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SERVICE TAX
2019-TIOL-3482-CESTAT-BANG
Ballal Developers Pvt Ltd Vs CCE & ST
ST - The assessee is engaged in Construction of Residential Complex services - They collected one-time deposit from all the buyers of residential apartments towards Resident Owner/ Welfare Association to be used for future payments which are deposited into a separate account and would be used for discharging statutory obligations such as property tax and water connection charges - They have also utilized the services of two sub-contractors for said purposes - They have also undertaken construction of buildings for Rajalakshmi Education Trust and T.A. Pai Management Institute Trust, which are meant for Educational purpose - The Department issued a SCN covering various aspects of service rendered by assessee and the same was confirmed - Coming to the first issue, the Commissioner held that the assessee has collected sums from the buyers before the receipt of occupancy certificate/completion certificate and therefore provided taxable service as per Section 65(105) (zzzh) of FA, 1994 - He also relied upon the Board Circular 151/2/2012-ST - He has also relied upon the judgment in case of M/s. GS Motors and judgment of Bombay High Court in case of Maharashtra Chamber of Housing Industry 2012-TIOL-78-HC-MUM-ST - Delhi High Court has maintained the above order in the case of Vaani Kappor 2018-TIOL-2724-HC-DEL-ST - In view of the above judgments, service tax cannot be levied on the assessee on this count - Coming to the demand of service tax from the assessee on reverse charge mechanism on services availed by them from two sub-contractors, assessee have submitted that the sub-contractors have already discharged service tax and they have not availed Cenvat credit of the same - They have also submitted a copy of a declaration submitted by said contractors - In view of the same, no service tax is liable to be paid by assessee in this regard - The assessee have also submitted that they are eligible to avail Cenvat credit, in case they are held to be liable to pay service tax - The Commissioner has observed that as the assessee have not availed Cenvat credit, they are eligible for abatement in terms of Notfn 1/2006 as amended from time to time - He has also observed that the service provider has not furnished Cenvat credit documents to the Department for verification and thus failed to comply with the provisions of Rule 6 of Cenvat Credit Rules; moreover, in terms of Notfn 21/2014-CE (NT) of CCR, 2004, the service provider shall not take credit after 6 months of date of issue of any documents specified in sub-rule (1) of Rule 9 - However, assessee submits that the credit was due to them prior to 11.07.2014 i.e the date of amendment of Rule and therefore, they are not barred from taking credit - However, Tribunal held that no service tax is payable by assessee on the issues raised in the impugned order, Tribunal is not going into the issue of credit - The impugned order is set aside: CESTAT
- Appeal allowed: BANGALORE CESTAT
2019-TIOL-3481-CESTAT-MAD
Banu Engineering Contractor Vs Commissioner of GST & CE
ST - The assessee is only challenging the penalty levied under Sections 77 and 78 of FA, 1994 - In the SCN, it is alleged that the assessee had not discharged tax liability "within the due dates specified", "failed to file the ST-3 returns" regularly, thus "suppressed relevant facts from the knowledge of the Department with intent to evade payment of Service Tax" - Even in O-I-O, there is nothing other than the above allegations reproduced - In fact, there is a recording in SCN that the statement of proprietor was recorded on 11.12.2009 by which, the Revenue comes to know of Service Tax collection, non-filing of tax returns and the subsequent remittance of Rs. 9,00,846/- through his statement - So, everything was known clearly as early as 2009 itself - Even the statute gives a cushion of thirty days' time after the SCN as sufficient compliance to escape the rigours of Section 78 by pegging the penalty at 15 per cent - It is the case of assessee that the entire tax and interest was paid by 31.03.2011 whereas the SCN was issued on 22.02.2011 and the O-I-O has appropriated a sum of Rs. 9,00,846/- as against the demand of Rs. 11,36,600/- and clearly, there is no discussion on why the other payments were not considered - On perusal of O-I-O, it is found that there are no doubts with regard to conduct of assessee entertained by Adjudicating Authority except a bald allegation of "suppressed the facts" which, in the context of Apex Court ruling in M/s. Rajasthan Spinning & Weaving Mills - 2009-TIOL-63-SC-CX , is not sufficient - So also, mere non-filing of ST-3 return is insufficient to bring home the guilt under Section 78 since that default is dealt with separately by a different provision - The penalties levied by exercising the discretion under Section 80 of FA, 1994 is deleted and accordingly, the impugned order is set aside: CESTAT
- Appeal allowed: CHENNAI CESTAT
CENTRAL EXCISE
2019-TIOL-3480-CESTAT-CHD
DC Steels Ltd Vs CCE
CX - The assessee No.1, is manufacturer of excisable goods i.e. non alloy steel ingots whereas the assessee No.2 is the supplier of inputs - It was alleged that the some goods are not in the nature of scrap and assessee No.2 has issued invoices to assessee No.1 by making the word "scrap" has been added on the goods purchased by assessee No.2 - On the basis of investigation conducted, a SCN was issued to both assessees on the ground that the steel melting scrap which is an input for assessee No.1 does not include any of the items mentioned in the description of the goods found during the course of investigation - The matter was adjudicated, the credit was denied and penalties on both assessees were imposed - There is no allegation in SCN that the goods in question have not been received by assessee No.1 from assessee No.2 - In the SCN, the only issue is that the goods in question cannot be the inputs to manufacture final products by assessee No.1 - To ascertain such fact, no visit was made by Revenue in the factory premises of assessee No.1 - No process of manufacturing has been brought on record - Moreover, no evidence has been produced by the Revenue that the said goods have not been diverted to be used by the assessee-manufacturer to manufacture final products, therefore, the allegation made against the assessee is only on the basis of assumptions and presumptions - No expert opinion has been obtained by the Revenue - No statement of transporter has been recorded to allege diversion of the goods - Therefore, the credit cannot be denied - In the impugned order, the adjudicating authority has alleged that there is diversion of goods and non receipt of goods by assessee - manufacturer - As there is no such allegation in SCN to allege that the goods were never received by assessee -manufacturer and supplied by the dealer, in that circumstance, the adjudicating authority has gone beyond the scope of SCN - Such findings of the adjudicating authority are not sustainable in the eye of law - Therefore, on merits as well as scope of SCN, the impugned order deserves no merit and therefore, the credit cannot be denied to the assessee-manufacturer - No penalty is imposable on both the assessees - The impugned order is set aside: CESTAT
Held - Some perceived ambiguity in terms of the rehabilitation which is in the jurisdictional preserve of the appropriate appellate authority is now brought before the Tribunal for solution - As the scope and jurisdiction of the Tribunal emanates from Section 129 of the Customs Act for the limited purpose of deciding upon the legality and appropriateness of a confirmed demand, denial of refund or other penal consequences under the Customs Act, Central Excise Act or Finance Act is not within the Tribunal's competence or expertise to foray into awards and determination of such other statutory bodies - Considering the clear provisions of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, the appeal comes to an end with the expiry or cessation of an appellant - Moreover, an application for alteration of cause title can be entertained only if an entity with potential for finding itself to be obligated by unfavourable future decision of the Tribunal seeks to substitute for an appellant on record to enable it to be heard before being saddled with detriment - Such obligation cannot be imposed by an existent appellant on to another entity whose involvement in the proceedings is not on record in the show cause notice - Hence the application for incorporation of M/s L&T in the appeal is dismissed - Regarding the specific alternate plea for substituting the resultant company as appellant, the same is allowed as the new name of the company is registered with the RoC - Hence the Registry is directed to modify the cause title accordingly: CESTAT
- Appeals allowed: CHANDIGARH ITAT
2019-TIOL-3479-CESTAT-MUM
Datar Switchgear Ltd Vs CCE & ST
CX - The assessee-company faced proceedings during the relevant period for irregular availment of MODVAT credit, which was followed by a demand for recovery of the same - SCNs were issued to such effect and their proposals were confirmed upon adjudication - Pursuant to remand, the adjudication order passed in ex parte - Meanwhile, a draft rehabilitation scheme was sanctioned by the BIFR for transferring one division of the assessee-company to M/s L&T Ltd and hiving off the electrical division to the resultant company, while dissolving the transferor-company, which is the assessee herein without winding up - A provision was also made for the assessee-company to be vested with all assets acquired and liabilities incurred by the transferor company - Such arrangement was sustained by the Appellate Authority for Industrial and Financial Reconstruction - Thereafter, though the transferor-company had been dissolved, it was still in appeal before the Tribunal, so it filed an application before the Tribunal to give effect to the proceedings before the BIFR, by substituting the assessee with M/s L&T - The Tribunal allowed the substitution to give M/s L&T the chance to defend its interests - On application by L&T, the Tribunal recalled its earlier order to restore M/s Datar Switchgear Ltd as the assessee - It was claimed that the resultant company ostensibly burdened with the duty liability was not put to notice before such recall - The resultant company also changed its name - Hence it was sought that if M/s L&T is not accepted as substituted appellant while discharging the assessee from SCNs and orders, the resultant company be allowed to do so.
Held - Some perceived ambiguity in terms of the rehabilitation which is in the jurisdictional preserve of the appropriate appellate authority is now brought before the Tribunal for solution - As the scope and jurisdiction of the Tribunal emanates from Section 129 of the Customs Act for the limited purpose of deciding upon the legality and appropriateness of a confirmed demand, denial of refund or other penal consequences under the Customs Act, Central Excise Act or Finance Act is not within the Tribunal's competence or expertise to foray into awards and determination of such other statutory bodies - Considering the clear provisions of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, the appeal comes to an end with the expiry or cessation of an appellant - Moreover, an application for alteration of cause title can be entertained only if an entity with potential for finding itself to be obligated by unfavourable future decision of the Tribunal seeks to substitute for an appellant on record to enable it to be heard before being saddled with detriment - Such obligation cannot be imposed by an existent appellant on to another entity whose involvement in the proceedings is not on record in the show cause notice - Hence the application for incorporation of M/s L&T in the appeal is dismissed - Regarding the specific alternate plea for substituting the resultant company as appellant, the same is allowed as the new name of the company is registered with the RoC - Hence the Registry is directed to modify the cause title accordingly: CESTAT
- Applications partly allowed: MUMBAI CESTAT
CUSTOMS
2019-TIOL-2760-HC-KAR-CUS
Apple India Pvt Ltd Vs UoI
Cus - Petitioner is inter alia engaged in the business of after-sales services of Mobile Phones, Computers, iPods (i.e., music system), Apple Watch, iPads and accessories. such after-sales services is referred to as "Apple Care" within the Apple world - It is submitted that the petitioner has no facilities to repair the products (other than computers) for its customers in India as an after-sales activity - As such, the petitioner imported new units to replace the repaired or malfunctioning units - It is contended that the petitioner was paying Additional Duty of Customs (Countervailing Duty) under Section 3 of the Customs Tariff Act, 1975 on the transaction value of the petitioner's goods imported under the Apple Care brand of services - The Customs Department at the Air Cargo Complex disputed the valuation methodology adopted by the petitioner on the subject goods on the premise that the Retail Sales Price (RSP)/Maximum Retail Price (MRP) has to be applied, not the Transaction Value - second respondent on consideration of all the information provided by the petitioner regarding adoption of transaction value, issued a letter dated 27.02.2013 inter alia directing the petitioner to pay countervailing duty on all goods of Apple Care [warranty and out of warranty] as per Section 4A of the Act 1994 - On further clarification sought by the petitioner, it was communicated that extension up to 30.04.2014 is granted for provisional assessment; there shall be no more extensions; the importer shall take all the steps to clear the warranty goods under Section 4A of the Act wherever the said provisions are applicable - petitioner sought final assessment of provisionally assessed goods and the Deputy Commissioner called for certain documents. A show cause notice dated 27.06.2017 came to be issued by the second respondent calling upon the petitioner to show cause as to why the goods imported as warranty replacement goods but a small portion of them were subsequently sold for out of warranty valued at Rs.8,65,68,087/- should not be confiscated under Section 111[m] of the Customs Act, 1962; as to why differential duty of Rs.9,70,981/- should not be demanded and recovered from them under the provisions of Section 28[4] of the Customs Act, 1962 and proposing penalty and interest. Against this SCN, the petitioner is before the High Court. Counsel for Revenue informed that to meet the principles of natural justice, personal hearing was fixed on 30.1.2018 and the same was adjourned at the request of the petitioner from time to time and the petitioner without attending before the original authority has rushed to this court.
Held: It is evident that the petitioner has invoked the writ jurisdiction without appearing before the statutory Authority - It is well settled law that there is no bar to entertain the writ petition if the impugned notice issued is without jurisdiction - judgments (cited by the petitioner in this regard) are held in a different context and are not applicable to the facts of the present case - It is the contention of the Revenue that during the period from January 2010 to July 2012, the petitioner has paid the duty on MRP value in respect of warranty replacements but for the period July 2012 to November 2012, customs duty was paid on Transaction Value and were clearing the warranty replacement goods on provisional assessment basis paying customs duty on MRP of the finished goods for the period December 2012 onwards, however, it is asserted by the petitioner that in respect of the said periods, the petitioner has erroneously valued the products imported for replacements at the maximum retail price at the products sold in retail - These are all vexed questions which requires to be examined by the authorities. On examination of the show cause notice impugned, it cannot be held that ingredients for invoking the extended period are not present - show cause notice issued to submit a written explanation cannot be held to be ill founded - Writ petition is premature and deserves to be rejected - respondent No.2 shall consider the submissions/reply of the petitioner and shall take a decision in accordance with law without being influenced by any of the observations made herein above, after providing reasonable opportunity of hearing to the petitioner: High Court [para 9, 18, 21]
- Petition disposed of: KARNATAKA HIGH COURT
2019-TIOL-3478-CESTAT-MUM
H And R Johnson India Vs CC
Cus - Goods imported were self assessed and CVD was paid on the basis of MRP - Subsequent to the clearance of the goods so self assessed, appellant realized that they had paid the duty in excess of actual payable for the reason that while making the assessment they had taken the MRP/ sq mtr instead of MRP/ Box - Since they had assessed the said Bill of Entries themselves and paid the duty accordingly, they filed the appeal before the Commissioner (Appeal) to modify the assessment so that they can claim the refund of excess duty paid – Commissioner(Appeals) by relying on the decisions in case of Premier Agencies - 2010-TIOL-853-CESTAT-MUM , Nagpur Transwell Power P Ltd - 2009-TIOL-1392-CESTAT-MUM and Gimatex Industries Pvt Ltd] - 2010-TIOL-425-CESTAT-MUM rejected the appeals filed, therefore, importer is before the CESTAT.
Held: Issue is squarely covered by the decision of Apex Court in ITC Ltd. 2019-TIOL-418-SC-CUS-LB - Since Commissioner (Appeals) has not decided the issue on merit and had disposed of the appeal stating that appeal does not lie against self assessment made, the matter needs to be remanded back for consideration of issues on merit: CESTAT [para 4.2, 4.3, 5.1]
- Matter remanded: MUMBAI CESTAT | |
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