| SERVICE TAX
2019-TIOL-2821-HC-MAD-ST
Commissioner of GST & CE Vs Commissioner Ranipet Municipality
ST - By the impugned order, the Tribunal has only disposed of the appeal for statistical purpose by observing that the issue relating to imposition of Service Tax on the rental of immovable property is pending before the Supreme Court with a liberty to the parties to file for revival of the appeal once the Supreme Court pronounces the Judgment - No question of law arising in the present appeal: HC
-CMA disposed of : MADRAS HIGH COURT 2019-TIOL-3562-CESTAT-HYD
Aditya Homes Pvt Ltd Vs CC, CE & ST
ST - The assessee is a builder engaged in construction of residential complexes and have been issued a SCN demanding service tax along with interest - The demands are under four heads; Construction of Residential Complex Services, Landowners portion of Construction of Residential Complex Services, Renting of immovable property and Management, Maintenance or Repair Services - The first two services pertain to the services allegedly rendered by assessee in construction of complexes - The assessee obtains land from land owners and constructs complexes on the same - In consideration of the land, some flats are built and given to the land owners - Remaining flats are sold by builder in semi-constructed form along with the undivided share of the land to the customers - Thereafter, he enters into a contract with the customers to complete the flats - Before proceeding further, it will be pertinent to state that in both the cases, the construction was done as composite works contract i.e. the assessee had not only provided the services but also supplied all the materials required for such construction - With effect from 1st June 2007, 'Works Contract Service' has been introduced in this clause by sub-clause (zzzza) of clause 105 of section 65 - Even before the introduction of this, Revenue sought to charge service tax under various other heads in the case of composite contracts allowing abatement towards the cost of materials as per applicable notifications - The established legal position is that 'Works Contract Service' can be charged as 'works contracts' only under Section 65 (105) (zzzza) and only with effect from1.6.2007 - If the services rendered are in the nature of composite works contracts, they cannot be charged to service tax prior to 1.6.2007 and can be charged post this date only under this head 65 (105) (zzzza) and not under any other head - As far as service tax, under 'construction of complex service' in respect of residential complexes is concerned, prior to 1.7.2010, no tax could be levied - This was also clarified by CBEC circular 108/2/2009-ST - The question as to whether this limitation on taxation prior to insertion of the explanation in 'construction of complex services' also extends to cases where such services are rendered as 'works contract service' was examined and answered in affirmative in the case of Krishna Homes 2014-TIOL-402-CESTAT-DEL by the Tribunal - In view of the legal position as the services in this case with respect to construction of complex services were rendered prior to 01.7.2010, no service tax is chargeable and the demand to this extent are set aside.
As far as the issue of demand of service tax on renting of immovable property is concerned, the relevant period is 2007-08 to 2009-10 and the SCN was issued on 22.10.2010 invoking extended period of limitation - Renting of immovable property per se was not taxable prior to 08.5.2010 but only services rendered in relation to renting of immovable property - When the law itself did not cover taxation of renting of immovable property services, it is inconceivable that the assessee could have anticipated the retrospective amendment and paid service tax accordingly - Failure to pay service tax in this manner cannot be alleged to be fraud or collusion or wilful misstatement or suppression of facts with intent to evade payment of service tax - Respectfully following the case of Shri Thadi Satya Ramalinga Reddy and M/s Nagpal Traders, it is held that the demand on this head is not sustainable beyond the normal period of limitation.
As regards the last demand of management, maintenance or repair services, this demand was made based on the information available in the books of accounts of assessee themselves and their ledgers which show the amounts as having been received from management services - The audited balance sheets of assessee themselves show that they have earned income on maintenance and repair services - They cannot now claim that the income is not so - It is also not in dispute that the assessee have neither declared these amounts as services rendered by them nor have they paid service tax nor have they filed their ST-3 returns with these amounts - The demand under the head management, maintenance and repair services invoking extended period of limitation is sustainable and needs to be upheld.
On the question of extended period of limitation, this is invokable in the case of management, maintenance and repair services and is irrelevant in respect of the construction of residential complex services and construction of complex services as the same has been held to be not taxable at all - As far as renting of immovable property is concerned, the extended period of limitation, cannot be invoked - Consequently, the amount on interest, if any, is payable and the penalties under Section 77 & 78 also need to be upheld: CESTAT
- Matter remanded: HYDERABAD CESTAT
2019-TIOL-3561-CESTAT-AHM
Gujarat Eco Textile Park Ltd Vs CCE & ST
ST - This appeal has been filed by M/s Gujarat Eco Textiles Park Ltd. against confirmation of demand of service tax and cenvat credit and imposition of penalties - Demand has been made under various heads i.e. Rs. 4,26,54,866/- (service tax- Issue of rental of immovable property), Rs. 9,05,725/- (Cenvat Credit of Service tax paid on construction of compound wall), Rs. 68,076/- (Cenvat Credit of service tax paid on construction of new pipeline) and Rs. 99,728/- [Service Tax on Tender and Plan Evaluation Fees (under BAS) and Finger Analysis Fees (technical testing and analysis)] - As regards to demand of Rs. 4,26,54,866/-, assessee had set up a textile park under the scheme of integrated textile park (SIPP) floated by Ministry of Textile of Govt. of India - In terms of aforesaid scheme, assessee is a special purpose vehicle (SPV) on public private partnership - The SPV acquired land for setting up infrastructure and for establishing Textile Park - Service tax was introduced on renting of immovable property w.e.f. 01.06.2007 - Earlier, High Court of Delhi in case of Home Solutions Retail India Ltd. 2009-TIOL-196-HC-DEL-ST had quashed and held ultravirus the levy of immovable property service as introduced on 01.06.2007 - The FA, 2010 amended the definition of service and gave it retrospective effect and introduced levy of service tax of vacant land under certain circumstances - It is clear that there was no levy of service tax on vacant land prior to 08.05.2010 - A perusal of SCN shows that there is no evidence whatsoever to support the allegation that what was collected was in fact rent and not non-refundable contribution - It is also seen that the entire scheme was devised under the supervision of Ministry of Textiles and it's representatives - The allegation appears to totally baseless - Thus, the demand is set aside - As regard limitation, the entire scheme was devised in consultation with Government of India, Ministry of Textile and in supervision of PMC appointed by the Government - The entire scheme was devised much before the levy of service tax on renting of immoveable property was introduced and in these circumstances to allege that rent was being collected under garb of non refundable contribution is totally misplaced - It is seen that when the scheme was devised, there was no levy of service tax on renting of immovable property and thus they could not have any intention to evade or to manipulate records to receive rent as non refundable contribution - Thus, the demand on such count is also not sustainable on the ground of limitation as well.
The next issue relates to demand of reversal of cenvat credit on service tax paid for construction of compound wall and laying of new pipelines - It is seen that the assessee is paying service tax on the rent received as well as on usage charges recovered from their members - They are providing various infrastructure services to member units and for providing the said services, the compound wall and pipelines are necessary ingredients - In these circumstances, the credit on the said services cannot be denied - In this regard, assessee has relied on the decision of Tribunal in case of Navaratna SG Highway Prop. Pvt. Ltd. 2012-TIOL-1245-CESTAT-AHM wherein, credit of service tax on construction service has been allowed in respect of construction of Mall - The ratio of the aforesaid decision is applicable to instant case - The circulars have been wrongly relied upon by Revenue and therefore, the credit on these services would be available, the demand on this count is set aside.
As regards to demand of service tax on amounts recovered under the head of finger analysis fee demanded under the head of technical testing and analysis service and tender and plant evaluation fee demanded under the head of Business Auxiliary Services - It is seen that the assessee had filed a VCES declaration in respect of service tax on technical testing and analysis services in respect of amount received under the head of finger analysis fee, however, the said VCES declaration was rejected - It is seen that the assessee has argued that no tax is leviable on the ground that the said testing of the waste water is a mandatory requirement under law - It has been argued that being a statutory in nature, it cannot be treated as service and therefore, no service tax can be levied - No merit found in the said argument - The assessee is not statutory body and no evidence in support of the claim that the activity undertaken by them is statutory in nature has been submitted - The demand and penalty on this count is upheld: CESTAT
- Appeal partly allowed: AHMEDABAD CESTAT
CENTRAL EXCISE
2019-TIOL-3559-CESTAT-BANG
Jindal Praxair Oygn Company Pvt Ltd Vs CCE & ST
CX - The assessee-company is engaged in production and supply of gaseous Oxygen, gaseous Nitrogen and Argon - On change in shareholding pattern, the assessee-company was renamed as JSW Industrial Gases Pvt. - An SCN was issued to the assessee, culminating into an O-i-O, raising duty demand apart from interest and penalty - On hearing the stay application, the Tribunal directed the assessee to deposit a part of the duty within 4 months and recovery of the balance amount was stayed - The assessee complied with such directions - Thereafter, the Tribunal settled the issue in favor of the assessee and quashed the demand - The assessee then filed application u/s 11B seeking refund of the duty pre-deposited - While such refund was sanctioned, the same was not disbursed and was instead adjusted against a separate demand raised by a different O-i-O - The assessee appealed to the Commr.(A) against such findings - Meanwhile, another SCN was issed to the assessee and O-i-O was passed confirming duty demand with interest and penalty - Here too, the Tribunal directed pre-deposit of part of the duty and the assessee complied with such findings, albeit under protest - Later, this issue too was settled in favor of the assessee and the demand was set aside - The assessee filed another claim for refund of this amount, which too though sanctioned, was adjusted against demands raised in a third O-i-O - Subsequently, the Commr.(A) directed disbursal of the sanctioned refund of the principal amount of duty, but refused to pay interest - Hence the present appeal.
Held - It is seen that no reasons were assigned for not granting interest on the delayed refund - Admittedly, there is delay in disbursal of refund amount in the present case - It is seen that notwithstanding the fact that the sanctioned refund is merely belatedly paid but instead, first adjusted against some other demand demand and later disbursed by the assessee - The issue is no longer res integra and stands settled by the Apex Court in Ranbaxy Laboratories Ltd. Vs. UOI wherein it was held that interest u/s 11BB becomes payable if on expiry of three months from date of receipt of application for refund, the amount claimed is still not refunded - Besides, the Board even clarified through various circulars that interest becomes payable after expiry of three months from date of receipt of the application u/s 11BB(1) - In light of such precedent, the order being challenged here is not sustainable in law and merits being set aside - The original authority is directed to quantify the interest for the period after the expiry of three months from the date of filing the refund application, till the amount is paid: CESTAT
- Assessee's appeal allowed: BANGALORE CESTAT
2019-TIOL-3558-CESTAT-MAD
KLM Pack Vs CGST & CE
CX - The assessee-company was served SCN seeking reversal of Cenvat credit as the assessee had moved out of the Cenvat scheme and had opted for exempted under Notfn No 08/2003-CE - On adjudication as well as on first appeal, it was found that the assessee partially reversed the credit but not the full amount as per Rule 11(2) of the CCR 2004 and that the assessee was not allowed to utilize the same for payment of duty - It was also held that the assessee was required to expunge the credit in respect of entire inputs lying in stock or final products lying - Hence duty demand was confirmed, with the assessee being held liable to pay an amount equivalent to the credit on the closing stock - Suppression of facts was alleged as there was difference in the amount in the P&L a/c and that paid by the assessee - Hence the present appeal.
Held - The issue at hand is no longer res integra as the high court in M/s. Tansi Fabrication Works Vs. Jt. Commr. of C.G.S.T. & C.Ex., Tirunvelveli considered the decision of the Apex Court in Collector of Central Excise, Pune Vs. M/s. Dai Ichi Karkaria Ltd. as well as that of the Punjab & Haryana High Court in Commissioner of C.Ex., Chandigarh Vs. M/s. C.N.C. Commercial Ltd., held that the assessee who rightly availed cenvat credit originally, could not be called upon to reverse the same merely because it was stepping into exemption regime - Besides, no reversal is required as demanded by the Revenue - Besides, the Revenue also failed to justify the need to invoke extended limitation, as the alleged suppression is based on documents such as P&L a/c and balance sheet and no new or independent material is used to allege such suppression - Hence the orders merit being quashed: CESTAT
- Assessee's appeal allowed: CHENNAI CESTAT
CUSTOMS
2019-TIOL-3560-CESTAT-BANG Shashank Assiociates Vs CC
Cus - Only allegation against the appellant on whom a penalty of Rs.10,32,283/- u/s 112(a) of the Customs Act, 1962 has been imposed is that he has aided and abetted the importer Gardenia Comforts in the undervaluation of the furniture imported by them from China - In order to prove the said allegation, the Revenue has relied upon the statement of the appellant as well as the statement given by the main importer HR Ravichandra - In all the statements, no material has come on record which establishes that the appellant has aided and abetted the importer in undervaluation of the imported goods - Commissioner has wrongly observed in the impugned order that the appellant has admitted that he has helped the importer Gardenia Comforts in undervaluation of the furniture - Commissioner has misread the evidence on record and has come to the conclusion on the basis of the involvement of the appellant in other cases wherein the appellant has confessed his guilty and has also approached the Settlement Commission along with other importers and paid the penalty of Rs.10,000/- imposed by the Settlement Commission but as far as the present case is concerned, there is no evidence on record to establish that the appellant has helped the importer in undervaluation of the furniture imported by them - penalty set aside and appeal allowed: CESTAT [para 5]
- Appeal allowed: BANGALORE CESTAT |
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