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SERVICE TAX
2019-TIOL-1713-HC-MP-ST
Matrika Infrastructure Pvt Ltd Vs UoI
ST - Petitioner is being aggrieved by the show-cause notice dated 01.01.2018 issued by the Assistant Commissioner (Audit) Central Tax, CGST, Central Excise & Service Tax, Indore - It has further stated that respondent No.5 vide letter dated 01.01.2018 has directed the petitioner / Company to furnish documents for audit of accounts following the year of last audit to the years 2016-17 - petitioner further states that he has submitted document / information vide letter dated 16.02.2018 and further details were sought by respondent No.5 vide letter dated 02.04.2018 - The petitioner did submit a reply on 05.06.2018 and also objected in the matter - The petitioner has further stated that respondent No.5 has issued an audit memo on 11.09.2018 and four other audit memos on 22.10.2018 - petitioner's contention is that the internal audit is nowhere defined under the Finance Act, 1994 and he is not having any authority to conduct the audit and to demand the documents - petitioner has referred to Section 173 and 174 of the Central Goods and Services Act, 2017 as well as Section 72-A of the Finance Act, 1994 and his contention is that by no stretch of imagination, respondent No.5 can demand production of document from the petitioner in the manner and method it has been done in the present case - further states that Section 173 of the Central Goods and Service Tax Act, 2017 has omitted the provisions of Finance Act, 1994 and as no saving to Rule 5A(2) of the Service Tax Rules, 1994 is provided in the provisions of Section 174 (2) of the Central Goods and Service Tax Act, 2017 , fresh audit proceedings initiated by the respondents is bad in law - After the petition was filed, a show-cause notice was issued on 25.04.2019 and the petitioner, by making an amendment, has sought quashment of notice dated 25.04.2019 - respondents have stated that after conducting an audit, audit report was sent to the petitioner on 06.03.2019; that the principles of natural justice and fair play were also observed and after furnishing the final audit report, showcause notice has been issued and, therefore, the present petition is certainly premature; that the petitioner is required to file a reply to the show-cause notice and no case for interference is made out in the matter.
Held: In the light of the Division Bench decision in Tripti Alcobrew Limited v/s The State of Madhya Pradesh & Six Others (W.P. No.1969/2014) the question of interference by the High Court at the stage of issuance of show cause notice does not arise - It has been held in the case of M/s Gitanjali Vacationville Private Limited & Another v/s The Union of India & Another decided by Calcutta High Court in W.P. No.380/2019 dated 15.01.2019 = 2019-TIOL-153-HC-KOL-ST that audit under the service tax provisions for pre-GST period is prima facie permissible under the GST regime - moreover, the Calcutta High Court has declined to stay the audit proceeding, however, in the present case, the audit is already over and the show-cause notice has been issued - Gauhati High Court in the case of Laxmi Narayan Sahu v/s Union of India = 2018-TIOL-2238-HC-GUW-ST has held that by application of Section 174 (2)(e), any investigation, enquiry, etc., instituted, continued or enforced under Chapter V of the Finance Act, 1994 continues to remain in place despite omission of Chapter V of the Finance Act, 1994 - Court is, therefore, of the considered opinion that no case for interference is made out in the matter specially when, the show-cause notice has been issued - The petitioner does have a liberty to file a reply, and thereafter, the authority shall be passing the appropriate order in accordance with law - It is made clear that High Court has not observed anything on the merits of the case and the Assessing Officer shall be free to pass appropriate order in accordance with law without being influenced by the order passed by the Court - Petition dismissed [para 29, 30, 31, 33]
- Petition dismissed: MADHYA PRADESH HIGH COURT
2019-TIOL-1711-HC-RAJ-ST
Aravali Minerals And Chemical Industries Pvt Ltd Vs UoI
ST/GST - Petitioner impugning that the SCN issued to it for recovery of service tax is not legally valid as w.e.f 01.07.2017, the legal regime has changed with introduction of GST which by section 174 repealed the Finance Act, 1994.
Held: Section 174(2)(c) of CGST Act, 2017 prima facie seems to preserve the levy insofar as any liability to pay tax was incurred by the individual or concern - Court is of the opinion that the present writ petition cannot be maintained - It is open to the Writ petitioner to raise all contentions including levy and extent of levy of service tax before the adjudicating officer concerned - Writ petition is disposed of: High Court [para 2, 3, 4]
- Petition disposed of: RAJASTHAN HIGH COURT
2019-TIOL-2222-CESTAT-KOL
CCE, C & ST Vs Sudesh Bhardwaj
ST - Respondent assessee is engaged in various activities/job such as raising, sorting, picking of iron ore at the mining site, loading the ores on dumper and transporting the same to the desired destination and unloading the same and hiring of HEMM for removal of mining rejects by mechanized operation at Thakurani Mines - Adjudicating authority confirmed the demand under "Business Auxiliary Services" and "Cargo Handling Services" for the period 10.09.2004 to 31.3.2006 but the same has been set aside by the Commissioner(A), therefore, Revenue in appeal.
Held: Vivisecting the composite contract and charging service tax on different components of the contract individually under different services is not justified - Division Bench of the Tribunal vide its Final Order No. 76824-76825/2018 dated 23.10.2018 on similar facts, allowed the assessee's appeal and rejected the Revenue's appeal - following the same, there is no reason to interfere with the impugned order - same is sustained and Revenue appeal is rejected: CESTAT [para 6 to 8]
- Appeal rejected : KOLKATA CESTAT
2019-TIOL-2221-CESTAT-BANG
Trackon Courier Pvt Ltd Vs CC, CE & ST
ST - Appeal is directed against the impugned order whereby the Commissioner (A) has upheld the Order-in-Original and also imposed penalty under Section 78 to the tune of Rs.22,47,125/-.
Held: Appellants have collected the Service Tax and not paid the same to the Government treasury and also filed late Return for the impugned period - when the audit was conducted and the Audit Party found that the appellants are liable to pay Service Tax, the appellant conceded their liability and paid a part of the amount and thereafter filed the Return on 13.07.2015 and subsequently before adjudication they paid the remaining amount but did not pay the interest which was paid subsequently - during the relevant period as per Section 78 the penalty shall be 50% of the Service Tax for the period beginning from 8th April, 2011 up to the date on which the Finance Act, 2015 receives the assent of the President - Further, as per the provision of Section 78 prevailing till March 2015 in respect of accounted transactions penalty imposable under Section 78 of the Act was 50% of the Service Tax - appeal is partly allowed and penalty is restricted to 50%: CESTAT [para 6]
- Appeal partly allowed : BANGALORE CESTAT
CENTRAL EXCISE
2019-TIOL-1715-HC-MUM-CX
CST Vs Vidyut Metallics Pvt Ltd
CX - Revenue seeking condonation of delay of 583 days in making application to set aside the order dated 02.02.2017 passed by the Prothonotary and Senior Master under Rule 986 of the Bombay High Court (Original Side) Rules by which order the applicant's appeal for non-removal of office objections was dismissed.
Held: On a reading of the affidavit and additional affidavit in support of the motion, the reasons for the delay are (I) implementation of GST w.e.f. 1st July, 2017; (ii) file gone through various offices leading to delay; and (iii) strong case on merits - On facts, Bench finds that there is no explanation offered for delay in the affidavit for the period from 2nd March, 2017 to 30th June, 2017 when the GST was implemented - Thereafter also, there is no explanation offered as to when and how the Revenue realized that the office objection had remained to be removed in this appeal - The affidavits are casual - explanation offered for the delay viz. movement of files amongst various officers is not sufficient reason - It is clear from the affidavits that the applicants have been negligent - no reason to condone the delay - Notice of Motion is dismissed: High Court [para 3, 6, 8, 9]
- Application dismissed: BOMBAY HIGH COURT
2019-TIOL-2225-CESTAT-AHM
Rameshwar Textile Mills Ltd Vs CST
CX - The assessee-company was engaged in processing man-made fabrics under Chapter 84, on job work basis, during the relevant period - It received grey fabrics from the merchant manufacturers and exporters, as per Notfn No 28/2003-CE(NT) dated 01.04.2003, which permits endorsement of raw material documents - The assessee claimed to have availed credit based on such endorsed invoices received from the principal manufacturers for whom job work was done - The goods were processed and cleared to the principal manufacturers upon payment of duty - The assessee was served an SCN alleging that the documents based on which credit was availed, had been issued by fake/non-existent firms - It was also alleged that the assessee did not take reasonable steps as per Rule 7(2) of CCR 2002 - Such allegations culminated into an O-i-O, which was later sustained by the Commr.(A) - Hence the present appeals.
Held - While extended limitation was invoked to raise demand for recovery of credit, the SCN did not specifically allege suppression or mis-declaration of facts by the assessee - In course of job work, the assessee received goods from principal manufacturers & did not buy the goods as such goods were purchased by the principal manufacturers - The assessee did not come into contact with the suppliers - Hence the demand merits being quashed on grounds of limitation: CESTAT
Held - Rebate - The other issue pertains to sanction of rebate claim to an entity and imposition of equivalent penalty on the assessee - In such case, extended period of limitation was not invoked - The penalty was imposed u/r 15(2) of CCR r/w Section 11AC of the CEA - The penalty imposed u/s 27 of the CER 2002 was already quashed by the Commr.(A) - The SCN issued to the assessee only alleges wrong availment of credit & cites no evidence - The SCN also presumes there to be bogus/fake suppliers and is not backed with any evidence - In such circumstances, the penalty imposed u/s 11AC r/w Rule 15(2) of CCR is unsustainable: CESTAT
- Assessee's appeals allowed: AHMEDABAD CESTAT
2019-TIOL-2224-CESTAT-CHD
Rajdhani Aromatics Vs CCE & ST
CX - During the relevant period, the Excise Commissionerate concerned, based in Meerut, conducted investigations against certain units who purchased Menthol Solution and De-mentholised Oil from units based in J&K - It searched the premises of various commission agents and buyers and sellers of such items - The agents were not found to be maintaining proper record of sale or purchase of raw material - Pursuant to investigations, the Meerut commissionerate concluded that J&K-based units purchased no raw material and so no question arose about them manufacturing any goods - It was also observed that manufactured goods were sold to UP-based manufacturers who in turn partially exported such finished goods and partially sold some in the domestic market - SCNs were issued to UP-based manufacturers to deny credit availed on goods purchased from J&K based suppliers - SCNs were also issued to J&K-based manufacturers proposing duty demand - Such demands were confirmed such demands on grounds that the absence of any farmers meant non-supply of raw material by the commission agents to the J&K units abd absence of any evidence of manufacture by the assessee - Cash refunded to the assessee was proposed to be recovered - Such findings were sustained by the Commr.(A) - Hence the present appeal.
Held - It is seen that no investigation was conducted at the assessee's end and the entire case is based upon the investigation conducted by the Central Excise commissionerate at Meerut - Without any investigation, it cannot be held that the assessee was not a manufacturer during the relevant period - Entries of vehicles at the toll barriers also certified the movement of raw material and finished goods - Besides, during the period of investigation, the assessee was allowed to continue its activity by procuring inputs from UP-based supplier and selling goods manufactured by it to its buyers - It is seen that the allegation is based solely on assumptions and presumptions & so it cannot be held that the assessee did not manufacture any goods during the relevant period - Hence no duty can be demanded from the assessee: CESTAT
- Assessee's appeal allowed: CHANDIGARH CESTAT
2019-TIOL-2223-CESTAT-HYD
Shaik Iqbal Mohammed Vs CC, CE & ST
CX - The assessee here is the proprietor of an entity engaged in manufacturing Sweet Meat Cereal Bars on job work basis for one M/s Naturell (India) Pvt Ltd - The goods were classified under Heading 21069099 of the CETA and exemption from payment of duty was claimed as per Sr No 29 of Notfn No 3/2006, claiming exemption as Chikki Sweet Meat Cereal bars under the category of Mithai/Misthan - The assessee was served SCN alleging that Chikki is made primarily from Jaggery and Sugar whereas the assessee was using different ingredients & use of the same made the manufactured goods distinct from those listed in Sr No 29 of Notfn No 3/2006 - It was claimed that Chikki was made from groundnuts coated with Jaggery and were dissimilar to Rite Bite Nutrition bars manufactured by the assessee - It was further mentioned that products containing Cocoa were classifiable under Heading 18069090, attracting a different rate of duty - It was further alleged that the bars were not Sweet Meat but were ready-to-eat packaged food, attracting 8% duty as per Sr No 30 of Notfn No 3/2006-CE - Hence duty demand was raised, by invoking extended limitation - A separate SCN was issued for a different period - On adjudication, such proposals in the SCN were confirmed and penalties were imposed on the assessee - Hence the present appeals.
Held - The assessee marketed and sold the product as Sweet Meat - The invoices issued by M/s Naturell for sale of the products mention the product as Sweet Meat - Even similar products of the competitors which are sold in market are known in trade circle and in mind of the consumers as Sweet Meat, as evidenced by wrappers of such products - The assessee produced a sample of the bars, showing that the Cocoa content in it is less than 1% - It is unnecessary for a product to contain Sugar or Jaggery in order to classify as Chikki - Even if the product is made from Cashew nuts, cereals or puffed rice or soya crispies, it would not lose its identity as Sweet Meat - Ingredients of different Sweet Meats could differ without the product losing its basic identity as Chikki or Sweet Meat due to difference in ingredients - The Revenue admittedly produced no evidence showing that the goods are not Mithai or Misthan - Mere packing of the sweet meat name would not remove the product from the heading of Mithai or Misthan - The scope of Sr No 29 of Notfn No 3/2006 is very wide and includes edible preparations in ready for consumption form - The word similar edible preparation is of wide compass - If the goods are known as Sweet Meat and are marked and consumed as sweet meat in general parlance, then even-if packed would not lose its identity as Misthans - The intention of packing these Mithais / Misthans is to preserve their freshness and save them from any contamination - It does not mean that Sweet Meats sold openly in sweet shops would classify as Sweet Meat - Besides, in Circular No. 841/18/2006 – CX dated 6.12.2006 the Board clarified that even if same items fall under two entries of the notification, the exemption of NIL rate of duty would be available to goods covered by Sr No 29 of Notfn No 3/2006-CE even when the said goods are also covered by Sr No 30 - Hence it is held that both types of cereal bars i.e those product not containing cocoa as well those containing cocoa would classification under 21069099 as Sweet Meat and are eligible for exemption under Sr No 29 of Notfn No 3/2006 – CE dated 1.3.2006 and subsequent analogous Notfns: CESTAT
Held - Limitation - The assessee also contested the demand on limitation - It was found to have been in correspondence with the Revenue, which was aware of every ingredient, nature of product & its classification - The assessee also adduced copies of such correspondence, showing there to be no suppression of facts on its part - As the issue stands settled in favor of the assessee on merits as well as limitation, no question arises for imposing penalty - Personal penalty on director is quashed as well: CESTAT
- Assessee's appeals allowed : HYDERABAD CESTAT
CUSTOMS
2019-TIOL-1714-HC-MUM-CUS
CC Vs Shimnit Infrastructure Pvt Ltd
Cus - Revenue has filed a notice of motion seeking stay of the order of the CESTAT on the ground that since their appeal has been admitted if no stay is granted of the impugned order of the CESTAT directing Revenue to grant refund to the respondent, the applicant Revenue would be saddled with payment of interest on the delayed payment.
Held: Mere admission of an appeal would not by itself lead to the stay of the order being appealed against before the High Court - admission of the appeal only indicates that the issue raised requires consideration and it does not in any manner reflect finally on the merits of the order of the Tribunal - The issue raised in appeal would require consideration which would be done at the final hearing of the appeal - In the present case, no circumstances have been shown which could justify denying the benefits available to the respondents by virtue of the impugned order of the Tribunal before the impugned order of the Tribunal has been fully considered at the final hearing of the appeal and set aside - Notice of motion dismissed: High Court [para 6, 7]
- Application dismissed: BOMBAY HIGH COURT
2019-TIOL-2239-CESTAT-BANG
Odiyanda Ayyappa Muddaiah Vs CC
Cus - During the relevant period, the DRI officers received intelligence that one passenger had concealed contraband under the seat of the aircraft and left the same there, having made arrangements with two airline employees to retrieve the same - The DRI officials identified the two employees, who are the appellants herein, and directed them to retrieve the hidden Gold - The deftly concealed packages were recovered and unwrapped, revealing 11 yellow metal bars - Statements of the three appellants herein were recorded - Later, the DRI officers searched the residences of all three persons, but found no incriminating documents or Gold - On adjudication, the value of the Gold was re-determined and confiscated - Penalties were also imposed on them u/s 112(a) of the Customs Act - Such findings were upheld by the Commr.(A) - Hence the present appeals.
Held - The statements given by the appellants reveal them to have confessed their guilt - From the submissions and the evidence at hand, the Commr.(A) correctly deduced that the second appellant masterminded the illegal activity - He was found to be the sole investor of money who sponsored the procurement of contraband Gold into India through carriers arranged in Dubai - The second appellant devised the entire plan and made the requisite arrangements to execute such act by concealing the goods - The first and third appellants were also found to have aided and abetted the illegal activity on payment of hefty remuneration - The appellants' contentions of their having not been subjected to cross examination is untenable as they never retracted their statements at any point of time - Besides, in their original statements made before the Customs officer u/s 108 of the Act, they admitted their involvement in smuggling activity on payment of remuneration - The version of the appellants' statements are also evidenced from their WhatsApp communications - In such circumstances, the penalties imposed u/s 112(a) are rightly imposed: CESTAT
- Appeals dismissed/In favor of Revenue: BANGALORE CESTAT
2019-TIOL-2220-CESTAT-MUM Lizer Technologies Ltd Vs CCE
Cus - The assessee-company is a 100% EoU - During the relevant period, it imported an elevator duty free by availing benefit of Notfn No 53/97-Cus - The Revenue opined that such elevator was not used in the manufacturing of goods meant for export and so the assessee was ineligible for benefit under the notification - SCN was issued proposing duty demand for recovery of benefit allowed, along with demand for interest & penalty u/s 117 of the Act - Such proposals were confirmed upon adjudication - The findings of the O-i-O were upheld by the Commr.(A) - Hence the present appeal.
Held - In respect of the issue of prior approval, the Commissioner failed to consider the certificate issued by the office of the Commissioner of Customs, mentioning the model number of the elevator, based on which the assessee made duty-free import of the elevator - The same is a very vital point since it goes to the root of the matter - In respect of extended period of limitation, it is seen that the SCN nowhere uses the word suppression or mis-statement and only mentions that the concession is irregularly availed - Such submission of the assessee was brushed aside by the Commissioner by placing reliance on the judgment of the Gujarat High Court in Neminath Fabrics Pvt. Ltd. but without mentioning how its is applicable to the present case - Hence the matter warrants remand for deciding the issue afresh - Thus, the O-i-A in challenge is quashed: CESTAT
- Case remanded : MUMBAI CESTAT |
