SERVICE TAX

2019-TIOL-3025-CESTAT-BANG

Lavie Fitness Vs CCE & ST

ST - Intelligence revealed that the appellant is providing taxable service of health club and fitness services without getting registered, without payment of ST, without filing the returns – after detailed investigation, SCN dated 23.11.2015 issued to the appellant demanding ST of Rs.20.27 lakhs – demand confirmed along with interest, equivalent penalty imposed – appellant filed appeal before the Commissioner (Appeals) contesting only the imposition of penalty on them, which was rejected, hence appeal before CESTAT.

Held: Contention of the appellant that he is entitled to cenvat credit of ST paid on various input services which has been denied by the authorities below is not tenable because he has not produced any document to claim the same - in reply to his SCN also, he has not claimed the cenvat credit of input services and, therefore, both the authorities have rightly denied the cenvat credit of input service in the absence of valid claim made by the appellant -further, once the appellant has accepted the liability which was confirmed by invoking the extended period then he is liable to pay penalty as per the provisions of section 78 of the Finance Act - further, since the entire demand is raised on the basis of the books of accounts shown by the appellant where all the transactions were recorded,therefore, in view of proviso to section 78(1), the appellant is liable to pay the penalty up to fifty per cent of the ST which was there during the relevant period - since, in the present appeal, the appellant has not contested the demand, therefore, the extended period has rightly been invoked and penalty under section 77 & 78 has rightly been imposed – in view of the above, the appeal is partly allowed and the penalty reduced under section 78 to fifty percent – with this modification, the appeal of the appellant is disposed of : CESTAT [para 6, 7]

2019-TIOL-3024-CESTAT-MUM

Maersk Global Service Centres India Pvt Ltd Vs CCGST

ST - Appellant is engaged, inter alia, in the activities of providing "business support services" to its overseas clients - during the disputed period, the appellant had filed the refund applications in terms of rule 5 of the CENVAT Credit Rules, 2004 [CCR] read with notification no.27/2012 dated 18.6.2004 -the refund applications were partly allowed by the original authority and against rejection of some portion of the refund amount, the appellant had preferred the appeals before the Commissioner (Appeals), who, vide impugned order, has denied the refund benefit on the ground that there is no nexus between the input services and the output service exported by the appellant; that description of services mentioned in the invoice did not conform to the definition of the input service contained in rule 2(l) of CCR and that some of the invoices were not submitted for ascertaining the issue, whether the benefit of refund should be granted to the appellant

Held - Nexus between the input services and the output service exported - this Tribunal, in the case of Accelya Kale Solutions Ltd. - 2018-TIOL-2452-CESTAT-MUM , by relying upon the letter dated 16.3.2012 of TRU, has held that under rule 5 ibid of CCR, refund of input service credit is permissible on compliance of the formula prescribed therein and not otherwise - in view of the above settled position of law, no merits found in the impugned order, in so far as it upholds the adjudication order on the ground of nexus between the input and the output services -accordingly, the appeals to such extent is allowed in favour of the appellant: CESTAT

Description of services mentioned in the invoice not conforming to the definition of the input service - it is an admitted fact on record that the authorities below have not proceeded against the appellant for denial of cenvat benefit by taking recourse to rule 14 of CCR, which provides for recovery of cenvat credit wrongly taken or utilized -since, the present issue pertains to refund claim under rule 5 of CCR, it has only to be ensured that the formula prescribed in the said rule has been complied with by the claimant -thus, rejection of refund benefit on such ground is not justified -accordingly, the impugned order denying the refund benefit on such ground is set aside and the appeal is allowed in favour of the appellant: CESTAT

Non-production of invoices, in certain cases, for scrutiny before the original authority - the onus lies with the claimant to prove that the input services were in fact used for exportation of the output service and thus, the documents were required to be examined at the original stage -at this juncture, since the Advocate for the appellant submits that all the relevant documents are available with the appellant, the matter should be remanded to the original authority for verification of the documents/records to be submitted by the appellant -therefore, after setting aside the impugned order, the matter is remanded to the original authority for the limited purpose of verification of the invoices to be submitted by the appellant: CESTAT

The appeals filed by the appellant are disposed of in above terms: CESTAT [para 7, 8, 9, 10, 11]

- Appeals disposed of: MUMBAI CESTAT

2019-TIOL-3023-CESTAT-MUM

Mahendra Brothers Exports Pvt Ltd Vs CCGST

ST - Appellant is inter alia engaged in the manufacture and sale of cut and polished diamonds - during the disputed period, the appellant had imported customized software through the electronic media from Israel - the appellant had paid for such software in convertible foreign exchange -the software provided by the foreign company is taxable under the category of "Information Technology Software Service" - the appellant being the recipient of such taxable service, was liable to pay ST under section 66A of the Finance Act, 1994 [Act] under reverse charge mechanism – SCN issued – demand confirmed, penalties imposed – on appeal, the Commissioner (Appeals) upheld confirmation of the adjudged demands – appeal to CESTAT.

Held: It is an admitted fact on record that the diamond manufacturing units, including the appellant herein, have challenged the constitutional validity of section 66A of the Act before the Bombay High Court and also made representation to the Finance Minister of Government of India regarding the clarification on the issue, whether customs duty or ST to be levied on such type of transaction - thus, under such circumstances, it cannot be said that non-payment of ST during the relevant period was owing to the reason of suppression or mis-statement of facts etc. - since, the appellant had deposited the ST along with interest before issuance of the SCN, the benefit of sub-section (3) of section 73 of the Act should be available to the appellant for non-issuance of any SCN, especially seeking for imposition of penalties -with regard to the element of suppression of facts/fraud etc., the Supreme Court in the case of Nestle India Ltd. - 2009-TIOL-26-SC-CX have held that there must be conscious or deliberate withholding of information by the manufacturer for meeting such allegations -in the present case, since the department was aware about the activities undertaken by the appellant including others way back in 2006, the show cause proceedings initiated much after such period of knowledge cannot justify for initiation of proceedings with the allegation of suppression, fraud etc. -in view of the above, no merits found in the impugned order, insofar as it has upheld the penalties imposed under section 77 and 78 of the Act - accordingly, the impugned order to the extent of imposition of said penalties is set aside and consequently the appeal to such extent is allowed in favour of the appellant - in the result, the appeal is partly allowed : CESTAT [para6, 7, 8]

- Appeal partly allowed: MUMBAI CESTAT

2019-TIOL-3022-CESTAT-DEL

Lekh Ram Arya Vs CCE

ST - Appellant, engaged in the construction activities, during the period 1.4.2010 to 31.3.2011, executed two work orders for Rajasthan Housing Board -in one of the orders, they constructed ten units of HIG houses and in the second one, twelve units of MIG houses -it is claimed that these units were individual houses -the lower authorities took the view that even if they were individual houses, they were part of the residential complex with various common facilities and were part of the colony -accordingly, the lower authority has held that the construction of the above housing units will be liable for payment of ST under the category of 'Construction of Complex Service' – against confirmed demand, appeal to CESTAT.

Held: A set of ten/twelve houses do not come within the definition of residential complex under section 65(91a) of the Finance Act, 1994 which is applicable only to a building or buildings having more than twelve residential units, but the Revenue has taken the view that these residential units have been constructed as part and parcel of a massive colony - but, Revenue has not gathered any specific evidence nor brought on record the fact whether such facilities are existing in the part of the residential complex where the appellant has carried out the construction – the Bench has also carefully considered the Final Order - 2018-TIOL-574-CESTAT-DEL  in which the Tribunal has occasion to consider a similar dispute in respect of the same appellant for an earlier period - in the said case, the appellant constructed twelve houses for Rajasthan Housing Board - the Tribunal held that in the absence of any positive evidence to the effect that these units share common facilities, the ST liability cannot be upheld - by following the earlier decision of the Tribunal, the impugned order is set aside and the appeal allowed : CESTAT [para 6, 7, 8]

- Appeal allowed: DELHI CESTAT

2019-TIOL-3021-CESTAT-DEL

Malviya National Institute Of Technology Vs CST

ST - Appellant is an engineering college and given the status of a National Institute of Technology on 26.6.2002- SCN dated 20.10.2005 was issued to the appellant mentioning therein that the appellant had been providing "Scientific and Technical Consultancy" [STC] services to various clients and paying ST under that category w.e.f. 16.7.2001, but there was no difference between the scope of service provided in the category of "Consulting Engineer" [CE] and the scope of services provided in the category of 'STC' services and, therefore, for the period 1.4.2000 up to 15.7.2001, the appellant should have paid ST under the category of 'CE' but it did not pay – demand confirmed along with interest, penalty imposed –on appeal, the Commissioner (Appeals) dismissed the same, hence appellant before CESTAT.

Held: The allegation made in the SCN is apparently incorrect - the definition of 'CE' services as it stood prior to 16.7.2001 was not amended when a new service namely, 'STC' was inserted on 16.7.2001 - it cannot, therefore, be alleged that 'STC' service had been carved out from 'CE' Services - in fact, the definition of 'CE' services continued to remain the same, till it was amended in 2006 - thus, the SCN proceeded on an incorrect premise that even prior to 16.7.2001, the nature of service provided in 'STC' services was the same as 'CE' Service - this apart what appears to have prevailed upon the Commissioner (Appeals) is the definition of 'CE' that was amended in 2006 - the definition of 'CE' as it stood at the relevant time means any professionally qualified engineer or an engineering firm who either directly or indirectly renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering - the appellant is neither "professionally qualified engineer" or an "engineering firm" - it cannot, therefore, be said that the appellant had been providing 'CE' services - in fact, the nature of service provided by the appellant would clearly fall under the category of 'STC' services and the appellant had paid ST when this service was introduced on 16.7.2001 - this being the position, it is not possible to sustain the impugned order - it is, accordingly, set aside and the appeal is allowed : CESTAT [para 14, 15, 16]

- Appeal allowed: DELHI CESTAT

2019-TIOL-3012-CESTAT-MAD

Sundaram Business Services Ltd Vs CGST & CE

ST - The assessee is providing services relating to accounting, hospitality reservation, mortgage, wealth management and financial planning to their customers and taking CENVAT Credit on various input services and since the assessee exported a major portion of its services and also received consideration in convertible foreign exchange - Considerable quantum of export services had resulted in accumulation of huge CENVAT Credit in assessee's CENVAT Account, which prompted the assessee to seek refund in terms of Rule 5 of CCR, 2004 and accordingly, filed a refund claim - It is clear from the decision in case of M/s. Span Infotech (India) Pvt. Ltd. - 2018-TIOL-516-CESTAT-BANG-LB that the relevant date for purposes of deciding the time-limit for consideration of refund claims under Rule 5 of CCR has been held to be the end of the quarter in which the FIRC is received in cases where the refund claims are filed on a quarterly basis and this finding is required to be applied to these cases as well since no contrary decision or order is placed on record - The denial of refund being contrary to the ruling of the Larger Bench is not proper and justified, for which reason the impugned order is set aside: CESTAT

- Appeals allowed: CHENNAI CESTAT

ND Commodities Vs CCE

ST - The assessee is registered as a service provider under category of forward contract service - During audit, the Department observed that assessee had collected brokerage charges and transaction charges during the period from 1st April, 2007 to December, 2011 from their customers but has avoided proper payment of service tax payable on such collection - Resultantly, a SCN was served upon assessee proposing the recovery of service tax as an amount to be discharged qua the collection of transaction charges alongwith the interest at appropriate rate and the penalties under Section 76 & 78 of FA, 1994 - It is clear that whenever the element as that of fraud, collusion, willful mis-statement or suppression of fact is apparent on the part of assessee as a ground for non-payment of service tax that the assesseee is liable to be imposed with the penalties under this section - The assessee has taken the ground of bonafide impression for not being liable to pay service tax on transaction charges - Though the Department's case is that the alleged non-payment came to the notice of Department only on audit of records of assessee by the Department, but there has been catena of decisions that mere non-payment may not suffice to be clothed with the grave allegations as that of fraud and mis-representation unless and until there is evidence about a positive act on part of assessee, as produced by Department, to prove that assessee had intent to not to pay the duty - Further, the apparent fact of the appeal is that the assessee has not contested the liability and in fact has prayed for his sufficient cenvat credit available to be utilized against the said demand - The transaction charges were subjected to levy of tax for the first time w.e.f 16-05-2008 without any intention to amend the 'forward contract service' already existing at that time - The CBEC vide Letter F. No. 137/ 57/2006-CX-4 also issued instruction on transaction charges stating that the same is not liable to Service Tax - Resultantly, penalty is not imposable: CESTAT

- Appeal allowed: DELHI CESTAT

The Professional Couriers Vs CC & CE

ST - "Courier Service" is defined in the Finance Act, 1994 as follows : "c ourier agency means a commercial concern engaged in the door to door transportation of time sensitive documents, goods or articles utilising the services of a person either directly or indirectly, to carry or accompany said documents goods or articles" - in the instant case, the appellant has carried goods/parts/components for the service receiver - accordingly, the Bench holds that the service has been rightly classified under the courier agency service - accordingly, no merit found in the appeal and the same is dismissed : CESTAT [para 6]

- Appeal dismissed: HYDERABAD CESTAT

CENTRAL EXCISE

2019-TIOL-3020-CESTAT-DEL

Magadh Plas Pvt Ltd Vs CCE & ST

CX- Whether the benefit of notification no.214/86 is available to the appellant in the given facts and circumstances.

Held: A bare perusal of provision makes it clear that exemption to the goods manufactured in the factory as a job work are subject to conditions as specified in the notification i.e. the notification exempts the job worker from payment of duty subject to fulfillment of the conditions enumerated therein - in the notification, one of the conditions is that such goods should be used by the principal manufacturer in the manufacture of goods which are cleared on payment of duty - in the present case, principal manufacturer i.e. M/s.Divya Pharmacy, though was getting the plastic containers manufactured on job work basis from the appellant but they were not clearing their final product with those plastic containers on payment of duty as they were availing the area based exemption as per notification no.50/2003-CE dated 10.6.2003 - once, there was no duty on the final goods cleared, no question of any exemption available qua the goods manufactured in factory as a job work arises - therefore, appellant is also not qualifying the remaining two conditions of the said notification – therefore, benefit of notification 214/86 is not available to the appellant - coming to the plea of bonafide on part of the appellant, it is observed that, admittedly, it was in the notice of the appellant that M/s.Divya Pharmacy, the principal manufacturer is availing the area based exemption Notification - no bonafide can be attributed to the appellant's submission that he was not aware of the condition of the said notification that the goods are to be cleared after payment of duty to availing the benefit - in the given circumstances, the only possibility for the non-payment is the intent to evade the duty -there is no other cogent evidence to support the bonafide - Commissioner has committed no error while imposing penalty - SCN also cannot be held to be barred by time for the said reason - as a result, Order under challenge is hereby upheld and appeals, accordingly, stand dismissed : CESTAT [para 5.1]

- Appeals dismissed: DELHI CESTAT

2019-TIOL-3019-CESTAT-MUM

Larsen And Toubro Ltd Vs CCE

CX - Whether the appellant is eligible to avail cenvat credit of ST paid on input services, namely, on the supply of tangible services used in the premises of job workers in relation to conversion of raw material sent by the appellant following rule 4(5) (a) of Cenvat Credit Rules, 2004.

Held: Issue is no more res-integra - following the cited judgements, no merit found in the impugned order to the extent of confirming recovery of credit and penalty on input services used in the job workers' premises - consequently, the same is set aside - the amount of cenvat credit of Rs.9491/- pertaining to outdoor catering services being not disputed is accordingly, upheld, however, penalty is not imposable for taking said credit - appeal partly allowed: CESTAT [para8, 9]

- Appeal partly allowed: MUMBAI CESTAT

2019-TIOL-3018-CESTAT-CHD

Liberty Shoes Ltd Vs CCE & ST

CX - Commissioner (Appeals) has denied the cenvat credit to the appellants on showroom maintenance charges, hotel management charges and photocopier charges on the ground that the said services are not 'input services' in terms of rule 2(l) of the CCR, 2004 as the same have been availed beyond the place of removal– appeal to CESTAT.

Held: Admittedly, the appellants are manufacturer of shoes/footwear and selling the goods from their showrooms -if the goods are sold from the showrooms, in that circumstance, the showrooms are the place of removal -but the Commissioner (Appeals) lost the sight to consider the fact to say which is the place of removal -when the appellants are selling their goods from showrooms only, therefore, showroom's maintenance expenses are entitled for availing the CENVAT credit in terms of amended definition of input services w.e.f. 1.4.2011 - further, the hotel expenses have been incurred by the appellants for the salesmen who were visiting various cities to sell of the product -admittedly, without selling of goods, the question of payment of duty or manufacture of goods have no value -any goods manufactured and sold attracts duty - therefore, the goods manufactured by the appellants are required to be sold and the expenses incurred by the appellants upto selling of the goods are entitled as input services, therefore, on hotel expenses charges, the appellants are entitled to avail the CENVAT credit -here, there is no question of place of removal of the goods, but Commissioner (Appeals) illegally held that this service has been availed beyond the place of removal - for photocopy service, the appellants have availed the CENVAT credit for photo copies of the documents which are relevant for maintaining their accounts -admittedly, the services relating to the accounts have been incorporated in definition of input services, but Commissioner (Appeals) failed to examine the said issue -as the photocopies service has been availed by the appellants for photo copies of their various documents for accounting and selling purposes, therefore, the appellants are entitled to avail the CENVAT credit thereon - in view of the above findings, no merit found in the impugned order, accordingly, the same is set aside - in result, the appeals are allowed : CESTAT [para 4, 5, 6, 7, 8]

- Appeals allowed: CHANDIGARH CESTAT

2019-TIOL-3009-CESTAT-AHM

Royal Recycling Industries Vs CCE & ST

CX - The assessee being a 100% EOU stored the goods outside the factory premises on which they had claimed exemption while imported the goods being a 100% EOU - The case of the department is that since the goods were removed from 100% EOU, assessee was liable to pay duty, accordingly, SCN was issued for demand of duty on the goods stored outside - The Commissioner (A) rejected the appeal on the ground that the assessee being a 100% EOU was not entitled to cenvat credit prior to issuance of Board Circular 799/32/2004-CX - Commissioner (A) denied the cenvat credit only on the ground that the Board has clarified about entitlement of cenvat credit to the 100% EOU by a Circular dated 23.09.2004 therefore before this date the credit is not permissible - The Tribunal completely reject the contention of Commissioner (A) for the reason that the Board is not the authority to make law whether the credit is admissible or not - The Board has only clarified the existing law regarding entitlement of cenvat credit, therefore, the Board clarification is a retrospective and not the prospective - Since the lower authorities have not verified the records that whether the goods had been recorded in the books of accounts and other excise records by assessee, the matter needs to be remitted back only for verification purpose - Accordingly, matter is remanded to the adjudicating authority for passing a fresh order: CESTAT

- Matter remanded: AHMEDABAD CESTAT

Unique Chemicals Vs CCE & ST

CX - The issue involved is that whether the assessee is entitled for cenvat credit in respect of Repair and Maintenance, Erection, Installation and Commissioning and Consulting Engineering Service used for expansion of production capacity - The ground for denial of cenvat credit by lower authority is that since "setting up" has been removed from the inclusion clause of definition, the credit in respect of setting up of factory is not admissible - The factory is already existing and running its production, it is only expansion of existing production capacity, therefore, it cannot be said that there is setting up of new factory - Moreover, the services were not excluded in exclusion category as brought in definition of input service w.e.f. 01.04.2011 - Therefore, all the services were used in or relation to the manufacture of final product as expanded production capacity is only for manufacture of final product - The impugned order is set aside: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

2019-TIOL-3007-CESTAT-MAD

Sun Pharmaceuticals Industries Ltd Vs CGST & CE

CX - The issue is with regard to disallowance of credit taken by assessee after availing the benefit VCES - The assessee has applied for VCES on 30.12.2013 and the application was acknowledged on the same date - Before filing the application, they have deposited 50% of admitted liability vide separate challans on 27.12.2013 - The question is, whether the assessee have to avail credit on the basis of these challans or the discharge certificate issued on 02.07.2014 - The Board has issued a Circular dated 20.01.2014 from which it can be understood that Cenvat credit is eligible even if the assessee adopts for payment of tax under VCES - However, though it is a Circular of clarification, there is not much clarity in the Circular as to whether the assessee has to avail credit on the challans or the discharge certificate - The department has to scrutinize the application and, thereafter, only if satisfied as to the declaration made, the discharge certificate is issued - In case there is any discrepancy or if department is not satisfied with the liability declared, the application is liable to be rejected - Thus, the tax paid by assessee becomes final under VCES, only when the discharge certificate is issued - The assessee can then take the credit on the basis of discharge certificate only - Under VCES, the challans being an intermediary payment, such documents cannot be a conclusive document for availment of credit - Further, the assessee cannot be found fault with when the department vide its Circular has shied away from unequivocally clarifying as to whether the asssessee can avail credit on challan for tax paid before filing VCES application or the discharge certificate issued after acceptance of declaration - For these reasons, the credit availed on discharge certificate is legal and proper - The impugned order is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

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