2019-TIOL-74-AAAR-GST

Tata Motors Ltd

GST - For the purpose of Cess @22% under Sr. no. 52B of Cess Rate Notification 1/2017, ground clearance is to be considered in laden condition only - Vehicle whose ground clearance in unladen condition is more than 170 mm but below 170 mm in laden condition will not get covered under Sr. no. 52B of Cess Rate Notification - Order pronounced by the Advance Ruling Authority to the said extent is set aside: AAAR

- Appeal allowed: AAAR

2019-TIOL-73-AAAR-GST

NES Global Specialist Engineering Services Pvt Ltd

GST - For any supply of services to be considered as export, one has to examine the place of supply of services as per the conditions prescribed in s.2(6) of the IGST Act - in view of provisions of s.97(2) of the CGST Act, 2017, question relating to 'place of supply' is outside the purview of the Authority - Advance Ruling Authority have passed a ruling exceeding its jurisdiction, hence the order is set aside - questions asked by the appellant are not covered under the scope and jurisdiction of the Authority for Advance Ruling, hence no order could have been passed in view of s.97(2) of the CGST Act, 2017: AAAR

- Appeal disposed of: AAAR

2019-TIOL-72-AAAR-GST

Lions Club Of Poona Kothrud

GST - Membership fee collected by respondent from its members will not be construed as consideration for levy of GST; rather it is the registration fee collected for organising the skill oriented workshops which would be considered as consideration and accordingly will be liable to GST - Lions Club of Poona is liable to take registration for discharging their GST liability - Paragraph 19 of AAAR order dated 23.04.2019 amended accordingly: AAAR

- Appeal disposed of: AAAR

2019-TIOL-71-AAAR-GST

Multiples Alternate Asset Management Pvt Ltd

GST - Appellant is an investment advisory firm and had sought a confirmation of its interpretation of the law with regard to applicability of GST on its services which are setting up of the fund, fund raising, pooling of investments into AIF (Alternate Investment Fund) and managing the investments pooled in the AIF - for these services the appellant receive Advisory and Management Fees from domestic and overseas contributors - appellant had sought to know as to whether GST is applicable on the said fees received in Indian currency from domestic contributors located in India and the fees received in foreign currency from overseas contributors located outside India - AAR held that since the AIF is liable to make payment, they are recipient of service as per s.2(93) of the CGST Act and the place of supply is to be determined by s.12(12) of the IGST Act for both Domestic and overseas contributors which would be taxable @18% - Appellant is aggrieved with this order and submits that the AAR had conveniently assumed the ‘person liable to make payment' to be the AIF which is contrary to the factual position in the agreements; that liability to make payment is with the contributors and the Fund has no obligation to make the payment at all; that the service provided by the appellant to overseas contributors (recipient of service as per s.2(93) of the CGST Act) should be held as export of service as per s.2(6) of the IGST Act and to be treated as zero-rate supply as per s.16.

Held: To decide the taxability of the above said Investment Advisory and Management fees, it is imperative to determine the place of supply in respect of the impugned overseas transactions - on perusal of s.97(2) of the CGST Act it is adequately clear that question on determination of ‘place of supply' has been excluded - therefore,  Authority cannot pass any ruling in respect of the question which involves determination of place of supply of goods or services or both - question posed by appellant being beyond the jurisdiction of Advance ruling, cannot be decided by the Authority - AAR should have refrained from passing any ruling - as AAR has passed the ruling by transcending its jurisdiction, the order is set aside: AAAR

- Appeal disposed of: AAAR

2019-TIOL-70-AAAR-GST

Western Concessions Pvt Ltd

GST - Applicant company is engaged in the re-gasification of LNG and delivering the same to its customers - The applicant is setting up a LNG re-gasification project, whose development consists of two legs, namely - i) setting up of infrastructure facility, i.e., jetty, on-shore receiving facility close to the jetty for enabling Floating Storage Re-gasification Unit (FSRU) to regasify the LNG; and ii) connecting the terminal with the cross-country gas pipeline to enable supply of re-gasified LNG to the customer - The applicant approached the AAR seeking clarification on eligibility for ITC on Tie-in pipeline used to supply LNG to the ulitmate customers - AAR observed that there are some ships which happen to be categorised as factories in the commercial world and, therefore, it was incorrect to infer that the FSRU is not a factory; that the pipeline could not exist in a vacuum without a factory; that the term pipelines outside the factory signifies that the pipeline is to transport some product from the factory to the end user; that the LNG re-gasified in the ship is transported through the pipeline, which is outside the factory ship, therefore, the pipeline in the present case classifies as' pipeline laid outside the factory'; that the restriction on availment of ITC u/s 17(5)(c) & 17(5)(d) is applicable herein - Appeal to AAAR.

Held: It is amply clear that the FSRU where the re-gasification of LNG is carried out for delivery to the National Grid through the tie-in pipeline proposed to be connecting the FSRU to the National Grid can be rightly considered as factory - Once it has been established that the premises of FSRU can be justly considered as factory premises, then there is no doubt that the tie-in pipeline to be laid by the appellant which will join the FSRU to the National Grid will be considered as‘pipeline laid outside the factory premises' and accordingly attract the applicability of the exclusion clause i.e. clause (iii) of the Explanation to S.17(5)(c) and s.17(5)(d) of the CGST Act, 2017 - consequently, the tie-in pipeline under question will not be construed as a plant and machinery and hence the appellant will not be entitled to avail ITC of GST paid on goods and services used for construction of Tie-in pipelines, from the FSRU to the National Grid: AAAR

- Appeal disposed of: AAAR

2019-TIOL-69-AAAR-GST

Arihant Enterprises

GST -  Respondent  company is engaged in re-sale of ice creams in wholesale as well as retail sale packages - It purchases goods from the sole manufacturer - The applicant deals exclusively in goods manufactured by the franchisor - It sells the ice cream without any further processing, alteration, structural or chemical change - The respondent approached the AAR seeking to know if ice cream supplied from retail outlets is supply of goods or supply of service or is composite supply - Whether if not being composite supply, the same is supply of service as per Entry 6(b) to Schedule II to CGST Act & attracting GST @ 2.5% as per Notfn No 11/2017-CTR as amended - Also, if found to be composite supply, whether it is treated as supply of service - Also, if held to be supply of service, then if it is mandatory for applicant to collect & deposit GST @ 2.5% - the Authority had held that  supply of ice cream by the applicant from its retail outlet is treatable as supply of goods and, therefore,  the remaining issues were not answered - Assistant Commissioner of SGST, Pune Division is aggrieved by this order  and  has filed appeal before the Appellate Authority - It is submitted that the respondent had suppressed certain vital facts in the application made before the AAR about the investigations that had been initiated by the DGGI against M/s Kamaths Ourtimes Ice Creams Pvt. Ltd. [ KOTI, in short, (franchisor)] and its various franchisees who deal in Naturals brand ice cream under the terms and conditions of an identical franchisee agreement; that, therefore, the ruling obtained from AAR by keeping the authority in the dark is not legal and correct.

Held: Appellate authority is satisfied that there was sufficient cause for late filing of appeal and, therefore, the delay in filing appeal by Revenue is condoned - As per s.104 of the CGST Act, 2017, powers have been given to the Appellate authority to declare an order u/s 98(4) of the  Act to be void ab initio in case it is obtained by fraud or suppression of material facts or misrepresentation of facts - jurisdictional officer might have taken a stand and which was confirmed by the Advance Ruling Authority and also agreeable to the applicant-respondent, however, later on it was made known to the jurisdictional officer that the proceedings were pending on the same issue against M/s KOTI and later on against the applicant-respondent himself - This amounts to deliberately keeping away knowledge from the jurisdictional officer and if he was made aware of the fact by the applicant-respondent that investigations were pending on the same issue against the franchisee and the applicant-respondent was also aware of the proceedings, then the jurisdictional officer would have surely brought it to the notice of the ARA - jurisdictional officer, therefore, has a valid reason to be aggrieved by the order of the ARA and there is no incongruity in him filing an appeal before the Appellate authority - there is also no reason to assume that he was compelled by the DGGI to file an appeal - Although technically proceedings were not pending against the applicant-respondent on the date of filing application before the Authority for Advance Ruling, it is clear and apparent from the deposition of Narendra Mutha, Partner of M/s Arihant Enterprises (applicant-respondent) that it was decided by M/s KOTI to file an application before the ARA on the same issue of classification of ice cream sold through the parlours which was taken up by DGGI - It cannot be called an apparent coincidence as made out by the applicant-respondent - This reflects the deliberate intent on the part of the franchisor and the franchisee to subvert the investigation proceedings and also a purposeful objective to hide facts which are critical to the AAR and the related provisions - It is trite law that when comes for justice, one should come with clean hands, but which is not the case here - It is, therefore, held that the order of the AAR is void ab-initio as it was vitiated by the process of suppression of material facts - Appeal filed by  Assistant Commissioner of SGST, Pune Division is allowed by setting aside the order of AAR: AAAR

- Appeal allowed: AAAR

Skol Breweries Ltd Vs CCT

Commercial Tax - Tribunal has treated Spent Malt as unclassified goods and subjected them to the highest rate of tax after reversing the finding of the first appellate authority in that regard who assessed tax @5% treating them to be old unserviceable machinery etc. - Question before the High Court is as to whether Spent Malt is not cattle fodder and, therefore, not exempt from trade tax.

Held:  Insofar as classification of the goods Spent Malt is concerned, the test to be applied has been laid down by the Supreme court in the case of CST vs. Ram Chandra Asha Ram [2000 UPTC 636 SC] wherein the Supreme Court held that in generic sense 'cattle fodder' is inclusive of everything that is fed to cattle including damaged wheat - this principle has to be applied in the facts of the present case as well - findings of the Tribunal do not consider the above principle of law - moreover, the assessing authority had taxed the Spent Malt as old unserviceable machinery etc. which findings had been confirmed by the first appellate authority, therefore, though the assessee was in appeal on that issue, the revenue's appeal was confined to other issues and, therefore, the revenue having not raised the issue that the goods were liable to be taxed as unclassified goods, the Tribunal could not have gone into the same - Tribunal has clearly erred in subjecting the goods Spent Malt by treating them as unclassified goods, therefore, order is set aside and the matter is remitted to the Tribunal to pass a fresh order in accordance with law within a period of three months: High Court [para 4, 5, 9 to 11]

Issue of rejection of books of account of assessee - Without having itself seen the books, the latter observation made by the Tribunal, on a prima facie basis, that there is no deficiency in the same cannot be sustained - Being a fact finding authority and the rejection of books of account being an issue raised before it, Tribunal was bound to return a proper finding upon appraisal of material and evidence: High Court [para 12]

- Revision disposed of: ALLAHABAD HIGH COURT

2019-TIOL-3237-CESTAT-ALL

Niraj Prasad Vs CCE & ST

ST - Appellant entered into agreement dated 15.3.2007 with Career Launcher (India) Limited [Career Launcher] which was engaged in providing commercial training and coaching services through its numerous centres located across the country - the appellant was granted the right to use the trademark, logo and proprietary system developed by Career Launcher regarding various courses - as per the terms of the agreement, the appellant and Career Launcher share the revenues collected from the students in the ratio of 75:25% - the appellant deposits the entire fee with Career Launcher and subsequently M/s Career Launcher transfers back 75% of the amount to the appellant - SCN dated 17.3.2011 was issued to the appellant imposing a demand of ST on the 75% amount of the amount received by the appellant under the category of "business auxiliary service" under section 65(105) (zzb) of the Finance Act, 19944 on the ground that the appellant is providing the said service to Career Launcher - demand confirmed, hence appeal to CESTAT.

Held: A perusal of the agreement between Career Launcher and the appellant reveals that the appellant was entitled to 75% of the net revenue amount deposited by it in the bank account of Career Launcher towards the fees collected from the students, while Career Launcher was entitled to the remaining 25% - this arrangement is a typical revenue sharing model arrangement - the appellant was not to receive fixed amount per annum or per month from Career Launcher but only a certain percentage of the net revenue - in such a situation, it cannot be said that the appellant was a service provider and Career Launcher was a service recipient - no service was, therefore, provided by the appellant to Career Launcher - this view finds support from the decision of the Tribunal in Mormugao Port Trust - 2016-TIOL-2843-CESTAT-MUM - the Tribunal found that unless it can be established that a specified amount had been agreed upon to be paid as a quid pro quo for undertaking any particular activity, it cannot be assumed that there was a consideration agreed upon for a specific activity so as to constitute a service - such being the position, the impugned order can be set aside only on this ground alone as no service was provided by the appellant to Career Launcher so as to attract payment of any ST - the first alternative submission of the Counsel for the appellant is that even if it is assumed that a service was rendered by the appellant, then too the appellant would be entitled to the benefit of notification 14 dated 10.9.2004 by which the Central Government exempted taxable service provided to a client by any other person in relation to "business auxiliary service" in so far as it related to a provision of service on behalf of a client and provided in relation to education - whatever service the appellant was providing to the students on behalf of the client, in the opinion of the adjudicating authority, cannot be considered as "education" - it is not possible to accept the view taken by the adjudicating authority - the appellant, as it clearly transpires from the agreement, was engaged in the activity of preparing students not only for the entrance examination, but also for academic courses, though at a higher level - some of these courses related to management courses, law courses, engineering courses etc. - after referring to the Dictionaries, it is clear that the word "education" has a wide meaning and includes the practice of teaching or training in a particular subject - the adjudicating authority, even after noticing that education apart from the process of teaching and learning includes training in a particular subject, erred in observing that 'education' is different from 'training' - in this connection what is important to notice is that the exemption is "in relation to education" - it cannot be doubted that the activity conducted by the appellant is 'in relation to education' and, therefore, the appellant would clearly be entitled to the benefit of the exemption notification 14 dated 10.9.2004 - the principles enumerated in the decision of the Tribunal in the case of Sunbeam Infocomm Pvt. Ltd. - 2014-TIOL-1564-CESTAT-MUM will apply with greater force in the present case - Career Launcher has paid ST on the entire amount of fees collected from the students - it is on a revenue sharing basis, that part of this fee is remitted to the appellant by Career Launcher - the appellant, therefore, cannot be required to again pay ST on this fee - a bare perusal of the order passed by  Commissioner (Appeals) in Appeal No.287 on 25.10.2012  reveals that the demand of ST under the category of "business auxiliary service" by a similarly situated assessee has been set aside - this order has attained finality - once the Department permitted this order to attain finality, it cannot, be permitted to urge that the appellant should be required to pay ST on "business auxiliary service" - thus, for all the reasons stated above, it is not possible to sustain the impugned order - it is, accordingly, set aside and the appeal is allowed : CESTAT [para 15, 17, 19, 21, 22, 27, 29, 32, 34, 36, 37, 38]

- Appeal allowed: ALLAHABAD CESTAT

2019-TIOL-3221-CESTAT-BANG

2019-TIOL-3220-CESTAT-ALL

CENTRAL EXCISE

2019-TIOL-3236-CESTAT-AHM

Jolly Electrical Industries Vs CCE & ST

CX - The appellant M/s. Jolly Electrical Industries were engaged in the manufacture of plain paper copier and transmitting apparatus - there are other two units, namely M/s. Jolly Enterprises [Jolly] having CE Registration for manufacture of electrical switches transmitting apparatus, micro film, etc. and M/s Kinitronics [Kini] having CE Registration for manufacture of TV sets, Modular Systems, Plain Paper Copier, etc. - the CE departmental officers carried out investigation of all the three units and found that in fact the other two units i.e. Kini and Jolly were not manufacturing the goods whereas the goods manufactured by the appellant were being cleared under exemption in the name of Kini and Jolly - from all these evidences, it was revealed that all the clearances shown to have made by Kiny and Jolly are in fact manufactured and cleared from the appellant firm - SCN dated 2.3.1994 was issued wherein demand of duty, penalty, and confiscation of land and building plant and machinery was proposed against the appellant - Kini and Jolly were proposed for recovery of modvat credit wrongly availed and utilized and also corresponding penalty was proposed to be imposed - personal penalties under rule 209A of Central Excise Rules, 1944 [CER] was also proposed to be imposed against various persons including partners of all the three partnership firms - vide impugned order, the duty demand against the appellant was confirmed and a penalty of Rs.80 lakhs was imposed under rule 173Q(1D) of CER - it was also ordered for confiscation of land, plant, building, machinery etc. of the appellant under rule 173Q(2) and an option was given to redeem the said assets on payment of redemption fine of Rs.10 lakhs - a penalty of Rs.10 lakhs was also imposed on Shri Nilesh V Shah, partner of the appellant firm under rule 209A of CER - appeal to CESTAT.

Held: The adjudicating authority on the basis of strong evidences such as insufficient production facility, electricity consumption and various other aspects came to the conclusion that the other two units i.e. Kini and Jolly did not have any set up for manufacture of excisable goods, therefore, the present case of the department is that all the goods cleared were manufactured by the appellant and not by Kini and Jolly - if that be so, then all the clearances are of the appellant and the clearances claimed to have manufactured by Kini and Jolly are clearly a clandestine removal of the appellant, therefore, the demand was rightly made from the appellant - with respect to the submission of the counsel that since Kini and Jolly were not demanded duty, the clubbing of clearances is illegal, since there is no clearance of Kini and Jolly but all the clearances are of the appellant, therefore, there is no reason or question to implicate Kini and Jolly for the purpose of making demand - therefore, even though these two parties were not implicated in the O-I-O does not make any impact on the demand raised against the appellant - the dropping of modvat demand has no impact as far as clandestine removal of goods manufactured and cleared by the appellant in the guise of manufacture and clearances of Kini and Jolly, therefore, merely because the case proceedings of modvat credit has been dropped against Kini and Jolly, it will not affect the case of clandestine removal against the appellant - therefore, this argument is of no help to the appellant - since all the clearances are of the appellant, the reliance made by the counsel on Trade Notice No.59/1992, which deals with the admitted clearances of more than one unit, is not relevant in the facts of the present case - the appellant indulged in clandestine removal of excisable goods with intention to evade duty in the guise of manufacture and clearance of goods from Kini and Jolly - there is a clear fraud, suppression of fact, misstatement, collusion with intention with evade duty, therefore, as per the facts of the present case it is a fit case to invoke the extended period - therefore, the demand for extended period is clearly sustainable - as regard, the relief sought by the appellants with regard to the benefit of cum duty price, it is found that this issue is no longer res-integra and the same has been decided in favour of the assessee that as and when the duty is calculated the sale price has to be taken as cum-duty price and for the purpose of demand the excise duty needs to be deducted - in view of the above settled position of law, the appellant is entitled for the cum duty benefit - accordingly, the demand of duty and corresponding penalty needs to be recomputed by extending the benefit of cum duty price - as per the above discussion and findings, the appeals are dismissed except for the re-quantification of the duty by extending the cum duty price - appeals are disposed of in the above terms : CESTAT [para 11, 12, 13, 14, 15, 16]

- Appeals disposed of: AHMEDABAD CESTAT

2019-TIOL-3219-CESTAT-ALL

2019-TIOL-3218-CESTAT-MUM

CUSTOMS

2019-TIOL-3217-CESTAT-DEL

TII

TP - Failure of employee cost filter and substantial functional dissimilarity call for exclusion of such entity from list of comparables: ITAT

TP - Company engaged in rendering diversified activities cannot be compared to captive service providers in absence of segmental information: ITAT

TP - Necessity of writ interference against interim order of Tribunal for payment of outstanding demand depends upon circumstances under which Tribunal has vacated earlier stay order: HC

TIOLCORPLAWS

IBC, 2016 - Insolvency application is admitted against Flipkart for its inability to discharge arrears of operational creditor even after having sufficient opportunities to settle disputes u/s 12A: NCLT

SEBI Act, 1992 - Non-executive director cannot be made vicariously responsible for fraudulent activities of companies if there are no evidence for his/her involvement : SAT

IBC, 2016 - Single judicial member of NCLT cannot pass final order admitting section 7 application in absence of two technical members: NCLAT