HIGH COURT CASES

2019-TIOL-2464-HC-MAD-GST

GRB Dairy Foods Pvt Ltd Vs State of Tax Officer (Dated: October 21, 2019)

GST - The present writ petitions were filed to assail assessment orders served for the AYs 2017-18, 2018-19 and 2019-20 - It was stated that the assessment orders were passed on 01.10.2019 and were served on 03.10.2019, with the demand notice being issued immediately on 10.10.2019, whereupon the petitioner was called upon to submit proof of payment of quantum of tax, interest & penalty determined by the AO for each AY on or before 21.10.2019 and that failure to do so would result in recovery of dues by initiating proceedings u/s 79 of CGST Act.

Held - It is undisputed that the assessment orders were passed for the relevant AYs on 01.10.2019 and were communicated to the petitioner on 03.10.2019 - It is also undisputed that the time prescribed for filing appeal against those assessment orders had not expired - Meanwhile, the demand notice was issued to the petitioner, directing it to submit proof of payment of tax, interest & penalty demanded through assessment orders on or before 21.10.2019 - However, further communication issued by the first respondent dated 21.10.2019 to the petitioner shows that the proceedings were already deferred by the Revenue, considering that the petitioner has time to file the statutory appeal and that the time had not expired so far - In such facts & circumstances, nothing survives in the present petitions for further adjudication, since the first respondent chose to defer the proceedings - Hence no further orders are necessary: HC

- Writ petitions disposed of : MADRAS HIGH COURT

2019-TIOL-2463-HC-ALL-GST

Ajeet Gupta Vs UoI

GST - The present writ petition was filed seeking issuance of writ of Mandamus to protect the welfare of registered GST dealers by directing the Revenue to not interfere with earning of livelihood - The petitioner also sought that hurdles be removed to ensure smooth business operations - The petitioner claimed to be espousing the cause of weaker GSTN registered dealers who were facing harassment due to unfair trade practices and unhealthy business atmosphere resulting in violation of basic human rights and social injustice - The petitioner claimed to have made representations in this regard but to no avail. Held - It is the duty of this court to ensure than there is no personal gain or private motive behind filing of PIL - To preserve the purity and sanctity of PILs, the courts must encourage genuine and bona fide PILs and discourage and curb filing of PIL for extraneous considerations or with oblique motives - The courts must prima facie verify the credentials of the petitioner before entertaining a PIL and before entertaining a PIL, the courts must ensure that it is aimed at redressal of some genuine public harm or injury - Concerning the credentials of the petitioner in this case, the petitioner failed to establish the same before this court - Hence the present writ petition is in abuse and misuse of the process of this court and is not a genuine petition: HC

- Writ petition dismissed: ALLAHABAD HIGH COURT

2019-TIOL-2462-HC-RAJ-GST

Rajasthan Bar Federation Vs UoI

GST - The petitioner claimed that the respondent-Union had not provided any bench as regional bench of the GST Appellate Tribunal in the State of Rajasthan.

Held - This court in earlier orders dated 17.09.2019 had directed the Central Govt to produce the details of noting and discussion as to why the existing benches, for redressal of grievances through appeal, had been denied - The counsel for the respondent-Union claimed that the bench could not be established since so such proposal was received from the State Govt and that since such proposal had been received shortly, the matter was under active consideration - In such case, the GST council directed to take final decision to notify the bench for the State of Rajasthan - Matter be listed on or before 18.11.2019: HC

- Case deferred: RAJASTHAN HIGH COURT

AAR CASES

2019-TIOL-427-AAR-GST

Chennai Port Trust

GST - Situation is w hen the license for renting of immovable property is in force, but the licensee does not pay or pays only partially the periodical license fee to the applicant as agreed in the lease agreement. Held:  In respect of continuous supply of service when the license is in effect, as per Section 31(5), the tax invoice, containing the details as per Rule 46 of CGST/TNGST Rules, should be raised on or before due date of payment as ascertainable from the contract - If  the rent invoice is issued before the due date of payment as specified in the agreement, the Time of supply as determined by Section 13(2) (a) of the Act shall be date of issue of invoice or Rent Claim Advice - If the invoice is issued after such due date of payment, the Time of supply as determined by Section 13(2)(b) shall be the date of provision of service which is the end of recurrent period specified in the agreement after which the rent/license fee is to be paid: AAR

- Application disposed of :AUTHORITY FOR ADVANCE RULING

2019-TIOL-426-AAR-GST

Chennai Port Trust

GST -  In the scenario of the license for renting of immovable property has expired and not in force but the licensee continues to be in Possession and occupation of the immovable properties, in cases where there is a provision in contract for continued supply of service after expiry or termination of the contract, the Rent Claim Advice is issued by the applicant within the period prescribed in Section 31(5) and the Time of supply as determined by Section 13(2)(a), as the earliest of the date of issue of Rent Claim Advice by the supplier and the date of receipt of payment: AAR GST - In respect of cases where there is no such provision regarding continued supply of service after expiry of contract, if such Rent Claim Advice (RCAs) are issued within thirty days after the end of recurrent period specified in the agreement after which the rent/license fee is to be paid for which the rent is being sought, the Time of supply as determined by Section 13(2)(a), as the earliest of the date of issue of invoice or Rent Claim Advice by the supplier and the date of receipt of payment - If the RCAs are issued more than thirty days after the end of the month for which the rent is being sought, the Time of supply as determined by Section 13(2)(b), as the earliest of the date of provision of service, which is the end of recurrent period specified in the agreement after which the rent/license fee is to be paid and the date of receipt of payment, whichever is earlier: AAR

GST - In the scenarios of the license for renting of immovable property is in force, but the licensee does not pay or pays only partially the periodical license fee to the applicant as agreed in the lease agreement, if the rent invoice is issued before the due date of payment as specified in the agreement, the Time of supply as determined by Section 13(2) (a) shall be date of issue of invoice or Rent Claim Advice - If the invoice is issued after such due date of payment, the Time of supply as determined by Section 13(2)(b) shall be the date of provision of service which is the end of recurrent period specified in the agreement after which the rent/license fee is to be paid: AAR

- Application disposed of :AUTHORITY FOR ADVANCE RULING

2019-TIOL-425-AAR-GST

Murali Mogan Firm

GST - Applicant is engaged in procuring Tamarind fruit, an agro product, from farmers (unregistered) across Tamil Nadu and supplying the same to processing units - after completion of procurement, the fruits are packed in gunny bags and supplied through transporting agencies to processing units - applicant contends that the Tamarind fruit obtained from farmers should be classifiable under HSN 0810 as fresh fruit" since the product does not undergo any process of manufacture or undergo any value addition, a ruling is sought in this regard.

Held : Applicant has explained the nature of their product thus - farmers collect ripened tamarind fruits by shaking and smacking the branches of the tree using long clubs/poles and as the fruits fall to the ground the outer shell gets cracked and comes in contact with soil deposits on the ground; that they are buying these fruits from the farmers and supply as such to the processing units where these fruits would be subjected to processes such as removal of remnants shells, outer fibrous ribs, removal of other impurities like sand/soil, removal of seeds and finally drying them to generate wads of tamarind - applicant has also submitted that the tamarind fruits obtained from farmers are not sun dried -  There are specific headings Tamarind fresh - 0810 9020 and Tamarind dried - 0813 4010 in the Tariff and as per the Explanatory notes (HSN), dried fruits classifiable under 0813 are those falling under CTH 0806 to 0810, prepared by either direct drying in the sun or by industrial processing - As per General Rule of Interpretation Rule 1, Classification shall be determined according to the terms of the headings and if it cannot be done then the classification is to be arrived at following the further rules - Tamarind fresh and Tamarind Dried are specific tariff headings and what constitutes "Dried fruit' is clarified in the Explanatory notes (HSN) - When a specific Tariff heading is available, there is no necessity to follow further interpretative rules - In the case at hand, the applicant has stated that the Tamarind fruit purchased by the farmers do not undergo any process of drying either by sun or industrial process and is hence, classifiable under CTH 08109020 as Tamarind, fresh: AAR

- Application disposed of :AUTHORITY FOR ADVANCE RULING

2019-TIOL-424-AAR-GST

Rich Dairy Products India Pvt Ltd

GST- Applicant has sought a ruling on the following question- Classification of goods manufactured - Whether Carbonated Fruit Juice falls under Fruit Juices or Aerated drinks.

Held: Statutory regulations require a minimum of 10% fruit juice to be called a Fruit Drink - Fruit juices and carbonated beverages with fruit drinks are distinct products in the FSSAI regulations and the products of the applicant are covered under Para 2.3.30 of the regulations and Category 14.1.4.1 in the food category system in Appendix A to these regulations - product is prepared by adding fruit juice, procured by the applicant (as per the input invoices submitted), to filter water - It is evident that this large quantity of water results in diluted products which as per the Explanatory Notes get classified under CTH 2202 - As per the First Schedule to Customs Tariff, CTH 22021010 covers 'Aerated waters' - CTH 22021020 covers 'Lemonade' and CTH 22021090 covers 'Others' - applicant's products are not classifiable as 'Aerated Waters' under CTH 22021010, therefore, the products are either classifiable under CTH 22021020 or CTH 22021090 depending on the flavours- Therefore, 'Richyaa Damer Lemon' and 'Licta Lemon' are classifiable under CTH 22021020 and all others i.e. Richyaa Damer Cola', 'Licta Cola', Richyaa Damer Jeera Soda', 'Licta Jeera Masala', 'Richyaa Damer Orange' and 'Licta Orange' are classifiable as 'Other' under CTH 22021090: AAR

- Application disposed of :AUTHORITY FOR ADVANCE RULING

2019-TIOL-423-AAR-GST

Royal Care Speciality Hospital Ltd

GST -  Medicines, consumables and implants used in the course of providing health care services to in-patients by the applicant is a composite supply of Inpatient Services classifiable under SAC 999311 -  Supply of health care services or in-patient services by the applicant as defined in Para 2(zg) of Notification no   12/2017-C.T. (rate)    is exempted from CGST as per Sl. No 74 -  applicant is not eligible for the credit of tax paid on the Input services used exclusively for providing exempt services of health services to in-patients, such as laundry services used for in-patients - For Input services such as housekeeping, leasing of equipment used for both exempt supply of health services to in-patients and taxable supply of medicines etc. to outpatients, the appropriate ITC eligible is to be determined by Rule 42 of the CGST Rules 2017: AAR

- Application disposed of :AUTHORITY FOR ADVANCE RULING

2019-TIOL-422-AAR-GST

Shifa Hospitals

GST - 'Applicant' is a poly clinic run by the partnership firm and provides health care services to both out-patients and in-patients - they have sought a ruling as to whether the medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment would be considered as "Composite Supply" and accordingly eligible for exemption under the category "HEALTH CARE SERVICES". Held: In-patient services means services provided by hospitals to in-patients under the direction of medical doctors aimed at curing, restoring and/or maintaining the health of a patient and the service comprises of medical, pharmaceutical and paramedical services, rehabilitation services, nursing services and laboratory and technical services - A complete gamut of activities required for well-being of a patient and provided by a hospital under the direction of medical doctors is a composite supply of service and is covered under In-patient services' classifiable under SAC 999311 - Therefore, Medicines, consumables and implants used in the course of providing health care services to in-patients by the applicant is a composite supply of In-patient Services classifiable under SAC 999311 - Supply of health care services or in-patient services by the applicant as defined in Para 2(zg) of Notification no 12/2017-C.T. (rate) dated 28.06.2017 as amended is exempted from CGST as per Sl. No. 74 of the above notification: AAR

- Application disposed of :AUTHORITY FOR ADVANCE RULING

2019-TIOL-3096-CESTAT-KOL

SK Sarawagi And Company Pvt Ltd Vs CGST & CE

ST - The assessee have exported Manganese Ore - They filed refund claim of Rs.3,52,220/- under Notfn 17/2009-ST - They have taken a mining lease from Central Government and the principal product to be exported was manganese ore - The Assistant Commissioner vide O-I-O sanctioned an amount of Rs.3,40,347/- and rejected an amount of Rs.11,873/- - In view of discrepancies and grounds of appeal, Reviewing Commissioner found that the refund sanctioned by Assistant Commissioner, for an amount of Rs.3,40,347, is erroneous and in contravention of the provisions of Notification - The assessee is in appeal before the Tribunal on the ground that all the conditions are satisfied under Notfn 17/2009-ST and also the clarification issued by CBEC, vide Circular 104/4/2008 being satisfied by assessee and the export was made through M/s MMTC Ltd. which was the statutory provision in the Trade Policy, Schedule-II SL. 80 and the money be realized after the export of the goods - The service tax paid in terms of services utilized in export of goods to be claimed as Refund was rightfully sanctioned - The Role of M/s MMTC Ltd. is as intermediary is only because of the restriction imposed in the Foreign Trade Policy schedule- II, SL. 80 which states that the Manganese Ore to be exported through MMTC Ltd. - The restriction imposed in respect of Manganese ore is governed by the Section 3 of Import and Export (Control) Act, 1947 - It is apparent that M/s MMTC Ltd. stands indemnified of all claims, damages of the foreign buyer and/or vessels owner in respect of exports to be made through them and assessee, the owner of the goods, is not allowed to export directly under Section 2 (20) of Customs Act, 1962 as well as under the definition of 'exporter' in the Foreign Trade Policy, 2009-14 under Chapter 9.26 - The role of M/s MMTC Ltd. in the export of Manganese Ore is a compulsion to be observed by the assessee and it is not by choice which has led to the present dispute - The impugned order is set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

2019-TIOL-3095-CESTAT-HYD

CC, CE & ST Vs Pragati Edifice Pvt Ltd

ST - The assessee is a builder involved in construction of residential and commercial/non-commercial buildings and complexes - They have been issued a SCN demanding service tax under the head of "works contract service" - Extended period of limitation was invoked in demanding the aforesaid service tax and interest was demanded under Section 75 of FA, 1994 - Penalties were proposed to be imposed under Section 76, 77 & 78 of the Act, 1994 - There is no dispute that the assessee not only supplied materials but also rendered services related to works contract - Therefore, these are all composite works contracts - It is not in dispute that the assessee has not sought or followed the procedure required for composition scheme - As regards to the demand of service tax on residential complex services, it is well settled legal position that whether the service is rendered as service simpliciter or as a works contract, no service tax can be levied on construction of residential complex prior to 01.7.2010 - Thus, the service tax under works contract services on construction of residential complexes post 01.07.2010 is upheld and the demand for the period prior to this date is set aside - As regards to demand of service tax on construction of Mahatma Gandhi Cancer Hospital & Research Institute, health care and hospitals is one of the most profitable and fast growing service industries in the country - No reason found to hold that the construction of hospital building of a corporate hospital is excluded from the definition of works contract service - It is clearly covered by section 65 (105) (zzzza) (ii) (b) as a new building meant for the purpose of commerce or industry - The demand on this count, therefore, is upheld - As regards to the demand of service tax on Construction of administrative building of Indian Registrar of Shipping, the Indian Registrar of Shipping is regulatory body who registers ships and vessels in the country and also classifies them and does related activities - These cannot be termed as an act of commerce or industry - It is neither an organisation involved in commerce or industry nor does the organisation make any profit - Thus, the demand on this count is dropped - As far as the composition scheme is concerned, the assessee has the option of paying service tax under the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007, if he chooses to do so - The mere fact that they have not opted for this earlier does not reduce their entitlement to opt for this scheme now - The demand of service tax needs to be recomputed, indicating if they desire to avail the benefit of composition scheme - Interest as applicable will have to be paid on the differential service tax - As far as the imposition of penalties is concerned, of the demand which the Tribunal has upheld, the assessee claims that they have already paid service tax on residential complex services from 01.7.2010 onwards - Invoking the provision of Section 80, all the penalties are set aside - The matter is remanded to the original authority for the limited purpose of calculation of service tax liability and interest: CESTAT

- Appeal partly allowed: HYDERABAD CESTAT

2019-TIOL-3094-CESTAT-ALL

Super Overseas Pvt Ltd Vs JCIT

ST - The assesese is manufacturer of readymade garments which were being exported by them - For receiving export orders, they procured the service of commission from foreign based commission agents - As the assessee was not discharging their tax liability, audit objected to the same and the assessee deposited the service tax alongwith interest - Thereafter proceedings were initiated against them for imposition of penalty by way of issuance of SCN - Admittedly, the commission paid to the foreign based agent was exempted if the same is less than 1% of FOB value of the goods - However, there were other procedural conditions also, subject to satisfaction of which the said exemption was to be extended - As such, in case the assessee would have claimed the benefit of Notfn 18/09-ST they would have been entitled to the benefit of the same - In such a scenario, assessee cannot be said to be guilty of mala fide so as to invoke penal provisions against them - Accordingly, the penalty imposed upon them is set aside: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

2019-TIOL-3093-CESTAT-AHM

Shri Krishna Industries Vs CCE & ST

CX - The assessee-company manufactures Ceramic Glaze Fritz falling under CETA sub-heading 3207.10/90 - Based on investigation by DGCEI, SCNs were issued to the manufacturers of such products, alleging evasion of duty - The assessee was served an SCN alleging under-valuation of goods, suppression of production based on excess consumption of fas, clearance of goods on parallel invoices & wrongful claim for SSI exemption as the clearances exceeded the exemption turnover - Separate demands were proposed on all these counts - On adjudication, the duty demands were confirmed along with equivalent penalty u/s 11AC - Hence the present appeal.

Held - Undervaluation - The assessee's contention of the price of the Fritz being dependent on the quality of Fritz, holds merit - Any reputed manufacturer of some international brand would use high quality raw material while a local manufacturer whose products have low prices would not use raw material of high quality or rates - The prices to different buyers based on quality of goods is no basis to allege under-valuation - The assessee adequately justified the increase in prices in subsequent years due to increase in prices of raw material and change in machinery - The allegation of undervaluation is based on statements of some buyers and not on any evidence - Hence the demands raised in this regard are unsustainable: CESTAT

Held - Excess consumption of gas - Apart from alleging excess consumption of gas, no evidence of its procurement or excess consumption of raw materials is brought on record - Ceramic Glaze Fritz is manufactured from 8 raw materials, none of which were shown to have been procured in an illicit manner or consumed in excess - In such circumstances, the demands have no legs to stand on - Hence the demands raised based on consumption of natural gas are unsustainable since unsupported by procurement of raw material, its processing or transportation or identification of buyer: CESTAT

Held - Clearance of goods on parallel invoices - It is seen that though the alleged consignee accepted receipt of goods, no evidence of such removal was found from the assessee's end - Even the format of the alleged parallel invoice is different from the invoice format of the assessee & there is no evidence to corroborate transportation of goods - The cheque number through which payment was shown to the assessee was refused by the assessee & no further investigation was conducted in this regard - In case of other 5 parallel invoices, the buyer refused receipt of any goods - In statements recorded from the assessee-company's proprietor, it is seen the assessee refused supply of goods and issuing of parallel invoices - Hence the demand raised in this regard is unsustainable: CESTAT

Held - SSI exemption - The demand was raised on grounds that after the addition of value of undervalued and clandestinely removed goods, the sale value of the assessee crossed the SSI exemption limit and the assessee is not entitled for SSI exemption in the relevant years - As the charges of undervaluation and clandestine removal are not sustainable against the assessee, there is no reason to deny SSI exemption - Hence the demand raised in this regard is unsustainable as well: CESTAT

- Assessee's appeal allowed: AHMEDABAD CESTAT

2019-TIOL-3092-CESTAT-DEL

Shreya Life Sciences Pvt Ltd Vs CCGST, C & CE

CX - The assessee is engaged in manufacture of pharmaceutical products and Nutritional Supplement/proprietary food under the brand name 'Beneficiale Liquid' and 'DSN Capsule' - The appellant is clearing their final product at nil rate of duty by availing the benefit of exemption under Notfn 49/2003-CE, which exempted the clearance of goods from the notified area in the state of Uttarakhand - The issue is to be decided is regarding classification of product namely DSN and beneficial as to whether under Chapter 3004 and 2106 - The department has drawn the sample and sent for the test to the CRCL, which is authorised Government body, for test of the product, in question - This report has not been contested by assessee as per record - The assessee has given various prescription by medical practitioner to prove that these products are being used for the treatment of malnutrition for various ailment - They submits that these products need to be classified under Chapter 3004 of Customs Tariff Act - Assessee have not contested the report by CRCL - There is a system of retest in CRCL on being aggrieved by the test report which has not been followed by assessee - On other hand, assessee argues that the test report is not conclusive criteria for classification of goods under Central Excise Tariff heading - This appears to be not correct proposition - Moreover, assessee themselves has applied for Drug Licence and which was granted to them on 4.12.2007 to manufacture these products - However, this grant of drug licence is for the subsequent period and hence not having any bearings on the current proceedings - As the test report has not been contested by assessee, no fault found with the impugned order by adjudicating authority - Accordingly, the same is upheld: CESTAT

- Appeal rejected: DELHI CESTAT

TII

TP - Adjustment in international transaction being less than 5% of total international transactions is deemed to be at ALP as per second proviso to Section 92(2): ITAT

TP - Mere fact of taxpayer's PLI determined at lesser rate after inclusion of loss making entities, forms no reason for exclusion of same from array of comparables: ITAT

TIOL CORPLAWS

SEBI Act, 1992 - Recovery certificate issued against CIS cannot be set aside without complete satisfaction that investor's has been fully refunded: SAT

SEBI Act, 1992 - Application of two provisions of SAST Regulations simultaneously is possible in exceptional circumstances of share acquisition of more than 15% without public announcement: SAT