SERVICE TAX

2019-TIOL-2148-HC-DEL-ST

2019-TIOL-2147-HC-DEL-ST

Idea Cellular Ltd Vs CST

ST - Assessee is engaged in providing telecommunication services - For providing the said services, they are required to install towers for which antenna and other equipments are required to be installed - They had taken the credit of service tax paid on various input services such as construction services, erection, commissioning & installation services, technical testing & analysis services which were used by them for commissioning and erection of BTS towers/ shelters - Three SCNs were issued to assessee seeking to disallow the credit taken by them, demand the interest in respect of inadmissible credit taken by them and for imposition of penalties - The Bombay High Court in case of Bharti Airtel 2014-TIOL-1452-HC-MUM-ST was Considering the issue of admissibility of CENVAT Credit in respect of "input" used for erecting and commissioning the telecom towers and decided against such admissibility - From the said decision, it is quite evident that the High Court has drawn a clear line for determination of admissibility of CENVAT Credit in respect of inputs used for manufacture of finished goods and those inputs used for providing the output services - In fact High Court has distinguished all the decisions relied upon by the assessee before it, in respect of the inputs used for manufacture of finished goods from the case before it - Most of the decisions relied upon by present assessee fall in the same category and hence need not be considered - In the present case, Tribunal is concerned with the input services used for providing the output services - Since on the issue there is the decision of Bombay High Court which is binding on the bench in Mumbai, matter referred to President for constituting a larger bench to decide the controversy i.e. whether the CENVAT Credit in respect of input services namely construction services, erection, commissioning & installation services, technical testing & analysis services which were used by the telecom service providers for commissioning and erection of BTS towers/ shelters used for providing telecom services is admissible or otherwise - Since the issue is referred on merits to the President for constituting the larger bench, all other issues such as limitation and penalties will be considered after the decision of larger of bench on the issue referred: CESTAT

- Case deferred: MUMBAI CESTAT

2019-TIOL-2651-CESTAT-MUM

Croda India Company Pvt Ltd Vs CST

ST - The assessee is registered with department for providing various taxable services - During audit, it was noticed that assessee had received from their associated enterprises (M/s Croda International) located abroad a sum of Rs 12,02,62,275/- for sale of their goods in India - Various issues arises for consideration i.e. whether the charges recovered by assessee as Commission for sale of goods of associated group of companies abroad are leviable to service Tax under category of BAS provided in India or the same are in respect of Export of Services as defined from time to time and thus exempt from payment of Service Tax - It is the submission of assessee that the services provided by them to their associated group companies for which they have received this commission is a performance based service - It is only as result of such usage of services in India that the sales of the these associated group company goes up in India - Since in respect of services provided by assessee for sale of goods of the associated group companies, all the conditions as laid down by Rule 6A to treat it as export of service are satisfied, it is held that the commission received towards sale of goods of associated group companies abroad are in relation to export of services.

Whether Service Tax is leviable in respect of reimbursements made by associated group companies to the assessee towards expenses actually incurred by them - Assessee have claimed that these reimbursements were made by their associated group companies on actual basis in respect of various expenses incurred by them under various heads - These expenses have been sought to be added in value of taxable services in view of Rule 5 of STR, 2006 - In view of the decision of Apex Court Intercontinental Consultants & Technocrats (P) Ltd holding that Rule 5 is ultra vires the Section 67 of FA, 1994 and noting that Commissioner has not given any other reason for including these charges in value of taxable service, it is held that these charges cannot be added to the value of taxable services provided by assessee - However, since these charges cannot be added to value of taxable services provided, assessee could not have claimed any CENVAT Credit in respect of the input services received for providing these reimbursable services to their associate group companies.

Whether in respect of Foreign Exchange remittances made by assessee to their associated group companies abroad for reimbursement of various expenses incurred by them could be levied to service tax on reverse charge basis treating the services provided as import of services - These charges are not reimbursement but payments towards the specific service provided by the overseas group associate company and are not reimbursements - If the payments are made for provision of specific service, which is taxable service, then the service tax is payable - Admittedly, in present case, the service provider the associated group companies are not having any office or presence in India - Thus the recipient of service has to pay the service tax on reverse charge basis.

Whether the demand is hit by limitation as extended period of limitation as per Section 73 of FA, 1994 is not invokable in the present case - The facts about the commission being received by assessee from their overseas associate group companies for sale of their goods in India was never brought to the knowledge of department - Neither the commission received were reflected in the ST-3 return filed by assessee - They have clearly suppressed the relevant information with the intention to evade payment of service tax - Tribunal uphold the charges of suppression with intent to evade payment of duty for invoking extended period of limitation as provided by Section 73 of FA, 1994.

Whether demand for interest under Section 75 and penalties imposed under Section 77 and Section 78 of FA, 1994 can be sustained - Since it is held that extended period of limitation has been rightly invoked in the present case, the provisions of section 78 will get attracted automatically - Since the demand of tax has been upheld the demand for interest will follow - It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due - Since assessee have failed to pay the said Service Tax by the due date, interest demanded cannot be faulted: CESTAT

- Matter remanded: MUMBAI CESTAT

2019-TIOL-2650-CESTAT-MAD

Chakra Tyres Vs CC, CE & ST

ST - The assessee is engaged in undertaking the work of repairing, reconditioning of tyres of automobiles, namely, four wheelers including buses, lorries, cars and two wheelers also - It is alleged that the assessee was providing taxable services under category of Management, Repair and Maintenance Services but they did not register themselves or pay service tax under this category - SCN was issued invoking extended period to demand service tax with interest and for imposing penalties - The demand has been raised after including the value of materials in the total taxable value - The Apex Court in case of M/s. Safety Retreading Co. (P) Ltd. 2017-TIOL-28-SC-ST , has held that value of materials cannot be included for arriving at the total taxable value on which VAT has been discharged - Following the said decision, the demand raised including value of materials cannot sustain - For the limited purpose of verifying as to whether the assessee falls within the threshold limit, the matter is remanded to the adjudicating authority - Needless to say that if assessee falls within the threshold limit, there would be no liability - Since VAT and service tax being mutually exclusive, the assessee will not be liable to pay service tax on the amounts which have suffered VAT - With regard to the issue of limitation, the Board by its Circular dated 27.02.2012 has only clarified that the tyre retreading activity is subject to levy of service tax - The said Circular does not give any confirmation that the Board was having any doubt as to whether it would be manufacture - The evasion of tax would not have come to light but for interference by department - The contentions raised by assessee that the extended period is not invocable cannot sustain - Thus argument on limitation fails: CESTAT

- Appeal partly allowed: CHENNAI CESTAT

2019-TIOL-2649-CESTAT-HYD

Granules India Ltd Vs CC, CE & ST

CX - Assessee is engaged in manufacture of bulk drugs and formulations and availing the facility of credit of duty paid on inputs, capital goods and service tax paid on input services - During scrutiny of records, it was found that assessee have availed higher CENVAT credit on inputs received from EOUs - The department was of the view that assessee have not complied with the provisions of Rule 3(7)(a) of CCR, 2004 and availed excess credit besides wrongly availing credit of SAD - The first issue is with regard to excess credit availed on inputs received from EOU by the assessee - The excess credit on this account is only Rs 2,28,722/- for the period April 2006 to March 2009 and Rs 1,23,835 for the period April 2009 to February 2010 where the total credit availed for these periods is above Rs 3 crores - Therefore, the contention of assessee that this was a mistake in calculation and that they were not aware of the revised formula prescribed in the Rules, is acceptable - For these reasons, demand raised for extended period cannot sustain - The assessee has reversed the amount of excess credit availed for the normal period - The assessee has relied upon the case of Bill Forge Pvt Ltd 2011-TIOL-799-HC-KAR-CX to argue that they are not liable to pay interest or penalties - The revenue brought to the attention, the decision in 2018-TIOL-1820-HC-MAD-CX wherein the High Court has relied upon the decision of Supreme Court in case of Ind-swift Laboratories Ltd 2011-TIOL-21-SC-CX to hold that the interest is payable on wrongly availed credit even though reversed before utilisation - Relying upon the said decision, assessee is liable to pay interest - However with regard to penalties, since this has been reversed, penalties imposed in this regard are unwarranted - The second issue is with regard to the credit availed on SAD - The decisions relied upon by assessee has clearly analysed the said issue for the period post 07.09.2009 as well as prior to 07.09.2009 - The demand in respect of credit availed on SAD cannot sustain - The impugned orders are modified to the extent of setting aside the credit availed on SAD as well as credit availed on inputs for the extended period - The demand of credit availed on inputs for the normal period as well as interest thereof is upheld - The penalties imposed are set aside: CESTAT

- Appeal partly allowed: HYDERABAD CESTAT

2019-TIOL-2648-CESTAT-ALL

Sarada Steel Industries Ltd Vs CCE

CX - The matter has been repeatedly coming up on the Board - On 09 January, 2019 the same was adjourned to 14 March, 2019 by way of last chance but as there was no court on 14 March, 2019 and the matter is adjourned to today - Assessee is not interested in pursuing the appeals - Accordingly, the appeals dismissed for non-prosecution: CESTAT

- Appeals dismissed: ALLAHABAD CESTAT

2019-TIOL-2139-HC-MAD-CUS

Cus - The petitioner challenges a SCN dated 08.08.2017 on the ground that penalty proposed to be issued under the impugned SCN has already been issued on 08.06.2017 by the Assistant Commissioner - The petitioner is a customs broker and under authorization from an importer, two bills of entries, had been filed for clearance of 'Rice Bran' from Malaysia - The bills of entry claim an exemption from payment of duty that is admittedly incorrect, since the exemption notification had been replaced by Notfn 12/12 stipulating Basic Customs Duty at the rate of 15% upon the goods imported aforesaid - The affidavit is wholly bereft of facts in regard to the circumstances in which the erroneous claim for exemption was put forth - The petitioner appears to have filed a letter dated 06.06.2017, a copy of which has not been placed before Court, seeking recall and re-assessment of the bills of entries in question - This request was accepted by the Assistant Commissioner on 08.06.2017 - The court is not inclined to consider the prayer of petitioner for the reason that the affidavit filed in support of the writ petition is wholly bereft of material facts - It was incumbent on the part of the petitioner to have brought to the notice of the Court all the material events that have transpired in the matter, its letters dated 06.06.2017, 08.06.2017 and 14.06.2017 and the sequence of events leading to the issuance of the impugned SCN - The fact that by letter dated 08.06.2017, the petitioner had accepted the levy of penalty and informed the assessing authority that it would remit the same, that it invited issuance of SCN, reiterating the request on 14.06.2017 constitute relevant material facts and ought to have been disclosed for appreciation by the Court - Since the petitioner has suppressed material facts leading to the issuance of SCN, it does not deserve the indulgence of the Court and hence, writ Petition in limine is rejected: HC

- Writ petition dismissed: MADRAS HIGH COURT

2019-TIOL-2138-HC-P&H-CUS

Cus - The petitioner is an importer and its goods were seized on the ground of mis-declaration of goods - The release of goods under Section 110-A of Customs Act, 1962, was permitted subject to mutilating the goods to reduce them into the melt scrap, which was assailed by the petitioner before the CESTAT - The Tribunal passed an order 2018-TIOL-3373-CESTAT-CHD allowing the appeal, thereby directing the release of goods, as they had been seized - The present writ petition was filed, inter alia , seeking a mandamus for compliance of the directions passed by the Tribunal - The petitioner submits that during pendency of present writ petition, final adjudication had taken place, whereby the seized goods have been released on payment of tax, penalty and fine - Hence, the present writ petition has become infructuous: HC

- Appeal dismissed: PUNJAB AND HARYANA HIGH COURT

2019-TIOL-2647-CESTAT-ALL

Rajshree Jewellers Vs CC

Cus - One of the appellant Shri Bipat Bind was intercepted at Mughalsarai Railway Station by officers of DRI who recovered 2997 Grams of Gold from him - He informed that he was working for Shri Neeraj Agarwal - The Officers got conducted chemical examination of seized gold through CRCL and the examination report revealed that the purity of gold in the seized gold was 99.63%, 99.79% & 99.70% - It appeared to revenue that seized gold was of foreign origin and was liable for confiscation under the provisions of Customs Act, 1962 - The purity of gold in the seized gold was less than purity of gold of foreign origin - Further, revenue also could not establish from where the gold was smuggled - On the contrary, the appellant has established that he has procured the said gold from Shri Shivanshu Agarwal after making payments through banking channels - It was up to revenue to further investigate as to from where Shri Shivanshu Agarwal has obtained the same - Though it is not available on record but it is more probable that after investigation with Shri Shivanshu Agarwal, revenue could not bring out any evidence to establish that Shri Shivanshu Agarwal had obtained smuggled gold and therefore, no such evidence is forth coming from the record - Further, Shri Shivanshu Agarwal is also not made a party to the proceedings for imposition of penalty on him for dealing with smuggled gold - After taking note that the purity of gold was less than the gold of foreign origin and M/s Raj Shree Jewelers and its proprietor Shri Neeraj Agarwal had obtained that gold from Shri Shivanshu Agarwal after making payments through banking channels, the seized gold was not smuggled into India and therefore, the same is not liable for confiscation - Accordingly, the confiscation of 2997 gms of gold is set aside - The penalties imposed on both the appellants are set aside: CESTAT

- Appeals allowed: ALLAHABAD CESTAT