued show cause notice and nor made the party to the show cause notice in question - Once the land-owning companies (LOCs) transfers the land development rights to developer for a consideration, it is obligated to transfer the undivided interest in the land in favour of developer's buyers for which no separate consideration is paid for it - In other words, such transfer of undivided interest in the land by the land-owning company is in return of the initial consideration paid by the developer to it for transfer of land development rights only - Thus, it is the ownership of the land, which stands transferred effectively by the land-owning company in return of consideration payable by the developers - The moment it is either land or "benefits arise out of land", it goes outside the purview of "Service" as defined in Section 65B (44) of Finance Act, 1994 - payment received from M/s DLF. Ltd was transferred to LOCs for acquisition of land - Further, no physical acquisition of land was taken over by the appellant - Consequently, the appellant have no right to transfer land development to M/s DLF Ltd. - Bombay High Court observed in the case of Sadoday Builders Private Ltd. and Ors. that transferable development right is immovable property, therefore, the transfer of development rights in the case in hand is termed as immovable property in terms of Section 3 (26) of General Clauses Act, 1897 and no service tax is payable as per the exclusion in terms of Section 65B(44) of the Finance Act, 1994 - activity in question is only acquisition of land, therefore, no service tax is payable by the appellant in terms of Section 65B(44) of the Finance Act - Therefore, whole of the demand against the appellant is not sustainable - Consequently, the impugned order is set-aside - Appeal allowed with consequential relief: CESTAT [para 8 to 11, 16, 18, 19, 20]
ST - Limitation - From time to time the query was made to the Revenue by the trade organization as well as M/s DLF Ltd whether they are liable to pay service tax on transfer of development right of land or not and the same was not answered till date which means revenue itself is not clear whether the said activity is taxable service or not - In that circumstances, the extended period of limitation is not invokable and it cannot be said that the appellant did not pay service tax with malafide intention: CESTAT [para 17]
- Appeal allowed
: DELHI CESTAT
2019-TIOL-1510-CESTAT-MAD
Eta Travel Agency Pvt Ltd Vs CGST & CE
ST - The assessee is registered as service provider for air travel agency service & business auxiliary service - During the relevant period, they were issued an SCN proposing to raise duty demand for recovery of credit wrongly availed on rent-a-cab service, vehicle insurance, group insurance medi-claim service, staff welfare and travel expenses - On adjudication, the duty demand was confirmed with interest & imposed penalty - These levies were sustained by the Commr.(A) - Hence the present appeal.
Held - Rent-a-cab service - Post 01.04.2011, the credit is available only if the motor vehicle is capital goods for the service provider - There is no evidence adduced by the assessee to such effect - Hence the credit is correctly denied: CESTAT
Held - Vehicle insurance & repair of motor vehicle - Clause (BA) of the definition of input services excludes general insurance service as well as repair and maintenance of motor vehicles - Therefore, as per the exclusion clause the credit availed on vehicle insurance as well as maintenance and repair of vehicle is not eligible: CESTAT
Held - Medical insurance - It is seen that the primary and most direct beneficiary of such incentive is the employee and not the company or the employer - Any untoward incident will entail the company having to utilize its funds to compensate the injured workmen - To indemnify in case of accident, such statutory mandated policies are availed by the company and in such circumstances it is the company that benefits from the insurance policies - In the present case, the insurance policy was not availed under any statutory obligation & is for personal consumption of the employee - Hence it is ineligible for credit: CESTAT
Held - Penalty - As the issue of credit on these services was under litigation for a long time - Hence the penalty merits being waived: CESTAT .
- Assessee's appeal partly allowed : CHENNAI CESTAT
2019-TIOL-1506-CESTAT-MAD
Erode Lorry Owners Association Vs CGST & CE
ST - The assessee is an association of lorry owners & it provided various services such as Club or Association Membership Services, Renting of Immovable Property Services and Supply of Tangible Goods Service - On perusal of balance sheet, it was alleged that the assessee did not d ischarge service tax liability under all three heads - SCNs were issued proposing to raise duty demand with interest & equivalent amount of penalty - Hence the present appeal.
Held: The demand raised under Club or Association Service stands quashed in light of a catena of judgments on the issue, such as M/s. Ranchi Club Ltd. Vs. Chief Commr. of C.Ex. & S.T., Ranchi Zone and M/s. Sports Club of Gujarat Ltd. Vs. Union of India and M/s. Cosmopolitan Club & Ors. Vs. C.C.E. & S.T., Chennai & Ors. - Regarding demand raised in respect of SOTG service, the agreement shows that the contract is for transportation of petroleum products on which service tax under GTA is paid by M/s HPCL itself - Hence the nature & type of arrangement between both parties indicates that there is no SOTG involved in the matter - Hence the duty demand is quashed as it is unsustainable - Moreover, the amounts received by the assessee under the renting category are very much under the threshold limits in each of the years - Hence there cannot be any further demand under renting since the total amount received would be within the threshold limit - The demands raised are quashed: CESTAT
- Assessee's appeal allowed: CHENNAI CESTAT
2019-TIOL-1505-CESTAT-HYD
DRS Dilip Road Lines Pvt Ltd Vs CCT
ST - The assessee-company is engaged in packing, loading, transporting, unloading and unpacking of goods - It claimed that majority of amounts charged to the customers are towards transportation of goods - The issue at hand is as to whether the services rendered by the assessee are classifiable under Cargo Handling Services or under Goods Transport Agency service - On adjudication, the Revenue classified these activities under Cargo Handling Service.
Held: An identical issue stands settled by the Tribunal in DRS Logistics Pvt Ltd in which similar services rendered by the assessee therein had been classified as Goods Transport Agency service - Such judgment was later upheld by the Apex Court - Hence the appeals challenging orders of the adjudicating authority as to the classification of the services under Cargo Handling Services are unsustainable and are liable to be set aside - All appeals challenging classification under Cargo Handling Services are allowed: CESTAT
- Assessee's appeals allowed: HYDERABAD CESTAT
CENTRAL EXCISE
2019-TIOL-1512-CESTAT-MAD
Elcomponics Sales Pvt Ltd Vs CGST & CE
CX - The assessee was served SCN for the period between September 2014 to March 2015, alleging availment of irregular credit based on invoices issued beyind 6 months, credit availed on invoices issued after one year of taking credit, taking credit twice based on same invoices & taking credit based on invoices in respect of rent-a-cab services - Hence the present appeal.
Held - Rent-a-cab service - As long as the fact remains that the employees of the assessee were transported for carrying out their work for the assessee and that their services were used in the manufacturing of the final product, the credit cannot be denied since it is directly covered in the inclusive definition: CESTAT
Held - Wrong availment of credit - The assessee claimed to have reversed such credit as is on record & though such credit was availed it had not been utilized - The assessee also claimed that it had more than Rs 60 lakhs worth of credit in its Cenvat a/c but the same was not discussed - If such fact is true, the Revenue cannot claim to have incurred any loss - The case is of revenue-neutrality on account of which no suppression of fact can be alleged - Hence the matter warrants remand for verifying the same & the pass a speaking order - Penalty u/s 11AC is unsustainable as the issue is seriously debatable in nature: CESTAT
- Case remanded : CHENNAI CESTAT
2019-TIOL-1504-CESTAT-BANG CCE, C & ST Vs L3 Communications India Pvt Ltd
CX - The assessee-company manufactures Integrated Platform Management System and Integrated Bridge System equipment falling under Tariff 90230090 and 90328990 of Schedule to CETA 1985 - These goods are used by ship builders for building ships - The assessee supplied such goods to M/s Garden Reach Shipbuilders & Engineers Ltd., Kolkata for constructing warships for the Indian Navy - SCN was issued alleging that the assessee was not entitled for exemption under Notfn No 64/1995-CE as the goods were not directly supplied to the Indian Navy, as required in the Notfn - Duty demand not paid on account of wrong availment of the benefit under the Notfn was determined - The same was sought to be recovered u/s 11A(i) of the CEA 1944 - Contravention of provisions of Rules 4 & 8 of the CER 2002 was also alleged - Penalty u/r 25 of CER 2002 was imposed - On adjudication, the duty demand was confirmed with interest & penalty - Hence the present appeals.
Held: The decision of the Tribunal in CCE, Chandigarh Vs. Leader Engineering Works as relied upon by the Tribunal in the SCN inapplicable to the facts & circumstances of the present case - This is because in that case, emphasis is laid on goods supplied for consumption on board a vessel of the Indian Navy and has nothing to do with material supplied for construction of warships - Also, the only condition stipulated was that before clearance of such goods, a certificate from an officer not below the rank of Rear Admiral of the Indian Navy or any other Naval officer whose rank is equivalent to that of a Joint Secretary to the Government of India is produced, stating that the goods supplied are to be used in construction of warship - This requirement stands fulfilled as certificate issued by the competent authority has been submitted - Besides, perusal of the amended Sr No 21 makes it clear that it is not necessary for the goods to be supplied directly to the Indian Navy - Hence the order confirming the demand is quashed - Based on such rationale, the Revenue's appeal contesting dropping of demand in another appeal, is quashed too: CESTAT
Revenue's appeals dismissed: BANGALORE CESTAT
CUSTOMS
2019-TIOL-1118-HC-MUM-CUS
Siddhi Vinayak Vs UoI
Cus - The petitioner is a partnership firm and is inter alia engaged in business of import and sale of pulses, cereals and spices - In the ordinary course of its business, the petitioner entered into Sales Contract for supply of 30,000 MTS of Whole Yellow or Green Peas packed in bulk containers of foreign origin through their overseas supplier M/s ILTA Agribusiness - The grievance of petitioner is that it was orally informed by respondent nos. 2 and 3 that the clearance of imported goods will be allowed for home consumption only upon the petitioner producing the Special Import Licence (SIL) from the second respondent, as, according to them, the import of the goods is restricted by respondent no.2 under various notifications issued by him - Hence, the petitioner requested the fourth respondent to allow it to convert the bill of entry from home consumption to warehouse in terms of section 59 of the Act - The sales contract in this case is dated 19th April, 2018 and the petitioner claims to have made payment on 20th April, 2018 - The petitioner was aware that the import policy was amended and import of peas was restricted from 1st April, 2018 to 30th June, 2018 - Then, the petitioner refers to the notification of 25th April, 2018 and further notification of 2nd July, 2018 extending the restriction on import of peas till 30th September, 2018 - However, the petitioner says that it had imported the goods prior to any restriction and relies upon the copy of bill of lading dated 28th August, 2018 (Exhibit 'H') - The petitioner says that Notfn 15/2015-2020 was withdrawn by second respondent on 29th August, 2018 and then, it has issued one more notification imposing restriction till 30th September, 2018 and finally, Notfn 37/2015 extends the restriction till 30th December, 2018 - The petitioner has said that it filed a bill of entry for clearance of imported goods for home consumption, but it was orally informed that the petitioner will be required to produce SIL as the import of peas is restricted - The petitioner, therefore argues that the policy has been amended by respondent no.2 and it had no jurisdiction to amend it - Insofar as that aspect is concerned, this aspect of the matter is covered by judgment of this court in case of Taj Agro 2018-TIOL-1390-HC-MUM-CUS - A careful perusal of notification Exhibit 'I', which is a copy of Notfn 31 leaves us in no manner of doubt that the subject of this notification is withdrawal of notfn 15 - The effect of this notification is that the restriction which was extended till 30th September, 2018 is withdrawn and at best w.e.f. 29th August, 2018 - It does not mean that this restriction is wiped out for it is evident that by the notification dated 30th August, 2018, copy of which is at Exhibit 'A', the restriction is again restored and the date till which it was to continue is the same, namely, 30th September, 2018 - Had this not been the position, then, the restriction already in place could not have been continued by the further notifications - The withdrawal of the notification dated 2nd July, 2018 will not wipe out the effect of Notfn 4 dated 25th April, 2018 for that is extended till 30th September, 2018 - That notification was in force and that was not withdrawn - It is only the notification of 2nd July, 2018 which is withdrawn albeit for a day - Hence, the restriction was operative and the argument that there was no restriction on import of peas till 29th August, 2018 is untenable in law - The respondents committed no error in refusing to take note of the representation dated 4th December, 2018, copy of which is at Exhibit 'M' to the petition - That representation is based on an incorrect and improper understanding of the notifications as well as the provisions of Customs Act, 1962 - As a result, this writ petition fails: HC
- Writ petition fails: BOMBAY HIGH COURT
2019-TIOL-1117-HC-MAD-CUS
Bell Match Company Vs CC
Cus - The petitioner, a 100% EOU is engaged in manufacture of Match Sticks - M/s. Eutrabell India was issued with LOP for transferring the capital goods in question from their unit to the petitioner - It is not in dispute that at the time when LOP was granted, the subject transaction was governed by notfn 52/03 - One of the conditions incorporated in said notfn was that in case of capital goods, it must have been installed or otherwise used within the unit, within a period of one year from the date of import or procurement thereof or within such extended period not exceeding five years - Admittedly, the petitioner did not satisfy the aforesaid requirements - When proceedings were initiated in this regard by issuing a SCN, the petitioner took the stand that notfn 34 of 2015-Customs had done away with the requirement of installing capital goods within a period of one year - Instead the earlier notification was so amended as to provide for such goods being installed or otherwise used within the unit within the period of validity of LOP - It is not in dispute that the purchase of goods by petitioner from Eutrabell India partakes the character of an import - The petitioner was therefore otherwise liable to pay customs duty on the goods procured from the Eutrabell India - The only reason the petitioner was exempted from such liability was on account of the applicability of notfn 52/2003-Customs - The LOP was granted in favour of Eutrabell India, governing the transaction between the Eutrabell India and the petitioner - The petitioner ought to have satisfied the conditions laid down in said notfn - The said notification requires that in case of capital goods they should have been installed or otherwise used within the unit within a period of one year from the date of import or procurement - Of course, the petitioner could have obtained extension of time limit not exceeding 5 years - In this case, the petitioner did not obtain such an extension - Therefore, on account of the operation of the Clause 3(d)(1)(i) of notfn 52/2003, the petitioner came under a liability - It is true that this notification was later amended on 25.05.2015 vide notfn 35/2015 - It is also true that the notification reads as if it is a substitutive amendment - But then, when liability has already accrued, the same cannot be washed away or effaced by a subsequent notfn, because, there is no clause in notfn 35/15 stating that it would cover even antecedent cases which failed to satisfy the conditions laid down in notfn 52/2003 - It is well settled that even a retrospective amendment will not take away the vested rights of the parties - The same logic and principle will apply in the case of accrued liability also - The writ petitioner had already come under a liability on account of non-adherence to conditions stipulated in the notfn 52/2003 - The impugned order is sustained: HC
- Writ petition dismissed: MADRAS HIGH COURT |
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