SERVICE TAX
2019-TIOL-2627-HC-MAD-ST
VS Agency Vs CCE
ST - The petitioner is a partnership firm and an authorised dealer of TVS Motor Company engaging in sale of various models of TVS brand two wheelers - After selection of vehicle for purchase, the customers are guided by personnel of petitioner to available options for finance that are offered at the site by representatives of finance companies - The commission received from the companies is offered as income for purposes of income tax by petitioner, but according to petitioner, would not be liable for levy of service tax in terms of FA, 1994, as the activity engaged in does not constitute taxable service - The question as to whether the petitioner is actually rendering services to the finance companies is one of fact - One cannot deny that there is a symbiotic relationship between the petitioner and the financial institutions and one does benefit from the efforts of other in terms of furthering their own respective business interests - The petitioner by the efforts of finance companies, gets the benefit of increased business, quite apart from the the finance company benefiting by marketing efforts of the petitioner - However, whether such an arrangement would fall within the realm of 'taxable services' is yet unclear and will emanate only upon further detailed enquiry of facts - The petitioner is directed to cooperate with on-going enquiry, appear before the respondent for completion of proceedings and allow the same to come to a logical conclusion - Having said so, the tenor of counter filed by respondent appears to indicate that the departmental view is that receipt of incentive/commission from financial institutions would squarely be covered under the category of business auxiliary service - This is putting the cart before the horse and validates the apprehension of the petitioner that a SCN and a conclusion adverse to the petitioner are a foregone conclusion - It is clear that the respondent shall not approach this issue with a pre-determined mind - Let a proper examination of factual aspects be embarked upon before arriving at a conclusion one way or the other: HC
- Writ petition dismissed : MADRAS HIGH COURT
2019-TIOL-3368-CESTAT-AHM
CCE & ST Vs Jalaram Security Services
ST - Appellant during the period 2001 to 2005-06 provided the security services - they were paying ST on the value of service i.e. only on the commission (gross value minus salary, PF ESI etc.) - the case of the department is that the appellant are required to pay ST on the gross amount including salary of the security guards, PF, ESI etc. - therefore, the demand of differential ST was raised invoking the extended period - in the impugned order, the Commissioner (Appeals) has extended the benefit of reduced penalty of 25% under section 78 of the Finance Act, 1994 [Act] - aggrieved with the said relaxation, the Revenue has also filed the appeal, assessee is also in appeal.
HELD: As per section 67 of the Act, the gross amount charged towards providing service shall be liable to ST - as regards the salary of security guards, PF and ESI, the same is not an expenditure incurred by the appellant on behalf of the service recipient - the service recipient is concerned about the overall provision of security service irrespective of bifurcation of payment of service paid by the service recipient to the appellant - therefore, it cannot be said that salary of guards, PF, ESI etc. are reimbursable expenditures to be deducted from the gross value of security service - therefore, the Bench does not agree with the appellant (assessee) that only the commission portion is liable to tax and not the gross value - as regards limitation, it is found that right from the beginning the appellant were paying ST only on the commission portion without adding the value towards salary of guards, PF, ESI etc. - as per provisions of security service, there is absolutely no ambiguity on which value the ST will be chargeable - therefore, it cannot be said that the appellant was under bonafide belief that only commission is chargeable to ST and not the total gross value of service provided by them - even in case of judgments cited by the appellant, the relief was given from the penalty by invoking section 80 whereas the demand of ST on the gross amount was maintained - in these facts, the SCN has rightly invoked extended period and therefore, the demand for the extended period is sustained - as regards the penalty imposed under section 78, since the appellant despite clear provisions for value of security service, paid ST on commission only, the bonafide is not proved - hence, the penalty imposed under section 78 is maintained - as regards the Revenue's appeal against the benefit of 25% penalty, in terms of Supreme Court decision in the case of R.A.Shaikh Paper Mills Pvt. Ltd., the option of 25% penalty should be given explicitly in writing by the Adjudicating Authority in the order - on perusal of the adjudication order, it is clear that the Adjudicating Authority has not given the benefit of 25% penalty in writing in the adjudication order - therefore, the Commissioner (Appeals) is legally correct in extending the benefit of 25% penalty - on the above settled position, the Revenue's appeal is not sustainable - as a result, the Assessee's appeal as well as Revenue's appeal are dismissed : CESTAT [para 6, 7, 8, 9, 10]
- Appeals dismissed : AHMEDABAD CESTAT
2019-TIOL-3367-CESTAT-ALL
K R Pulp And Papers Ltd Vs Commissioner Of CGST & CE
ST - Appellant is exporter of writing paper, which is being manufactured by them - in terms of notification no. 31/2012-ST dated 20.6.2012, they used the services of GTA for movement of the goods for the export purposes - inasmuch as the export in their case was being undertaken from Land Custom Station and not from the port or air port, the Revenue proposed to deny the benefit of the said notification on the ground that the same exempts only movement of the goods for export purposes from port or air port and not from land customs - the exports from land custom stations were introduced in the said notification only w.e.f. 1.4.2015 by way of amendment vide notification no.04/2015-ST dated 1.3.2015 - SCN issued in both the cases belonging to two different units, for the period dated 1.7.2012 to 28.2.2015 - demands of Rs.4.61 lakhs and Rs.3.9 lakhs respectively confirmed along with interest, penalty imposed - the O-I-O upheld by the Commissioner (Appeals), hence appeal.
HELD: It is well settled law that the notification have to be interpreted in the light of the expression used therein - the Notification no.31/2012 clearly mentions only port or air port and there is no ambiguity in the use of the said expression - if an unambiguous language stands used by the Government, legislative intent is not required to be examined - Tribunal being only an interpreter of the notification, cannot rewrite the notification by introducing any extraneous words to the same - the land customs station having been introduced in the notification w.e.f. 1.4.2015, it cannot be held that the exemption was effective from the original date of issuance of the notification even in respect of exports from land customs station - however, it is noted that the Original Notification prescribes a procedure to be followed by the assessee, which is in the nature of filing of consignment note and EXP1 returns etc. - the appellant had followed the said procedure and Revenue was aware of the fact that the exports have taken place from the land customs station - in such a scenario, no mala fide can be attributed to the appellant so as to justifiably invoke the longer period of limitation - the demand having been raised and confirmed by invoking the longer period has to be held as barred by limitation - however, a part of the demand falls within the limitation period, which shall be re-quantified by Original Adjudicating Authority - as the Bench has held absence of any mala fide on the part of the assessee, the penalty imposition upon them is not called for - accordingly, the entire penalty is set aside - both the appeals are disposed of in above manner : CESTAT [para 6, 7, 8, 9]
- Appeals disposed of : ALLAHABAD CESTAT
2019-TIOL-3366-CESTAT-HYD
Paramount Builders Vs CCT
ST - Appellant was issued SCN proposing to demand ST under Works Contract Services for the period April 2014 to March 2015 - the original authority confirmed the demand of Rs.1.92 lakh under Works Contract Services along with interest and also imposed penalty - Commissioner (Appeals) upheld the order, hence appeal to CESTAT.
HELD: On perusal of the SCN, an amount of Rs.42.29 lakhs which is the amount shown as sale value in the sale deed is included for ascertaining the short payment of tax - it is also seen that the said sale deed was executed after occupation certificate was obtained by the appellant - thus, the transaction would indeed be sale of immovable property and the value of Rs.42.29 lakhs shown in the sale deed cannot be subject to levy of ST - however, certain construction works have been carried out by appellant for an amount of Rs.11,985/- - the appellant has conceded that they are liable to pay ST on this amount - from the above, it is held that the demand of ST to the tune of Rs.1.92 lakh cannot sustain - the demand of ST on Rs.42.29 lakhs is set aside - the demand is confined to the ST liable to be paid on Rs.11,985 only as discussed above - taking note of the facts of the case, the penalties imposed are also set aside - the appeal is partly allowed in above terms : CESTAT [para 5, 6, 7]
- Appeal partly allowed : HYDERABAD CESTAT
2019-TIOL-3365-CESTAT-DEL
Jal Mahal Resorts Pvt Ltd Vs CCE & ST
ST - Appellant filed refund claim of ST of Rs.7.23 lakhs on 3.9.2015 for the financial year 2013-14 - the said claim was in relation to the legal consultancy service as the appellant under reverse charge mechanism had wrongly deposited being unaware of the exemption on the ground that taxable turnover of the appellant company was below Rs. 10 lakhs during the aforesaid period - the Deputy Commissioner sanctioned the said refund observing that the appellant has fulfilled all the conditions of notification no.25/2012-ST dated 20.1.2012 - on appeal by Revenue, the Commissioner (Appeals) rejected the order of the Deputy Commissioner holding that the refund has wrongly been sanctioned - assessee in appeal before CESTAT.
HELD: For becoming entitled to the refund, the appellant had to specify two conditions of the said notification: (1) That it is a business entity and (2) The turnover thereof is less than Rs. 10 lakhs in the preceding financial year - the financial year in the question is the year 2013-14 - business entity has been defined in the Finance Act, 1994 under section 65(19)(b) thereof to include an association of persons, body of inpiduals, company or firm except an inpidual - The appellant admittedly is a Private Limited Company, hence qualifies the definition and thereby the first condition of the notification - coming to the fulfillment of second condition, it is observed that term "turnover" has not been defined in either Finance Act, 1994 or in Central Excise Act, 1944 - neither the definition of ‘business entity' nor that of ‘turnover' creates a distinction between taxable and the non taxable income - resultantly, the net aggregate thereof has to be taken while calculating the turnover of the business entity - the Commissioner (Appeals) is opined to be correct while holding that "the Notification does not use the word business turnover instead has used the word business entity with a turnover" - hence, from the plain reading of Notification and understanding of word turnover it is clear that entire proceeds of business entity has to be considered - the findings of Commissioner (Appeals) have a legal as well as genuine basis - also, the intention of legislature vide the impugned Notification is to exempt only the under-sized business entities i.e. whose turnover as appearing in their profit and loss account as a whole is less than Rs.10 lakhs - therefore, the Commissioner(Appeals) has rightly rejected the claim - no infirmity found in the Order under challenge - appeal is, therefore, rejected : CESTAT [para 5, 6, 7]
- Appeal rejected : DELHI CESTAT
CENTRAL EXCISE
2019-TIOL-2628-HC-MUM-CX
Nicholas Piramal India Ltd Vs UoI
CX - The Petitioner is engaged in manufacture of medicines and cleared some medicines as physician samples for free distribution among physicians and some medicines were sold as physicians samples to other pharmaceutical company for free distribution by them - The demand against Petitioner was confirmed on the aforesaid two accounts besides, imposing penalty upon the Petitioner - Before the Tribunal, the petitioner's grievance was with regard to confirmation of demand on both the aforesaid grounds as well as on imposition of penalty - However, the order passed in appeal on 26th April, 2018 with only in respect of physician's sample distributed free by it amongst the physicians - The rectification application specifically refers to the above aspects - This while urging that, the issue of physicians samples being sold and on the issue of penalty being imposed, was not considered by Tribunal in its order - However, the Tribunal dismissed the rectification application by impugned order dated 20th November, 2018 - On the face of it, there are no reasons in this order as to why the grievance of Petitioner was not justifiable - The impugned order dated 20th November, 2018 passed by Tribunal is set aside - The rectification application stands restored to the file of Tribunal to be decided as per law: HC
- Writ petition disposed of : BOMBAY HIGH COURT
2019-TIOL-3364-CESTAT-DEL
Jaypee Sidhi Cement Plant Vs CCE
CX - The issue in this case is regarding the imposition of penalty, which the Department proposed to invoke against the appellant for availing of the cenvat credit on dumper and tippers, which as per the Department, appellant was not eligible to avail.
HELD: Once the appeal is filed against the order, the entire issue gets opened and the appellant is free to take any issue on the matter of the law and fact also before the Appellate Authority - the appellant had already taken a point of law before the Commissioner (Appeals) citing the decision of Aditya Cement Ltd. - 2016-TIOL-2582-CESTAT-DEL but the Commissioner (Appeals) has ignored this fact and confined his decision only on point of penalty, which is not legal and correct - the Appellate Authority is required to deliberate upon the point which has been raised in the appeal by the appellant and record his findings, accordingly, which has not been done in this case - it is also found that the Department was aware of the fact about the availment of the cenvat credit on the dumpers and tippers way back in 2010 and the SCN is issued on 22.11.2013, invoking the extended period of limitation after the lapse of more than three years - extended period of the limitation will not be available in this case as it is undisputed and agreed fact that the Department was aware of the issue at the time of audit objection itself and the appellant has also paid the cenvat credit along with interest on 17.11.2012 by reversing the cenvat credit, Cess and interest on 29.11.2012 in compliance with letter from the Superintendent dated 7.2.2012 - therefore, this case is not covered by the extended period of limitation as per the section 11 A of the Central Excise Act read with Cenvat Credit Rules as well as the demand of the lower Authority is also not sustainable in view of decision in case of Aditiya Cement Ltd. - in view of the above, the impugned order is set aside and the appeal allowed : CESTAT [para 7, 8]
- Appeal allowed : DELHI CESTAT
2019-TIOL-3363-CESTAT-MUM
Nashik Strips Pvt Ltd Vs CCE & ST
CX - As per the department, the appellant herein is one of the manufacturers who had availed inadmissible cenvat credit on the basis of invoices issued by M/s.SB International [M/s.SBI] without physical receipt of duty paid goods on which CE duty was paid by the original manufacturers/importers - appellant before CESTAT against the impugned order.
HELD: The entire case of the Revenue is based on the documents seized by them from the premises of M/s. SBI as well as the statements of Bhavik Sashikant Thakkar - proprietor of M/s.SBI and its accountant Naeem Shaikh - from the record of the case, it is clear that no summons were issued to Bhavik Sashikant Thakkar and Naeem Shaikh in order to secure their presence in order to enable the appellant to cross examine them - the correctness of their statements can only be tested if the same is processed through cross-examination by the appellant who are affected by it - in a similar matter, a coordinate bench of the Tribunal in the matter of Shri Ajay Kumar Gupta, Partner & Anr. - 2018-TIOL-2475-CESTAT-ALL where also the opportunity to cross examine the persons were not granted to the appellant therein whose statements were relied upon by the department, set aside the order on the ground of violation of principle of natural justice and remanded the matter back to the original authority - it is no doubt true that the non-affording of opportunity of cross-examination of Bhavik Sashikant Thakkar and Naeem Shaikh has resulted in contravention of the principles of natural justice in the facts of the present case - in view of the foregoing, the impugned order needs to be set aside and the matter is remanded to the adjudicating authority for denovo adjudication after affording of opportunity of cross-examination of Bhavik Sashikant Thakkar and Naeem Shaikh to the appellant - the appeal is, therefore, allowed by way of remand : CESTAT [para 3, 4]
- Matter remanded : MUMBAI CESTAT
2019-TIOL-3362-CESTAT-MUM
Jain Irrigation Systems Ltd Vs CCE
CX - This appeal of the appellant, a 100% EOU and a manufacturer of 'PVC pipes and fittings', lies against the impugned order which has upheld the O-I-O confirming demand of Rs.5.51 crores being the duty leviable on supplies effected between 1.4.1994 and 2.4.1994 to Superintendent Engineer, Irrigation Department, Patna for execution of 'Bihar Public Tubewell Project' which was awarded pursuant to 'international competitive bidding' process - the impugned goods were proceeded against on the premise that these goods were being cleared into the 'domestic tariff area' on which duty liability arises under section 3 of CEA, in SCN issued on 12.5.1994 - appeal to CESTAT.
HELD: The claim of appellant that supplies to the agencies, who are entitled otherwise to import without payment of duty should logically be extended to '100% EOU' which are obliged under the Letter of Permission (LoP) to export goods and earn foreign exchange - however, there are prescriptions under the Export Import Policy [EXIM Policy] and entitlements are restricted to the incentives enumerated therein - in terms of EXIM Policy, the eligibility of inclusion of such clearances in the prescribed export obligation automatically derives for them the benefit of import duty exemption - the same, however, cannot extend to the finished products which are governed by exemption notification no.125/84-CE dated 26.5.1984 applicable except when sold in India - the exigibility to CE duty arises upon manufacture and this exemption is intended to sequester them from the obligation of such duties which, would not crystallise when cleared for export - by any description and, notwithstanding the communications emanating from the jurisdictional Development Commissioner and Ministry of Commerce, the clearance cannot be designated as anything other than sale in India - thereby the provisions of section 3 of CEA with appropriate duty liability will get triggered - the provisions of section 3 of CEA would apply to all clearances that are not exported out of India or supplied in terms of exemption afforded by notifications under section 25 of Customs Act, 1962 - in terms of the claim for the benefit of notification no. 260/92-Cus dated 27.8.1992, it would appear that this was intended for material procured to manufacture goods which were supplied to specified agency for specified projects - it is worth noting that the condition prescribed in the said notification were relevant to the cases of licensing which were attendant upon these projects specified therein and is limited to the inputs procured for such - it is not the case of the appellant herein that, at the time of import of materials that ultimately found use in the impugned goods, supply to the specified project was intended - furthermore, the benefits of a claim under the EXIM Policy as implemented through a specific notification under the taxing statute and notification, however akin it may be, is not a permissible substitution; the former is contingent upon a letter of permission contemplated in the scheme while the latter is not so restricted - the clearance have been effected to the 'domestic tariff area' with permission accorded by the jurisdictional Development Commissioner in accordance with the prescription in the EXIM Policy - the benefits of various concessions available therein would apply if within the quantitative prescriptions in the EXIM Policy and the relevant notification - furthermore, the appellant has furnished a worksheet in terms of which the duty liability is computed at Rs.99.00 lakhs - the impugned order has not examined the applicability of the said notification or the submission on the computation of the duty liability - accordingly, holding that the proviso in section 3(1) of CEA is applicable to the impugned goods, the matter is remanded back to the original authority for computation of the duty liability after applying eligible notifications and scrutinising the claim of the appellant to a lesser assessable value : CESTAT [para 5, 6, 7, 8, 9]
- Matter remanded : MUMBAI CESTAT
CUSTOMS
2019-TIOL-2630-HC-DEL-CUS
Cynorlmpex Vs CC
Cus - The grievance of petition is about non-serving of O-I-O dated 5th March, 2019 to the petitioner herein - The authorized representative of this petitioner namely Mr. Raj Kumar has made a statement under Section 108 of Customs Act, 1962 before the customs authority - Hence, the original copy of O-I-O dated 5th March, 2019 was duly served to said authorized representative on 6th March, 2019 which is also mentioned in copy of letter dated 19th July, 2019 annexed with this writ petition - Thus, there is no question of issuing any direction to the respondent to serve again O-I-O to the petitioner - The contention of the respondent about the limitation is kept open - In case this petitioner prefers an appeal, the issue of limitation shall be decided on its own merits: HC
-Writ petition disposed of : DELHI HIGH COURT
2019-TIOL-2629-HC-DEL-CUS
CC Vs E S Lighting Technologies Pvt Ltd
Cus - The Revenue has preferred the appeal to assail the order dated 03.04.2018 passed by Tribunal - The said appeal had been preferred by respondent due to the request for conversion of free shipping bill to advance license shipping bill being rejected on the basis of time limit as prescribed by Circular 36/2010-Cus by the Adjudicating Authority - The Adjudicating Authority has held that since the request was made beyond the period of three months, the request could not be entertained - By a short impugned order, the Tribunal held that there was no time limitation prescribed in Section 149 of Customs Act and, therefore, the rejection of respondent's request for conversion of the license was held to be bad - The Tribunal was not justified in adopting the approach that it did - Merely because no time limitation is prescribed under Section 149 for the purpose of seeking amendment/ conversion, it does not follow that a request in that regard could be made after passage of any length of time - The same could be made within a reasonable period - The conversion sought by the respondent was from free shipping bill to advance license shipping bill - It was not fair to expect the Department to maintain, and be possessed of, the records after passage of five long years-when the respondent made its application for such conversion - The impugned order is set aside: HC
- Appeal allowed : DELHI HIGH COURT
2019-TIOL-3361-CESTAT-MUM
Venus Petrochemicals Bombay Pvt Ltd Vs CC
Cus - The issue involved in the present appeal is in respect of classification of goods imported vis. "Low Aromatic White Spirit (ANYSON-5) in bulk (Laws)" - appellants have claimed the classification under heading 27101990 whereas Revenue has sought to classify them under 27101290 - rate of duty under both the headings as claimed by appellant and as proposed by the revenue is same - however, the IEC requirements under both the headings are different - the goods, if classified under heading 27101990, are freely importable and if classified under heading 27101290 they are restricted and reserved for import through specified public sector undertaking (PSU) - Adjudicating Commissioner has classified the goods under 27101290, and has held the goods have been imported in violation of the provision of Export Import Policy as these goods are restricted goods as per the policy - for the above violations, Commissioner held goods liable for confiscation under section 111(d) of Customs Act, 1962 [Act] and confiscated them under section 125 - however, Commissioner allowed the appellants to redeem the goods on payment of redemption fine of Rs.82 lakhs - for the various contraventions leading to the confiscation of goods, Commissioner held the appellants to be liable for penalty under section 112(a)(i) of the Act and imposed a penalty of Rs.54 lakhs - appeal to CESTAT.
HELD: It is found that the issue in respect of classification has been decided by the Ahmedabad Bench of the Tribunal - 2019-TIOL-1515-CESTAT-AHM against the appellant holding classification under CTH 27101290 - no reason found to differ with the order of Ahmedabad Bench - it is also noted that for the contraventions of the restrictions under Export Import Policy, goods have been held liable for confiscation under section 111(d) of the Act - thus, the Ahmedabad Bench upheld the order of confiscation, but has reduced the redemption fine from Rs.81.81 lakhs (as imposed by the adjudicating authority) to Rs.20 lakhs - following the order of the Ahmedabad Bench, the confiscation of goods is upheld but the redemption fine imposed is reduced from Rs.82 lakhs (as imposed by the adjudicating authority) to Rs.40 lakhs - for various contraventions leading to confiscation of goods, appellants have been held liable for penalty under section 112(a) - Ahmedabad Bench has reduced the penalty from Rs.35 lakhs (as imposed by the adjudicating authority) to Rs.20 lakhs - in accordance with the said order, the impugned order of Commissioner imposing penalty under section 112(a)(i) is upheld but the same is reduced to Rs.25 lakhs - but for the modifications as stated above, the order of the adjudicating authority is upheld - the appeal filed by the appellant is disposed of in above terms : CESTAT [para 4.2, 4.3, 4.4, 5.1, 5.2]
- Appeal disposed of : MUMBAI CESTAT
