2019-TIOL-2474-HC-ALL-CT

Whether without recording a categorical finding that the imported electronic machinery valued at Rs 10 lacs or more falls within the sweep of identified machinery under the Entry Tax Act, the issue of taxable event qua such goods cannot be conclusively decided - YES: HC

- Case remanded : ALLAHABAD HIGH COURT

2019-TIOL-2473-HC-MAD-VAT

Whether a Clarification issued by the VAT Commissioner though not binding on the court or on an assessee, would yet be binding upon an assessing authority who is subordinate to the Commissioner, where it favors the assessee - YES: HC

Whether in such circumstances, the Commissioner is also empowered to withdraw such Clarification if it is found that it incorrect in law or in facts - YES: HC

- Assessee's writ petitions dismissed : MADRAS HIGH COURT

2019-TIOL-2472-HC-AHM-GST

GST - Section 67(2) of the Act empowers the authorised officer to search and seize the goods, documents or books or things - however, s.67(2) does not empower the officer concerned to record statements of family members through force or coercion or to record their conversations in their mobile phones - it is not permissible for the authorised officer to use coercive measures against family members to find out the whereabouts of the taxable person - It is shocking to see that in a premises where there are three ladies, namely, the petitioner's mother, wife and young daughter, male officers together with a CRPF officer have stayed throughout the day and night despite the fact that the goods, articles and things were already seized on 11.10.2019 - entire exercise carried out by the officers from 12.10.2019 to 18.10.2019 was totally without any authority of law and in flagrant disregard of the provisions of the Act and the rules and in total abuse of the powers vested in them under the Act - manner in which the officers have conducted themselves by overreaching the process of law and acting beyond powers vested in them under s.67(2) of the CGST Act, 2017 needs to be deprecated in the strictest terms - A proper enquiry needs to be made in respect of the action of the respondent officers of staying day and night at the premises of the petitioner without any authority of law - first respondent Commissioner of State Tax, Ahmedabad shall carry out a proper enquiry in the matter and submit a report before the Court on or before 13th November 2019 - Matter to be heard on 13.11.2019 - Registry to forthwith forward a copy of the order to the Commissioner of State Tax as well as Chief Secretary of the State to look into the matter and do the needful to ensure that such incidents are not repeated: High Court

- Matter listed : GUJARAT HIGH COURT

2019-TIOL-3117-CESTAT-DEL

Rajasthan State Mines And Minerals Ltd Vs CCE & ST

ST - The issue to be decided is; whether the acquisition of land made by assessee for setting up of thermal power plant by JV company as per the agreement entered with RWPL is to be considered as service after the denial of permission of transfer of land, acquired by the JV company - It is on record that the same has been procured by Government of Rajasthan (GoR) and assigned to the assessee - It is clear that the surface right, which Revenue is contemplating as service, emerges out from the activity of mining operation, as incidental activity - The main activity remains the mining activity, which is nothing but benefit arising out of the land - Therefore, the same cannot be held to be the service per se - It is also on record that initially assessee has only acquired the land for purpose of making it available to the JV company, for the setting up of the power plant to meet acute shortage thereof in the remote area of State of Rajasthan, in the Barmer District - If due to change of policy of Government of India and State Government, the transfer of land acquired was denied mutation to the JV company, by the assessee, will not retrospectively convert the sale into services of renting of immovable property - The identical issue has come up for consideration though in different context regarding sale of 'developmental right' in case of DLF Commercial Project - 2019-TIOL-1514-CESTAT-CHD wherein it has been held that the development right is benefit arising out of land and therefore, the same is not chargeable to service tax - There is no element of service involved in the transaction, undertaken by assessee while acquiring the land and transferring the same to the JV company, for setting up of the power plant.

Whether the 51% equity stake which has been granted to assessee by the Implementation Agreement, in the JV company, could be treated as 'Business Auxiliary Service' - The activity of grant of 51% share in JV is not covered in any of the sub heading under BAS as defined in Section 65(105) of Finance Act - Even by assuming that the grant of 51% of equity is considered as consideration, for rending of service, the same was granted in year, 2008-09, while the notice has been issued on 18.03.2015, this is even beyond the limit of five years, therefore, the SCN could not have been issued on this count - The demand is, therefore, not sustainable.

Whether deployment of officers in the JV company, would amount to rendition of service under category of BAS - Regarding the expenses recovered by assessee on actual basis from BLMCL, the JV company, towards deputation of their employee and related expenses, cannot be categorised under the BAS - Even otherwise the deputation of employee in the JV company cannot be treated as BAS relying on the decision of this Tribunal in case of Punj Llyod Ltd.- 2018-TIOL-1442-CESTAT-DEL - The deputation of employee to the JV company cannot be held to be service: CESTAT

- Appeal allowed: DELHI CESTAT

2019-TIOL-3116-CESTAT-MAD

Foxteq Services India Pvt Ltd Vs Commissioner of GST & CE

ST - The assessee provides maintenance or repair services - Upon audit of accounts, it emerged that the assessee entered into agreement with M/s HP India Sales Pvt Ltd to provide part support service to them - The assessee had been supplying parts and accessories against requirement during the warranty period on sale of HP products - The Department opined that sale of computers includes after-sales warranty as well and that it is the bounden duty of HP to keep inventory of parts and accessories for free replacement on failure of their product in warranty period - It noted that this involves huge operations requiring space, manpower and finance which were outsourced to the assessee - The Revenue claimed that support service of the assessee is warranted by HP to take care of the customer for their business and that part of the work relates to after-sales warranty service is entrusted to the assessee for maintaining inventory stocks and distributing them as and when needed for replacement - The Revenue also claimed that the assessee received certain sums from HP for every single sale of computer - Hence it claimed that such receipts were taxable under Business Auxiliary Service - SCNs were issued proposing to raise duty demand with interest for different periods and also imposing penalties - On adjudication, the demands were confirmed - Hence the present appeals.

Held - From the evidence at hand, it is clear that HP entered into a contract with the assessee to supply warranty parts, apparently at equalixed per part rate termed as Warranty Adder cost - However, the assessee instead of supplying the parts to HP, supply the same to Redington India, which is the authorized service organization for HP products - The assessee may stock such warranty parts for supply to Redington as and when the warranty requirements arise - But there can be no allegation that the assessee procured such warranty parts on behalf of HP or for Redington - Such warranty parts are imported by the assessee itself in its own name and the title to those goods will remain with it till the goods are sold to HP under invoices and supplied to Redington - The appellants also discharged VAT liability on the entire Warranty Adder Value for each unit invoiced to HP - Besides, the Apex Court in M/s. Bharat Sanchar Nigam Ltd. Vs. Union of India clearly held that the aspect theory would not apply to enable the value of the services to be included in the sale of goods or the price of goods in the value of service - Hence the findings of the adjudicating authorities holding that the assessee would fall within the mischief of Section 65(19)(iv) and finding the assessee liable to pay tax under this heading, cannot be sustained - Thus, the rejection of refund is also unsustainable: CESTAT

- Assessee's appeals allowed: CHENNAI CESTAT

2019-TIOL-3115-CESTAT-CHD

Kalyan Projects Construction Company Vs CCE & ST

ST - During the course of audit of M/s. Steel Strips Wheels Ltd. by the internal Audit wing, it was observed that the appellant during the period January 2005 to September 2008, have provided ‘Erection, Commissioning & Installation Service' to M/s Steel Strips on job work basis but have not paid ST on the gross value of taxable services provided by them and the appellant has availed abatement of 67% of the amount charged for job work from the service recipient for the purpose of payment of ST - the appellant had not sold/supplied any material including plant, machinery equipment, structures or parts thereof to them during the course of providing the service and has only provided the service on job work basis - the appellant has wrongly availed the exemption under notification no.19/2003 dated 21.8.2003 as amended and notification no.1/2006-ST dated 1.3.2006 which was not available to them - SCN dated 28.7.2009 issued - demand of ST confirmed by denying the benefit of the said notifications - appeal to CESTAT.

Held: Objection was raised on the ground that the appellant has not sold any goods and material while providing services to the appellant, but, have received only the amount on job work done by them vide audit objection dated 17.1.2007 - the said objection was settled vide letter dated 18.5.2007 - further, the intimation thereof was sent to the concerned Deputy Commissioner, Chandigarh - as the audit objection raised by the revenue has already been settled by them on 18.5.2007, in that circumstances, on the same audit objection, SCN cannot be issued to the appellant on 28.7.2009 - therefore, the whole of the demand on the basis of said objection is not sustainable and is also time barred - further, as per the agreement between the appellant and M/s. Steel Strips, the appellant was required to provide material while providing services, in that circumstances, it is held that the appellant has rightly availed the benefit of notification no.19/2003 dated 21.8.2003 as amended and notification no.1/2006-ST dated 1.3.2006 - in the circumstances, the demand of ST is not sustainable against the appellant - accordingly, the demand is set aside and no penalty is imposable on the appellant - in view of this, the impugned order is set aside and the appeal is allowed : CESTAT [para 6, 7, 8, 9]

- Appeal allowed: CHANDIGARH CESTAT

 

 

2019-TIOL-3114-CESTAT-BANG

Tata Motors Ltd Vs CCE, C & ST

CX - The assessee is manufacturer of excisable goods viz., motor parts and are operating under CCR, 2004 - On verification, it was observed that assessee had availed CENVAT credit of based on the photocopies of Bill of Entry - A SCN was issued towards recovery of irregularly availed inadmissible CENVAT credit along with interest and also proposed to impose penalty under Rule 15(1) of CCR - The only ground on which CENVAT credit has been denied is that assessee has taken the CENVAT credit on photocopies of Bills of Entry which according to Department is not the valid document under Rule 9 of CCR, 2004 for taking credit - The assessee has submitted the various documents to prove the receipt of its usage but the same has not been considered and CENVAT credit has been denied merely on the ground that photocopy of the Bill of Entry is not the proper document - By relying upon the decision of Tribunal in the case of Century Metal Recycling Pvt. Ltd. , the impugned order is not sustainable in law because it is a settled law that CENVAT credit cannot be denied on the ground of procedural lapses - Therefore, the impugned order is set aside and the case is remanded to the original authority only for the purpose of verification of the documents relating to its receipt and usage of the inputs - As far as the entitlement of the CENVAT credit is concerned, assessee is entitled to CENVAT credit on the basis of photocopies of the Bill of Entry: CESTAT

- Matter remanded: BANGALORE CESTAT

2019-TIOL-3113-CESTAT-HYD

Zuari Cement Ltd Vs CCT

CX - The assessee is a manufacturer of Cement and Clinker - Their Head Office in Bangalore received certain services and paid for the services along with service tax - They have distributed credit of service tax so availed in their head office among their factories including the assessee through an ISD invoice - A SCN was issued invoking extended period of limitation, seeking to deny credit of service tax paid on input services transferred to them by their head office through ISD invoice in respect of Air Travel services, Repair and Maintenance services and Annual Maintenance Charges (AMC) - As far as air travel services are concerned, it is sought to be denied on the ground that the travel was for personal benefit of employees - The SCN did not adduce any evidence to show that the travel was only on personal account and the benefit of the travel went to individual employees - When the SCN was issued, some evidence must be produced along with it to show why it is proposed to deny the credit - Otherwise the presumption is that the credit has been properly taken - In this case, it is not in dispute that air travel services are not entirely excluded from the benefit of Cenvat credit - They get excluded only if they are meant for personal use of officers - This fact has not been established by revenue in SCN or in the OIO or OIA - From the sample invoices which have been produced, travel in question was for official work - Accordingly, credit of service tax paid on air travel services is allowed - As far as repair and maintenance services and AMC services are concerned, undisputedly both these pertain to contracts which involved both supply of material and rendition of services and therefore, can be considered as works contract services - However, the input invoices paid the amounts under different heads - They have not paid it under works contract services - The classification of any goods or services at the input invoice stage cannot be altered while deciding eligibility of credit to the recipient - Therefore, the classification cannot be altered in this case as well - Further, works contract services entered into only with respect to construction of buildings or part thereof or laying the foundation for setting up capital goods is excluded - All works contract services are not excluded from definition of input services - In this case, the works contract services pertain to either maintenance of office equipment or cleaning of carpets, which were used at the head office - Accordingly, assessee is entitled to Cenvat credit on these services as well - The impugned order is set aside: CESTAT

- Appeal allowed: HYDERABAD CESTAT