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SERVICE TAX
2019-TIOL-2429-CESTAT-BANG
TNT India Ltd Vs CCT
ST - Allegation of the department is that the appellant was providing both taxable and exempted services and as per rule 6(3)(c) of CCR they are required to maintain separate accounts of inputs and input services and if not maintained they are required to utilise CENVAT credit so availed to the extent of 20% of tax liability; that since the appellant had contravened the said provision, notice was issued requiring them to show cause as to why excess CENVAT credit of Rs.78,45,806/- utilised for payment of tax should not be disallowed and recovery and penalty/interest be imposed - Appellant had in the meantime reversed the CENVAT credit to the extent of 80% of the credit availed in respect of housekeeping and rent-a-cab service - amount so reversed for the disputed period was Rs.11,37,010/- and interest was also paid - Adjudicating authority confirmed the demand of Rs.14,21,259/- and also demanded interest - Tribunal had by order dated 25.07.2017 remanded the case to reconsider the issue and decide afresh - AA noticed that the appellant had not disputed the quantification and, therefore, confirmed the demand as initially held payable and appropriated the amounts paid - appellant is before CESTAT in the second round.
Held: The previous adjudicating authority had called for a report from the Additional Commissioner and the said officer had reported the calculation of quantification as Rs.11,37,010/- and the same was also confirmed by the Internal Audit of the LTU as well as the Superintendent - such detailed calculation along with worksheets were submitted by the appellant on 29.10.2009 and the same were noted by the AA - therefore, the finding in the impugned order that the appellant had not annexed any worksheet to dispute the quantification is factually incorrect and contrary to the finding recorded by the previous adjudicating authority - impugned order is, therefore, unsustainable in law - same is set aside and appeal is allowed: CESTAT [para 5]
- Appeal allowed : BANGALORE CESTAT
2019-TIOL-2428-CESTAT-MUM
Nichrome India Ltd Vs CCT
ST - Appellant had taken CENVAT credit on the strength of Supplementary invoice issued by M/s Datta Enterprises - such invoice was issued by Datta Enterprises subsequent to an investigation of a case registered against them in May 2012 for failure to pay service tax for the period 2007-08 to March 2012 and which culminated into issuance of SCN and confirmation by o-in-o dated 28.01.2014 - alleging that the credit availed by the appellant of Rs.5,65,008/- is improper in terms of rule 9(1)(bb) of CCR, 2004, SCN was issued and a demand of Rs.3,32,087/- was confirmed and the order was upheld by Commissioner(A), hence appeal to CESTAT.
Held: It is pertinent to note that rule 9(1)(bb) of CCR clearly talks of fraud etc. at the end of the service provider and not at the end of the service recipient viz. the appellant in the present case - however, insofar as limitation is concerned, there is force in the argument of the appellant that the department was well aware of the fraud/suppression etc. committed by M/s Datta Enterprises to whom a SCN was issued on 25.03.2013 - as the appellants were regularly submitting ST-3 returns and were also audited in 2013-14 and the SCN was issued on 31.12.2015, the same is clearly beyond the limitation provided - under the circumstances, no suppression can be alleged on the part of the appellant - SCN and the impugned order are liable to be set aside on the ground of limitation - appeal allowed with consequential relief: CESTAT [para 4, 5]
- Appeal allowed : MUMBAI CESTAT
2019-TIOL-2423-CESTAT-ALL
BHELVs CST
ST - The issue involved is as to whether the service tax paid on 'Commercial or Industrial Construction Services' by the sub-contractors would be available as credit to the assessee for further utilization in respect of same services provided by assessee - Admittedly, the assessee is covered by main blanket definition of input service in so far as he is utilizing the services of the sub-contractor for providing output services - Revenue's reliance is on the exclusion clause - As per the said exclusion clause, certain services stand specified in clause (A) of the said exclusion, which would not be available for availing Cenvat credit, if the same are used for certain specified output services - However, the said exclusion clause does not stop there - There is further exception to the effect that such exclusion would not apply if the specified services are used for providing one or more of the specified services - This leads to a clear interpretation that if any of the specified excluded services stand utilized for providing one or more of the specified services, the exclusion would not apply - The various specified excluded services are in respect of 'Architect Services', 'Port Services', 'Airport Services', 'Commercial or Industrial Construction Services', 'Construction of Residential Complex Services' and 'Works Contract Services' - If the said services are used for construction of building or the laying of foundation or making of structures to support the capital goods, credit would not be available - However, further exception makes it clear that if the said services stand utilized for providing any of the services specifically excluded, the credit would be available - As per the settled principle of law, no word in legislation has to be ignored - The second exception carved out in first exception leads to make two negatives as positive and it has to be interpreted as the construction services used for further construction services have to be treated as an eligible input services - As such, the services of sub-contractors utilized for their output services of construction of power plant would be an admissible Cenvatable services - The demand stands raised by invoking extended period of limitation - The assessee being a Public Sector Undertakings cannot be saddled with any mala fide so as to justifiably invoke the longer period of limitation - Appeal is allowed on merits as also on limitation by setting aside the impugned order: CESTAT
- Appeal allowed: ALLAHABAD CESTAT
2019-TIOL-2422-CESTAT-CHD
DLF Projects Ltd Vs CST
ST - The assessee provided various services to the unit located in SEZ during the period from 3.3.2009 to 20.5.2009 under the category of works contract services but did not pay service tax - The Revenue views that the assessee is liable to pay service tax in terms of Notfn 9/2009-ST - Demand of service tax was confirmed along with interest - As the assessee has provided services to SEZ unit and in terms of section 26 of SEZ, 2005, the assessee was not required to pay service tax - Accordingly, in terms of Notfn 9/2009, the assessee is not required to pay service tax - Therefore, the demand of service tax raised against the assessee is set aside: CESTAT
- Appeal allowed: CHANDIGARH CESTAT
2019-TIOL-2421-CESTAT-MAD
J Alex Raja Vs CCE
ST - The assessee was undertaking various works for Bharat Sanchar Nigam Ltd., Airport Authority of India and Indian Railways - On scrutiny of records, it was found that the assessee had been engaged in activity of construction of office buildings and erection of transmission towers and other associated structures - However, they were not discharging any service tax on these activities - Department issued a SCN proposing demand with interest as service tax liability on the amount received towards Commercial or Industrial Construction Service prior to 01.06.2007 and under Works Contract Service thereafter - For the period prior 01.06.2007, the demand will not in any case sustain in the light of decision in case of M/s. Larsen & Toubro Ltd. 2015-TIOL-187-SC-ST - For the period after 01.06.2007, the ratio laid down by decision of Tribunal in case of V. Chinnasamy & 2 Ors. 2018-TIOL-2478-CESTAT-MAD is applicable on all fours in respect of Construction Services provided by assessee - Assessee was given to understand that no tax is liable to be paid by them as well as they under the bona fide belief that BSNL, AIA., being Govt. entities are not liable to tax - This submission has been made before Commissioner (A) that they were doing works only to Govt. agencies like BSNL, AIA and they were given to understand they are not liable to service tax for the services provided to Govt. agencies, which was supported to some extent by CBEC Circular No. 80/10/2004 wherein it had been clarified clearly that Govt. construction would not be taxable; that BSNL, which is Govt. establishment also informed the assessee that service tax is not applicable to the services rendered by assessee to them; that the non-payment was only due to the confusion prevalent in the filed during the material period - No difficulty found in applying the ratio laid down in case of V. Chinnasamy & 2 Ors - This being so, for the period after 01.06.2007, the demand invoking the extended period of limitation with respect to Works Contract Service cannot sustain - It is, however, made clear that the assessee will be liable to pay service tax for the normal period of limitation calculated from the date of issue of SCN - However, for the same reasons no penalty will be imposable under section 78 ibid for the normal period - Now coming to the demand with regard to Cleaning Services, assessee has conceded the tax liability - Demand of tax and interest is not interfered - The penalty under section 78 ibid on this score also is unjustified: CESTAT
- Appeal partly allowed: CHENNAI CESTAT
CENTRAL EXCISE
2019-TIOL-1939-HC-RAJ-CX
Commissioner Of Central Goods and Service Tax Vs Rajasthan Prime Steel Processing Center Pvt Ltd
CX - The assessee manufactures autoparts which are exciseable - It procured steel coils of various widths and sizes as inputs for use in manufature of their final product during period from July, 2011 to March, 2016 - In some cases, the quantity of inputs were either cleared as such or after undertaking the process of cutting/slitting on 14.11.2013, the assessee obtained registration as a dealer and thereafter, cleared the inputs on reversal of credit under Rule 3(5) of Cenvant Credit Rules - The trading was included as an exempted service w.e.f. 1.4.2011 or inputs cleared as such was done on reversal of proportionate credit of inputs services attributable to such trading activity as per Rule 6(3)(iii) of Cenvat Credit Rules - The SCN was issued to assessee alleging that the common input service credit was utilized for dutiable goods as well as exempted service of trading and since he did not file a declaration under Rule 6(3A), he was liable to pay an amount of 7%/10% of value of exempted goods sold in terms of Rule 6(3)(i) - The SCN covers two different periods - substantial part of that period was when Rule 6(3A) did not exist - During this time, adjudicating authorities were bound to follow the rule while granting inputs credit in respect of services that qualify for it, even while excluding the credit for noneligible services and activities - All that Rule 6(3A) has done is to streamline the procedure for apportioning credits to ensure that proportionate credit, to the extent admissible could be claimed for the business and ensure that the concerned adjudicating officers do not have to spend time on carrying out the exercise - This amendment i.e. procedure for apportionment under sub-rule 3(A) was facilitative and procedural - The entitlement to credit otherwise is in Rule 3 of Cenvat Credit Rules - It is not disputed that Cenvat credit can be given in respect of services only when the inputs services qualify for that benefit and not for other inputs which are not eligible for the process of manufacture - No question of law arises and the appeals are accordingly dismissed: HC
- Appeals dismissed : RAJASTHAN HIGH COURT
2019-TIOL-1938-HC-GUW-CX
Real Time Technology Vs CESTAT
CX - The stand of department is that the O-I-O was served personally on assessee on 16.07.2010 and the same was duly acknowledged by him - In the appeal before Commissioner (A), plea was taken by assessee that he was not provided with a copy of O-I-O and he came to know about the same after receipt of letter dated 10.04.2017 from the department asking him to pay the confirmed demand - The assessee received the copy of O-I-O on 01.09.2017 and thereafter the appeal was filed on 10.10.2017 - The Commissioner (A) rejected the plea taken by assessee holding that he was of the firm belief that the impugned order was received by proprietor of the firm on 16.07.2010 - While forming that opinion, the Commissioner (A) observed that it is not believable that the assessee would keep quiet for 7 years even if he had not received the O-I-O and that the assessee changes his signature regularly - Accordingly, the appeal having been preferred beyond the period of 60 days, same was dismissed as time-barred without going into the merits of the case - The assessee preferred an appeal before Tribunal under Section 35B of CEA, 1944 - Same was rejected by upholding the order of Commissioner (A) - Having regard to the endorsement of Additional Commissioner, the author of O-I-O, that the order is being sent by registered post with A/D, it is not understood under what authority the Superintendent (Adjudication) altered the mode of service and sought to effect service of the order through a special messenger - If the order is sent by a special messenger as asserted by the department, it is baffling why there should be an endorsement “Register with A/D” at page-53 on which reliance is placed - The computation of period of limitation will begin from 01.09.2017, the date on which, the assessee undisputedly was furnished with a certified copy of O-I-O - So computed, the appeal filed before the Commissioner (A) on 10.10.2017 is within the prescribed period of limitation - The Commissioner (A) and the Tribunal did not consider or advert to this aspect of the matter, which goes to the moot question with regard to date of knowledge of assessee - The impugned orders are set aside - The Commissioner (A) will now hear the appeal on merits and pass appropriate orders in accordance with law: HC
- Appeal allowed : GAUHATI HIGH COURT
2019-TIOL-2420-CESTAT-MAD
BS and B Safety Systems India Ltd Vs Commissioner of GST & CE
CX - The assessee is engaged in manufacture of rupture disk and availing the facility of CENVAT credit scheme - On verification of records, it was noticed that the assessee had availed wrong credit on certain input services - The first issue is with regard to disallowance of credit on GTA service - The Supreme Court in case of Ultra Tech Cement Ltd. 2018-TIOL-42-SC-CX has held that credit is eligible from the place of removal upto buyer's premises - However, in the case of Roofit Industries Ltd. 2015-TIOL-87-SC-CX , the Apex Court has held that when the sale is on FOR basis, all the charges / cost have to be included in assessable value for payment of central excise duty - Thus, in such cases, when the sale takes at buyer's premises, the place of removal is the buyer's premises - The Board has clarified in their circular dated 8.6.2018 that when the transaction / sale is on FOR basis, the place of removal would be buyer's premises - Therefore, it is necessary to determine the place of removal to consider the eligibility of credit of service tax paid on freight charges upto buyer's premises - For this purpose, matter remanded to the adjudicating authority who shall look into the issue of eligibility of credit on GTA service after determining the place of removal - The second issue is with regard to credit disallowed on works contract service - The period involved is prior to 1.4.2011 - The input services for setting up of factory / premises is eligible during the period prior to 14..2011 - Therefore, the disallowance of credit on works contract service is unjustified - The credit in respect of printing charges is upheld as the assessee is not pressing the same - The issue with regard to GTA service is remanded to adjudicating authority for fresh consideration - However, the penalty imposed in the third issue is set aside: CESTAT
- Appeals disposed of: CHENNAI CESTAT
2019-TIOL-2419-CESTAT-AHM
Anupam Mhi Industries Ltd Vs CCE & ST
CX - The limited issue to be decided is whether the assessee is liable to pay interest on credit of Education Cess and Secondary & Higher Education Cess subsumed in opening balance of cenvat credit as on 01.03.2015 and whether the assessee is liable for penalty under Section 11AC - The assessee shown the closing balance of Education Cess and Secondary & Higher Education Cess as on 28.02.2015 and declared in their ER-1 Return and the same amount was included/subsumed in the opening balance of basic cenvat credit as on 01.03.2015 and the same was declared in ER-1 Return for the month of March 2015, therefore, the facts was very much in the knowledge of Revenue - Therefore, there is no suppression of fact on the part of assessee, accordingly, the penalty imposed under Section 11AC is not imposable - As regard the demand of interest, if at all, there is availment of wrong credit w.e.f 01.03.2015 only, however, from 01.03.2015 till the reversal of the credits the assessee have not utilized the said amount - As per amended Rule 14 w.e.f. 01.03.2015, the interest is chargeable for the act of wrong availment of credit only when the assessee wrongly availed and utilized the cenvat credit - The credit of Education Cess and Secondary & Higher Education Cess was subsumed in opening balance of March 2015 - Since till the date of reversal, it was not utilized, therefore, the interest is not chargeable, accordingly, demand of cenvat credit in respect of Education Cess and Secondary & Higher Education Cess was confirmed by the lower authority and reversed by the assessee is maintained - The demand of interest and penalty is set aside: CESTAT
- Appeal allowed: AHMEDABAD
CESTAT
CUSTOMS
2019-TIOL-2417-CESTAT-ALL
GT Cargo Fitting India Pvt Ltd Vs CCE
Cus - The assessee-company is a 100% EoU which exports final products as per Notfn No 52/2003-Cus - It is entitled to import duty-free raw material required to be further used in the manufacture of exported articles - Such Notfn permits clearance of part manufactured goods to DTA with the permission of the Development Commissioner - As per the conditions in the notfn, the importer must obtain authorization from the Development Commissioner to establish unit for export purposes - The assessee imported Polyester webbings fabric buckles for manufacturing ratchet lashing system - The latter goods were exported and part of the same were cleared to DTA unit with due permission of the Development Commissioner - The Revenue sought to deny benefit of Notfn on grounds that as per the LOP, the permission was granted only to parts used in motor vehicles - As the latching system cannot be considered part of motor vehicle, the condition of Notfn regarding authorization by Development Commissioner was unsatisfied - SCN was issued proposing duty demand & the same was confirmed upon adjudication.
Held - Considering the letter issued by the Development Commissioner, it is seen that it is not a fresh LOP issued by the Development Commissioner & it is to the effect that the item lashing belts system stands included in the earlier LOP which is modified to such extent - Since it is a modification of earlier LOP, the same must be treated as a clarificatory amendment by the Development Commissioner - This would effectively over-rule the Revenue's objections - Moreover, the issue at hand involves bona fide interpretation of provisions of Notfn - Without there being any evidence of mala fide intent on part of the assessee, extended limitation is not invokable - Hence the O-i-A merits being quashed: CESTAT
- Assessee's appeal allowed: ALLAHABAD CESTAT |
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