|
SERVICE TAX
2019-TIOL-1162-HC-MAD-ST
Vendhar Movies Vs Joint Director
ST - Writ petitions challenge a show cause notice/orders-in-original issued by the Service Tax Department to producers/purchasers of cinematograph films who have assigned some part of their copyright in the cinematograph films to television channels as being relating to 'Intellectual Property Rights' service. Held: Petitioners have admittedly transferred independent rights relating to the exhibition of Cinematograph films to the Television Channels - According to the Assessing Authority, it is only if the film was transferred, in entirety, that the transfer would amount to a 'perpetual' transfer and nothing short thereof - The transfer of any part of the copyright relating to a specific aspect of the cinematographic film would only be temporary in nature - there is no dispute with the position that the petitioners are producers or purchasers, and thus, owners of the copyright in cinematograph films - A conjoint reading of the provisions of Sections 13, 14, 17, 18, 19 and 56 of the Copyright Act, 1957 make it clear that the term 'copyright' denotes a specific and special right bestowed by statute - It may relate to one of several kinds of creative inputs, the sum total of which/portions of which, may constitute different assets, each holding a different underlying copyright - A cinematograph film holds a copyright in its own right, as a whole - However, the film, as an asset, comprises of various smaller but equally important components, such as the script, screenplay, background score, song lyrics, melody, instrumentation, orchestration, the use of light and camera work, to name a few - While the sum total of these inputs results in a film, the copyright of which will be held by the producer, each component thereof carries an independent and distinct copyright - This has given rise to the expression, 'bundle of rights', as per which the film holds a copyright by itself and also comprises of small, but equally distinct rights within itself - It is the lack of appreciation of the aforesaid point that is the fundamental and fatal flaw in the impugned show cause notice and orders of assessment - Setting this principle against the context and purpose of Section 65(105)(zzzzt) of the Finance Act, 1994, the 'right' mentioned therein, relates to the right in the film as well as each of such rights comprised in the film - The interpretation accorded by the Department tends to ignore the fact that the taxable service under Service Tax Law is of 'any copyright' denoting all rights, that which vests in film as a whole, or any of the smaller but equally important rights comprised in the making of the film itself - The impugned notice and orders-in-original, to the extent to which they do not indicate appreciation as well as application of the aforesaid, are erroneous in law and are liable to be quashed - Assignment of a copyright is by way of transfer, dealt with under section 18 and 19 of the CR Act - On the other hand, sub-section (1) of Section 21 entitles the author to 'relinquish' the whole or any part of the rights comprised in the work and this cannot be equated with a 'transfer' of a copyright which is what is dealt with under the Act for the purposes of levy of Service tax - Petitioner's confirm that the documentation entered into by them with Television Channels specifically uses the word 'perpetual' and this is specifically and fairly admitted by counsel for Revenue - stand of the Department is that the use of the word 'perpetual' is a mere camouflage - The Assessing Authority proceeds on the basis that the use of the words 'in perpetuity' are not in consonance with the spirit of the agreement and is only used to disguise the actual fact that the transfer was temporary and to avoid tax - However, this is only a suspicion and nothing is brought on record to prove the allegation - Though the initial burden is upon an assessee to establish the proper nature of a transaction and the stand taken by it in law and on facts, once it has done so, such burden then shift upon the department to disprove the picture painted by the assessee and establish the falsity of the agreement as well as the true nature of transaction entered into between the parties - This burden is not discharged in the present cases and the officers merely allege falsity without, in any manner, being able to disturb the transaction as portrayed by the petitioners - admittedly all agreements use the term 'perpetual transfer' and some transfer the asset specifically for a period of 99 years, both in excess of the period of 60 years set out under the provisions of the CR Act - The assignment is, simplicitor, permanent/perpetual and seen not temporary - In this backdrop, the conclusion of the respondents to the effect that a perpetual transfer or a transfer for 99 years, though in excess of the period stipulated in the Act, is temporary, appears, fundamentally unsound and defies logic - provisions of the CR Act have not been looked at or applied in the proper perspective in the impugned SCN/orders - SCN and Os-in-O set aside - Department is given full liberty to initiate proceedings afresh, bearing in mind the observations and conclusions as above, in accordance with law - The aspect of limitation shall also be gone into afresh bearing in mind the burden that is imposed upon the Department in terms of Section 73 and specifically the proviso thereto - writ petitions are allowed in the above terms: High Court [para 19, 22, 27, 28, 30, 32, 33, 34, 35, 38, 39]
Maintainability - As far as the question of maintainability and alternative remedy is concerned, it is all too well settled that where a legal infirmity is pointed out and established, there is no fetter on this Court to consider the validity or otherwise of such order of assessment of even a show cause notice. [para 12, 16] - Petitions allowed
:
MADRAS
HIGH COURT
2019-TIOL-1576-CESTAT-MUM
Ace Pipeline Contract Vs C.C.G.S.T
ST - Appellants are registered for providing services under the category of Works Contract service, construction service, SOTG, RIPS etc. - At the time of audit it was noticed that they were also engaged in trading of goods and had availed CENVAT credit in respect of common input services such as Telephone Bills, mobile, courier, conveyance, professional fee etc. for providing output services which are chargeable to tax as well as for their trading activities, which is exempted service, without maintaining separate account as required under Rule 6(3)(iii) of CCR, 2004 - alleging that the appellant is liable to pay an amount equal to 5%/6% of the cost of traded goods in terms of Rule 6(3)(i), CCR, 2004, a SCN dated 25.8.2015 was issued to the Appellant to pay an amount of Rs.17,15,866/- for the period April, 2010 to March, 2014 - demand confirmed along with interest and penalty and amount already paid appropriated - Commissioner (A) rejected appeal, hence assessee is before CESTAT and submits that they had reversed CENVAT credit on proportionate basis and there were several correspondences between them and the department between August 2011 and November 2013, therefore, extended period cannot be invoked; that the said issues were not at all considered by the lower authorities.
Held: Since the reversal of proportionate CENVAT credit has not been considered by the authorities below while deciding the matter, without going any further, Bench is inclined to remand the matter to the Adjudicating Authority - appeal allowed by way of remand: CESTAT [para 5, 6]
-Appeal allowed by way of remand : MUMBAI CESTAT
2019-TIOL-1575-CESTAT-MUM
National Health And Education Society Vs CST
ST - Appellants run hospitals for providing healthcare and other related services to their patients - such services are provided through two departments viz. In-Patient department (IPD) and Out-Patient Department (OPD) - In case of IPD, patients are admitted in the hospitals whereas in case of OPD, the patients are treated without being admitted in the hospitals - patients in both IPD and OPD are being treated normally by the resident doctors who are on the payroll of the appellants and also by the panel/non-panel doctors engaged by the appellants - appellants provide consulting rooms required by the panel/non-panel doctors for treating their (doctor's) patients in the OPD and in such cases the appellants receive consideration from the doctors for permitting them the use of consulting room on an hourly basis - appellants discharge service tax liability in such cases under Business Support Services (BSS) on the consideration received - however, in case of medical services provided to the patients through panel/non-panel doctors in the hospitals, the appellant-hospitals did not pay service tax on the ground that the consideration for healthcare services are directly received by them from the patients and that the appellants-hospitals do not charge the doctors for utilizing their hospital facilities and equipment in the course of their performing the professional activities - investigation revealed that the hospitals have engaged the medical professionals/doctors on contractual basis for providing medical services to patients; that they collect the charges from the patients and out of income so generated, certain amount is paid to the doctors towards consultancy provided by such doctors to the patients - case of the department is that the amounts retained by the appellant-hospitals were on account of infrastructure support provided by the hospitals to the doctors in enabling them to carry out their profession and accordingly, such services should be held to be taxable services under the head BSS (prior to 01.07.2012) and after 01.07.2012 (negative list regime) as taxable services for the provision of infrastructural support - demand of tax was confirmed against certain hospitals who have come up in appeal before the CESTAT and in the matter of those cases where the demand has been dropped, Revenue is in appeal.
++ Appellant-hospitals argue that the issue arising out of the present dispute in no more res integra, in view of the order of this Tribunal in the case of Sir Ganga Ram Hospital Vs. CCE, Delhi-I - 2018-TIOL-352-CESTAT-DEL and that since Revenue has not filed any further appeal, the said order has attained finality - furthermore, by relying upon the said decision, the Tribunal in the case of CST, New Delhi Vs. M/s Holy Family Hospital, 2018-TIOL-1508-CESTAT-DEL and M/s Apollo Hospitals Vs CCE, Raipur, 2018-TIOL-2174-CESTAT-DEL has taken the stand that under identical set of facts, service tax liability cannot be fastened on the assessees - contention of Revenue is that the Tribunal decision in Sir Gangaram's case (supra) is per incuriam as the judgment of Gujarat High Court in the case of Dr. K.K. Shah (1982) 135 ITR 146 (Guj.) relied upon therein was rendered prior to the Larger Bench judgment delivered by the Supreme Court in the case of Barendra Prasad Ray - (1980) 2 SCC 693 = 2002-TIOL-576-SC-IT .
Held:
Statutory provisions prevalent at the material time (prior to July 2012) provided that the value of any taxable service shall be the gross amount charged by the service provider for such service provided or to be provided by him - Similarly, after 1st July' 2012, the term "service” has been defined in Section 65B (44) of the Act to mean inter alia , that any activity carried out by a person for another for consideration - In the present cases, admittedly the appellants-hospitals did not charge the doctors at all - There is no payment by the doctors to the hospital and, therefore, no consideration is received by the hospitals from the consultant doctors - Thus, in absence of any consideration being received, no service tax is required to be paid by the hospitals - there is no privity of contract between the doctors and the patients and the patients are under no obligation to pay any amount to the doctors - The billed amount paid by the patients is reflected as the income of the hospitals alone in the books of accounts and the doctors are paid as per the contractual norms, on which the hospitals deduct the tax at source under the income tax statute - is absence of any specific allegation and discussions with any supporting evidence regarding the type of support services provided and the amount received on such account by the hospitals, service tax demand cannot be fastened on the hospitals under the taxable category of BSS/Support Services - it is an admitted fact on record that Revenue has not filed any appeal against the order of the Tribunal passed in the case of Sir Ganga Ram Hospital (supra), thus, the said order has attained finality and the findings recorded therein cannot be disturbed for deciding identical issues, involved in the present cases differently - it cannot be said that the doctors are engaged in the activities of providing business/profession, in order to fall within the purview of the definition of taxable service under the category of BSS/Support Services - It is the case of the department that the hospitals/institutions are rendering ‘Business Support Services' to the doctors - In such a case, the hospitals should have charged the doctors for the services rendered to them - One cannot take a long drawn conclusion that a portion of the doctors' fee paid by patients is retained by the hospitals/institutions and such retention should be treated as consideration paid to the hospitals - facts of the present case are not dissimilar to the case dealt by Tribunal, therefore, the ratio is squarely applicable - Held that the Appellant hospitals/institutions are not liable to pay service tax under the category of ‘Business Support Services' - Appellant-hospitals appeals allowed and Revenue appeals are rejected: CESTAT [para 7, 9, 10, 11, 13, 14, 15]
-Assessee appeals allowed/Revenue appeals rejected : MUMBAI CESTAT
2019-TIOL-1569-CESTAT-MAD
Nissan Motor India Pvt Ltd Vs CST
ST - The assessee-company manufactures various models of motor vehicles - It entered into a Manufacturing Licensing Agreement with M/s Nissan Motor Co Ltd., Japan (NML) during the relevant period - Upon investigation by the Revenue, it emerged that the assessee availed the right to use trade mark license and technical information and technological assistance data for manufacture & or assembly and certain models of cars and its spares - The Revenue alleged that the assessee made provisions in its books of accounts for royalty paid to NML but had not paid service tax despite being recipient of service - It was also noted that the assessee did not assess its own liability or disclose the same in ST-3 returns - SCN was issued proposing duty demand with interest & imposing penalties - On adjudication, the duty demand was confirmed with interest along with equivalent penalty being imposed along with penalties u/s 77 & 78 of the Finance Act, 1994 - Hence the present appeal.
Held: The assessee does not contest the duty demand but contests the interest & penalty - The assessee claimed that no interest is leviable since it paid the duty demanded before issue of SCN - Such an interpretation of law is misconcieved - Explanation (1) to sub-section clearly indicates that interest u/s 75 is also payable on amount paid u/s 73(3) - Hence payment of interest cannot be evaded even when the assessee paid the entire tax liability before issue of SCN - Besides, it must be kept in mind that the assessee paid up the entire duty immediately upon the same being pointed out - The fact that the assessee meticulously made provisions in their books of accounts indicates that they did not intend to hide facts - Hence no suppression of facts with intent to evade payment of duty can be attributed so as to impose penalty - Hence the penalty imposed u/s 78 is an overkill and must be quashed - Penalty u/s 77 is sustained - The appeal is disposed off on such terms: CESTAT (Para 1,2,8.4,9.2)
-Assessee's appeals partly allowed : CHENNAI CESTAT
2019-TIOL-1568-CESTAT-HYD
Vasavi Cotton Merchants Kalyana Mandapam Vs CCE, C & ST
ST - Issue is regarding liability to pay service tax under Mandap Keeper Services - This is the second round of litigation before Tribunal - In the 1st round of litigation, SCN issued to assessee for non-discharge of service tax liability on amounts collected towards generator charges, electricity charges, cleaning and maintenance charges and towards supply of water was confirmed by the lower authorities and the Tribunal remanded the matter back directing the Authorities to consider the issue in its full perspective as to the limitation angle also - The demand of service tax on various amounts collected i.e. generator charges, electricity, cleaning and maintenance are includible in the assessable value - As the assessee is not able to produce any documents indicating that they are reimbursement charges; in the absence of such documents, the demands raised on these charges received by assessee are upheld - Coming to the issue of demand being hit by limitation, in the absence of any documents that assessee had declared these amounts to be reimbursement charges, the claim of limitation also fails - As regards penalty imposed under Section 78, the Commissioner (A) in the impugned order has explicitly recorded that assessee is of high social status and render philanthropic services without profit motive - He also records that they have not collected the service tax on disputed charges and could have entertained a bonafide belief that no tax is payable - Coming to such a conclusion he set aside the penalty imposed under Section 76 of FA, 1994 - Same findings will also apply for the penalty imposed under Section 78 of FA, 1998 - Assessee should produce compliance of discharge of tax liability and interest before the adjudicating authority - On such compliance being noted, the penalty imposed on assessee under Section 78 of FA, 1994 stands set aside: CESTAT
-Appeal disposed of : HYDERABAD CESTAT
CENTRAL EXCISE
2019-TIOL-1567-CESTAT-DEL
Caparo Fasteners Vs CCE & ST
CX - The assessee is engaged in manufacture of bolts & screws and are availing the facility of cenvat credit under CCR, 2004 - The Department noticed that the assessee has availed excess cenvat credit on imported goods in contravention to Rule 3 (i) of CCR, 2004 during February 2008 - On being pointed out, though the assessee reversed the said amount of Cenvat Credit, however, the interest was not deposited, which still was a contravention not only of CCR, 2004, but also of Section 11 AB of CEA, 1944 - The only controversy which remains to be adjudicated is as to whether the assessee was liable to pay interest as has also been confirmed by order under challenge - The interest liability under Rule 14 of CCR, 2004 if read with Section 11B of CEA, 1944, is applicable when there is delay in payment of duties - It becomes clear that where the credit has wrongly been availed but has been reversed prior it being utilized by the assessee, no question of any interest liability at all arises - The High Court of Punjab & Haryana in case of M/s. India-Swift Laboratories Ltd. 2009-TIOL-440-HC-P&H-CX has appreciated the same - Hence, the question of payment of interest does not at all arise - Finally coming to the aspect of limitation, the period of demand is 2008-09 - Audit was conducted on 21st February, 2009 - The SCN is dated 27th April, 2012 - Apparently, the same is beyond the normal period of limitation as provided under Section 73 of CEA, 1944 - But present is the case of voluntary reversal of the cenvat credit, that too, before utilization thereof - Question of any malafide intent or the mensrea to evade the duty does not at all arise - The record of assessee simultaneously reflects that the closing balance of assessee has been more in the impugned period - Invocation of extended period was not justified on the part of Department - Order under challenge is set aside for this reason as well: CESTAT
- Appeal allowed : DELHI CESTAT
2019-TIOL-1566-CESTAT-AHM
Huber Group India Pvt Ltd Vs CCE & ST
CX - The issue involved is that whether assessee is entitled for Cenvat Credit in respect of input services namely, Air Travel Agent Service, Courier Service and Outdoor Caterer's Service - The issue lies a narrow compass as in the assessee's own case, this Tribunal has allowed the Cenvat Credit - Following the said decision of Tribunal, Cenvat Credit allowed in respect of Travel Service and Courier Service - However, as regard the Cenvat Credit on Outdoor Caterer's Service, the matter was remanded - Accordingly, matter remanded to verify that whether the assessee had collected any charges from their employees in providing catering service - Accordingly, the appeal is partly allowed: CESTAT
- Appeal partly allowed : AHMEDABAD CESTAT
2019-TIOL-1565-CESTAT-BANG
Eid Parry India Ltd Vs CCT & CE
CX - The assessee-company manufactures Sugar, Denatured Ethyl Alcohol and Bio-compost falling under Chapter subheading 17, 22 and 31 under CETA, 1985 - During manufacture, certain waste such as Bagasse and Molasses emerge - The Bagasse is used for heating boilers which in turn produce Steam, which is further used for rotation of turbines for generating electricity - Part of the power so generated is used in the factory of production while the rest is sold to other parties - The assessee availed Cenvat credit on inputs used exclusively in manufcturing dutiable final products - The assessee also received certain input services such as professional services, telephone services, security services & consultancy services used in the manufacture of sugar/ethyl alcohol and generation of electricity - Pursuant to investigation by Revenue, the assessee agreed to reverse proportionate credit under protest on common input services based on turnover for the common input services after following the formula - The assessee reversed some amount of credit - Nonetheless, SCN was issued seeking recovery of credit, being consideration received for electricity sold - On adjudication, substantial demands were dropped on grounds that the assessee could reverse proportionate credit & the duty demand was considerable reduced - Hence the present appeal.
Held: The assessee already reversed proportionate credit for the relevant period as per the formula prescribed in Rule 6(3A) of CCR - The Revenue wrongly demanded duty by incorrectly following the formula prescribed u/r 6(3A) of CCR - The reversal already made by the assessee is valid and is in keeping with the mandate of Rule 6(3A) - Hence the demand raised is untenable and warrants being quashed: CESTAT
- Assessee's appeal allowed : BANGALORE CESTAT
CUSTOMS
2019-TIOL-1564-CESTAT-MAD
Numerical Analytics Instruments Pvt Ltd Vs CC
Cus - The assessee had imported financial calculators manufactured in China, supplied to them by a dealer in Malaysia - Accordingly, they filed Bill of Entry for clearance of 84 PCS of "TI-BA II Plus Financial Professional Calculator" & 300 PCS of "TI-BA II Plus Financial Calculator" declaring the value at USD 3108 (C&F), the unit price of which was declared as USD 12 & USD 7 respectively - The RSP declared by assessee for the above items was Rs. 1,800/- and Rs. 1,050/- respectively - Admittedly, there is no documentary evidence placed on record or any contemporaneous import relied on by lower authorities, to justify valuation at a much higher rate - It is a settled position of law that the law only recognizes an expert's opinion as an evidence and undoubtedly, data available on the internet is not the one - The Revenue can rely on contemporaneous imports alone and since the same having not been done, the impugned Order becomes unsustainable and liable to be set aside being contrary to the settled position of law and therefore, the same is set aside: CESTAT
- Appeal allowed : CHENNAI CESTAT
2019-TIOL-1563-CESTAT-HYD
Bharat Aluminium Company Ltd Vs CC & ST
Cus - The assessee has imported machinery under EPCG scheme from their supplier in France - The contract which they have entered into with their supplier includes an amount of EUR 460,000 towards supervision of erection, commissioning and performance guarantee tests of the equipment and machinery - While assessing the bill of entry, the lower authority has added 50% of this amount i.e. EUR 230,000 to the assessable value taking roughly half of the erection and commissioning supervision charges as having been rendered prior to import and rest having been rendered post import - It is not in dispute that the charges for supervision of erection, commissioning and performance guarantee tests need not be included in assessable value to the extent they represent post importation charges and to the extent they represent any charges for services rendered prior to importation, they are includable - Perusal of contract shows that the entire amount of EUR 460,000 paid by the assessee to their supplier is towards supervision of erection, commissioning and performance guarantee tests in India - Therefore, the entire amount is for services rendered in India - Even otherwise, the supervision of erection, commissioning and performance guarantee tests cannot be done in the country of origin because a commissioned plant cannot be imported - Commissioning takes place after the import - Therefore, there is no scope for interpreting these charges as meant for any services rendered in the country of origin - Assessee has case in their favour and the entire charges for supervision of erection, commissioning and performance guarantee tests in India is not includable in the assessable value - Consequently, the impugned order is set aside: CESTAT .
- Appeal allowed : HYDERABAD CESTAT
|
|
