2019-TIOL-1590-HC-MUM-GST

Bramha Corp Ltd Vs State of Maharashtra

Luxury Tax - Petitioner seeks a direction to the Respondent State of Maharashtra to honour its commitment to grant luxury tax exemption under the Act of 1987 for the period 5 April 2017 to 31 March 2027 - Petitioner contends that this waiver was an incentive for the petitioner to establish hotel within the State of Maharashtra, however, upon introduction of GST Act, 2017, the luxury tax was subsumed in GST and thus the benefit granted to the petitioner under the eligibility/entitlement certificate dated 5 April 2017 and 22 June 2016 could not be given effect to.

Held: A similar issue had come up before the Bench in the case of Adlabs Entertainment Ltd. which dealt with entertaintent tax waiver under the erstwhile regime before the introduction of GST and the High Court had vide its order dated 21 st December 2018 - 2018-TIOL-2933-HC-MUM-GST directed the State government to constitute a high level committee to consider the said petitioner's representation as has been done by some other States and consequently the high level Committee had by its report dated 6 th March 2019 recommended to refund the quantum of SGST paid by the petitioner during the period of incentive as per the Entitlement Certificate issued to them - Respondents do not dispute that the facts in this case are similar/identical to those in the case of Adlabs Entertainment Ltd. (supra) - The only distinction being that the waiver sought is of luxury tax and in the earlier case, the waiver was of entertainment tax - If the Committee report has been accepted, the State Government should take a policy decision so that the benefit can be extended to all similarly situated parties - For the purpose of taking instructions, AGP for the State, seeks time - petition is adjourned by a period of two weeks to be listed along with Original Side Writ Petition No.3027 of 2018 - to be heard on 30 July 2019: HC [para 2 to 7]

- Petition adjourned : BOMBAY HIGH COURT

2019-TIOL-51-AAAR-GST

RMKV Fabrics Pvt Ltd

GST - In the mattter of classification of Salwar/Chudidar sets, top semi-stitched, but bottom not stitched and dupatta fabrics cut from bales/thans, AAR had held that the same is classifiable as ‘made up articles' under tariff heading 6211 depending upon material - attracts tax CGST @2.5% if sale value does not exceed Rs.1000 per piece and CGST @6% if sale value exceeds Rs.1000 per piece; in the matter of Salwar/Chudidar sets, top fully stitched but bottom not stitched and dupatta fabrics cut from bales/thans, AAR held that the same is classifiable as ‘made up articles' under tariff heading 6211 depending upon material - attracts tax CGST @2.5% if sale value does not exceed Rs.1000 per piece and CGST @6% if sale value exceeds Rs.1000 per piece and in the matter of Salwar/Chudidar sets, top neck-worked, bottom not stitched and dupatta fabrics cut from bales/thans, AAR held that the same is classifiable as ‘made up articles' under tariff heading 6211 depending upon material - attracts tax CGST @2.5% if sale value does not exceed Rs.1000 per piece and CGST @6% if sale value exceeds Rs.1000 per piece - Appellant is before the AAAR contending that these Salwar/Churidar Sets are nothing but three different pieces of fabrics cut from the lengthy fabrics which has to be ultimately stitched into a complete Salwar/Churidar Set and hence are required to be classified as "Fabrics", based on the constituent materials .

Held: Chapter covers unfinished or incomplete articles of the kind described in the heading provided the products have the essential character of the articles concerned - Appellate authority find that the sets which are in approximate shape/outline of the finished goods, more so with one piece in ready to wear condition, have the essential character of 'finished goods' and in view of interpretative Rule 2(a) are classified as 'Kurta and Salwar with or without dupatta' under CTH 6211 - importantly, sets can be used only as 'Churidars' and cannot be used as any other garments or termed as 'fabrics' - From the Circular No 80/54/2018-GST dt 31.12.2018, it is evident that to be a garment/made up, the product has to be more than mere fabric - It is further commented that Made up article in Chapter 63 covers pieces which have undergone some working, such as hemming or formation of necklines and intended for the manufacture of garments but not yet sufficiently completed to be identifiable as garments or parts of garments - In the case at hand it is already established that the products are incomplete or unfinished Salwar/Churidar Sets', which requires further stitching to size/design - The products are not simply fabrics with certain embellishments but containing Top which are Semi-stitched, Stitched and neck-line formed/dupatta hemmed/knotted, which are without ambiguity cannot be considered as mere 'Fabrics' but more appropriately termed as 'garments' or 'Part of garments' - Thus the Model 2, 3 and 4 under consideration, being Sets of three pieces consisting of (1) unstitched Salwar (bottom), (2) laced/hemmed/knotted duppata and (3)Semi-stitched/Fully stitched Kurta (Top)/Top with defined neckline are 'garments' and not mere 'fabric' in three pieces - lower authority has correctly pronounced the ruling and Appellate authority does not find any reason to interfere with the same - Appeal rejected: AAAR [para 9.1, 9.2, 10.2, 10.3, 11]

- Appeal rejected : APPELLATE AUTHORITY FOR ADVANCE RULING

SERVICE TAX

2019-TIOL-2117-CESTAT-HYD

CPR Construction Pvt Ltd Vs CCT

ST - Upon audit for the relevant period, it was observed that the assessee had not discharged its complete service tax liability - SCN was issued proposing to raise duty demand with interest - However, the assessee had paid the duty with interest & part of the penalty before the SCN had been issued - The remaining penalty was paid after the SCN was issued - Thus the issue arose as to whether the assessee was entitled for benefit of reduced penalty - On adjudication, the benefit of reduced penalty @ 25% was allowed - On Revenue's appeal, the Commr.(A) quashed the O-i-O - Hence the assessee's appeal.

Held: The assessee is entitled for benefit of the first proviso u/s 78(1) of the Finance Act 1994 - The penalty is liable to be reduced to 50% of service tax payable for the relevant period - Hence the O-i-A is modified by reducing the penalty under Section 78(1) from 100% service tax demanded on advances received during the 2014-15 and 2015-16 (upto 13.05.2015) to 50%: CESTAT

- Assessee's appeal partly allowed: HYDERABAD CESTAT

2019-TIOL-2116-CESTAT-MUM

Aditya Birla Science And Technology Company Pvt Ltd Vs CCGST & CE

ST - Issue relates to denial of CENVAT credit to the assessee on the Service Tax paid towards Business Support Service on the ground that cost of rent paid for residence of employee is not taxable for which credit is not admissible - Assessee has been rendering scientific and technical consultancy services - M/s. Aditya Birla Management Corporation Pvt. Ltd. (ABMCPL) is the service provider from whom assessee received services upon entering into Secondment Agreement on which basis services of Dr. Prashant Puri, having vast experience in the field of science and technology was extended to assessee on secondment basis for carrying out various scientific and technical research projects in assessee’s company - Admittedly Dr. Puri was engaged through secondment agreement By ABMCPL and as per agreement between assessee and ABMCPL, expenditure incurred for service provided by ABMCPL is to be borne by assessee - As found from the O-I-O, denial of CENVAT credit on rent paid for residential accommodation was justified by adjudicating authority on the ground that Service Tax was not payable to the owner of property for rending the residential accommodation to Dr. Puri - It was not known if such Service Tax collected on such rent has been paid to the property owner who, in turn, had paid the same to the department - Liability of discharge of tax in the said case does not fall on the house owner as service provider ABMCPL, who collected the Service Tax, is duty bound to pay the same to the Government - In the instant case, there is no dispute concerning such payment being not paid to the Government by ABMCPL - Even in such a situation the liability is supposed to be fixed on the person who collected the same and it can never be fixed on the person from whom it is collected - When service tax was collected by service provider even on providing for residential accommodation which is admissibly not subjected to service tax, there is no point in denying benefits of availment of CENVAT credit to assessee when legality of such collection at the receivers end was not questioned - Impugned order is set aside: CESTAT

- Appeal allowed: MUMBAI CESTAT

CENTRAL EXCISE

2019-TIOL-2115-CESTAT-MAD

Adani Power Mundra Ltd Vs CGST & CE

CX - The tax value involved in the present appeal is less than Rs 2 lakhs - As per the second proviso to Section 35B of the CEA 1944 and Section 129A of the Customs Act, the Tribunal can refuse to admit an appeal if the amount involved is lesser than Rs 2 lakhs - Hence the appeal merits being dismissed on account of the low tax value: CESTAT

- Assessee's appeal dismissed: CHENNAI CESTAT

Divis Laboratories Ltd Vs CCT

CX - Whether the assessee, who is a manufacturer of bulk drugs is entitled to cenvat credit on MS items such as plates, angles, channels and sheets as inputs - Initially, the assessee had taken cenvat credit on these items as capital goods which was questioned by department and in response to assessee admitted that they do not qualify as capital goods because they were materials which were used for repair and maintenance of their machinery - The definition of inputs under Rule 2(k) of CCR, 2004 has been amended w.e.f. 01.04.2011 to include all materials of goods used in factory of manufacture of final products - It is not in dispute that the goods in question were used in factory of manufacture by manufacturer - The only question which remains is only whether they get excluded by exclusion part of definition as materials which have no relationship whatsoever to the manufactured final products - It is not in dispute that the materials in question were used for repair and maintenance of machinery which were used for manufacture of final products - There is a direct relationship between goods which were used and manufactured of final products and therefore they were not excluded by clause (f) of the Rule 2(k) - In the case of CEAT Ltd. - 2019-TIOL-906-HC-MUM-CX, Jindal Steel Ltd. - 2015-TIOL-1032-CESTAT-BANG and HPCL, credit of cenvat as inputs was allowed on the material used in maintenance and repair of the machinery - In view of the same, the impugned order is unsustainable and needs to be set aside: CESTAT

- Appeals allowed: HYDERABAD CESTAT

Adani Gas Ltd Vs CC

CX - The assessee is engaged in marketing, distribution and supply of natural gas/ Compressed Natural gas - They have installed CNG Outlets at the location of various Oil Marketing companies namely M/s IOC, M/s BPCL and M/s EOL known as OMCs and the gas is sold by assessee to such OMCs on payment for duty and VAT - In case of direct sale of CNG through their own outlet the assessee discharge central excise duty/ VAT on sale price to the retail customers - In case of sale to OMCs the duty is paid by assessee at the sale price to the OMCs who in turn sell it to retail customer and pays VAT on their sale price - Since the sale price has to be uniform regular at all the sale outlets the assessee grants a Trade Margin to the OMCs to cover their expenses, outgoings and profit margin - The value of the goods between the assessee and OMCs is fixed as per the agreement and hence the same cannot be disputed - The Revenue has relied upon the judgment of Maruti Udyog Ltd - 2010-TIOL-1127-CESTAT-DEL-LB and Coromandal Fertilizers Ltd 2002-TIOL-343-SC-CX-LB, and Supreme Petrochem Ltd - 2009-TIOL-1133-CESTAT-MUM-LB - However, the said judgments are not applicable to the present set of facts - The demand on 'Trade Margin' confirmed against assessee is not sustainable and is required to be set aside - The demands raised in instant case are hit by limitation of time as assessee right from beginning made correspondences with the Department disclosing the price structure and the terms of agreement entered with the OMCs - The Revenue was in knowledge of valuation method adopted by assessee - The assessee since 2005 had made correspondence with department disclosing the price structure with bulk customers, retail customers and OMCs to Revenue - The correspondence clearly shows that assessee were disclosing the methodology of valuation and the Revenue never pointed out any irregularity - In such case, the bona fide of assessee cannot be doubted - Since there is no ingredient of any malafide intention on the part of assessee to evade the excise duty, the extended period cannot be invoked for raising demand - Views are also supported by Tribunal, Apex Court and High Court's judgments in cases of Pragati Concrete Products (P) Ltd - 2015-TIOL-223-SC-CX, Simplex Infrastructures Ltd - 2016-TIOL-779-HC-KOL-ST and Amway India Enterprises Pvt. Ltd - 2017-TIOL-423-CESTAT-DEL - The demand is not sustainable on merits and even on limitation of time - The impugned order is therefore not sustainable - The cross objection also stand disposed off: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

CUSTOMS

Spaniso Studio Vs CCT & CE

Cus - The assessee-company filed bills of entry for clearance of Polished Porcelain Tiles - Upon assessment, the AO proposed to enhance the assessable value based on NIDB data - The goods were provisionally released & cleared upon payment of duty & execution of bond and furnishing of security - The declared duty was paid, although a separate amount was figuring in Icegate and duty payable - On enquiry, the assessee was informed that such amount was figuring mistakenly & the same was part of the total differential duty to be paid as security deposit against provisional assessment - The assessee paid the duty - On assessment, the adjudicating authority enhanced the assessable value - On appeal, the Commr.(A) set aside such order & directed that assessment of goods be done at declared value - The assessee then claimed refund of the security deposit furnished during provisional assessment - Such refund was denied on grounds that the amount did not reflect in the O-i-O & the appraising section was not apportioned in such amount as security deposit or differential duty - Such rejection of refund was sustained by the Commr.(A) - Hence the present appeal.

Held: The O-i-A in challenge was passed without proper appreciation of facts as recorded in the O-i-O - Undisputedly, the assessee was asked to pay differential duty and the same was paid - After making the payment, the assessee also wrote to the Revenue, explaining the reasons for different modes of payment - Such letter was not considered by the authorities when deciding the assessee's case - The assessee also produced CA certificate certifying the payment of said amount as security deposit in respect of the BoE, but this too was not considered - Besides, no valid reasons were recorded for retaining such amount & the orders are also silent in respect of the appropriation of such amount - The Revenue officers are duty bound to explain under which head the amount has been allocated, but no reason is recorded in respect of the collection, appropriation, utilization of such amount - It is well settled law that duty collected without authority of law cannot be retained by the Government and the same is liable to be refunded with interest - Hence the O-i-A rejecting refund is quashed: CESTAT

- Assessee's appeal allowed: BANGALORE CESTAT