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SERVICE TAX 2020-TIOL-10-SC-ST
PR CST Vs Pawan Cargo Forward Pvt Ltd
ST - The assessee, a air cargo agent is paying service tax on commission amount paid from the airlines - The Department opined that the assessee should have been paying service tax also on the freight charges reimbursed by them from their customers charged over and above the freight amount payable to the airline companies - Later, the Tribunal noted that the very issue had been addressed in decisions of Tribunal in case of Skylift Cargo (P) Ltd. and La Freight Pvt. Ltd. relied upon by assessee holding that mere sale and purchase of cargo space and earning profit in the process is not a taxable activity - The facts of this case are in pari materia with those cases wherein the issue was held in favour of assessee - Hence the orders in question were set aside.
Held - Delay condoned - Notice issued: SC
- Notice issued: SUPREME COURT OF INDIA
2020-TIOL-07-SC-ST
CCT Vs KVR Rail Infra Projects Pvt Ltd
ST - The assessee is providing various taxable services in nature of Consultancy Services, Construction of railway sidings, Maintenance of Railway tracks, Site Formation services and Supervision of Site Formation & Loading of the materials to various private companies namely Grasim, ACC Ltd. and Madras Cement Limited - They did not discharge service tax on these services and also had not deposited to Government the service tax collected by them - SCN was issued proposing to demand short paid service tax along with interest and also for imposing penalties - The first issue is with regard to demand of service tax under Commercial or Industrial Construction Service and Works Contract Service for construction of railway sidings/tracks - The Tribunal noted that the period involved under Commercial or Industrial Construction service is from October 2004 to June 2007 - Such service is in the nature of composite contracts which involves both supply of material and rendition of services - Hence the decision of Apex Court in case of Larsen & Toubro would apply and the demand cannot sustain - Besides the demand under Works Contract Service has been raised for period from August 2007 to October 2009 for the very same activity - The issue whether the construction activities of railway sidings/tracks for non governmental railway or private railway is subject to service tax has been analysed by Tribunal in the case of Afcons Infrastructure Limited - In case of International Metro Civil Contractors , the Tribunal observed that the works of civil engineering contraction, mechanical and electrical installation, tunnel ventilation and station air conditioning had been in relation to the construction of Delhi Metro Rail Corporation, was not liable to tax - The demand of service tax under Commercial or Industrial Construction Service or Works Contract Service for the period from October 2004 to June 2007 and August 2007 to October 2009 respectively for construction of railway sidings/tracks cannot sustain - On perusal of the definition of Consulting Engineer Service and Maintenance or Repair Service, no exclusion for services rendered in respect of railways found - The confirmation of demand under these two heads are therefore legal and proper - In the absence of any statutory provision, the demand of interest cannot sustain - Thus, the demand of interest in respect of the amounts collected under Commercial or Industrial Construction Service/Works Contract Service and Site Formation and Clearance Service cannot sustain - Regarding penalties, the assessee entertained a bona fide belief that the services are not taxable - Taking into consideration that the assessee has put forward the reasonable cause for failure to pay service tax, it is a fit case to invoke Section 80 of the Act ibid and the penalties imposed under these two categories are set aside.
Held - Delay condoned - Appeal admitted - Matter be tagged with Civil Appeal Diary No 2040 of 2014: SC
- Notice issued: SUPREME COURT OF INDIA
2020-TIOL-70-CESTAT-BANG
A R Trading Company Vs CCE
CX - Issue which needs to be considered is as to whether the synthetic filament yarn manufactured by the appellant falls under heading 5402 of the CETA as contended by the department or under heading 5404 as contended by the appellants and as to whether the test result would be applicable prospectively or retrospectively.
Held: The Superintendent In-charge of the appellant got the item, manufactured by the appellant, tested by the Textile Committee who vide report dated 06.08.2004 concluded that the impugned goods were polypropylene monofilament yarn of 600d or more and of which, no cross section dimension exceeds 1mm - accordingly, the appellant surrendered their registration certificate and submitted a letter to the department on 15.03.2005 stating that no duty was payable on the impugned goods in terms of notification 7/2003-CE - however, the DGCEI conducted an investigation and got the samples tested by the Chemical Examiner who reported in his letter dated 21.09.2006 that the impugned goods were black coloured multi-filament yarn composed of polypropylene and denier was 610.4 without tolerance and based on the said report the department contended that the impugned goods fall under heading 5402 without the benefit of exemption notification 7/2003-CE and 30/2004-CE during the relevant period 2003-04 to 2006-07 (up to 08.08.2006) - Being a Technical expert and having an experience of testing the samples of yarns and fabrics, the Chemical Examiner's report cannot be brushed aside; impugned goods, therefore, cannot be classified under heading 5404 as alleged by department - Tribunal has held in the case of Pattani Chemicals that the test results could have only prospective application and which finding the Bench agrees with - appellants have registered themselves with the department before 2003 itself and have surrendered the registration on the basis of the test report given by Textile Committee at the behest of the department itself and this being the case, results of the test reports are to be applied prospectively only - confiscation of goods cannot be ordered for the goods cleared before the test report dated 21.09.2006 since there being no malafide intention - accordingly, imposition of fine in lieu of confiscation cannot also be justified: CESTAT [para 6.2] CX - Limitation - Appellants have kept the department informed about their intention to claim exemption under the above said notification 7/2003-CX, 30/2004-CX vide their letters dated 12/11/2003 and 15/03/2005 - test conducted in 2003 was in favour of the appellants and it was free for the department to get another test conducted in 2005 also - this having not done, extended period cannot be invoked - suppression of facts cannot be alleged on the basis of statements of dealers to conclude that the goods cleared in the past are also similar to the goods tested - unless such goods are available and tested, nature of the goods cannot be established on the basis of oral submissions, therefore, invocation of extended period is not tenable - demand prior to 05.02.2006 is barred by limitation as SCN was issued on 05.02.2007 - for quantification of duty for the normal period, case needs to be remitted to the original authority - penalty u/s 11AC is liable to be set aside as extended period of limitation cannot be invoked - penalty imposed on M/s A R Trading Company u/r 25 of CER and penalty imposed on T C Vijayan of Usha Traders, Madurai u/r 26 of CER is also liable to be set aside: CESTAT [para 6.2] - Appeal partly allowed: BANGALORE CESTAT
2020-TIOL-56-CESTAT-HYD Vishwanath Projects Ltd Vs CST
ST - The assessee is registered with Central Excise Department as a Service Tax provider under service categories of 'Works Contract Service', 'Goods Transport Agency' and Erection and Commissioning Services' - During verification of their accounts, it was found that they had undertaken the works of execution of some works on which they have not discharged service tax appropriately - It was also observed that the assessee had received advances from their customers and had not discharged the service tax on such advances - Accordingly, a SCN was issued to them - As far as the demand on the project for construction of floodlighting around Indo Bangladesh Border in the State of Tripura is concerned, it is evident from the records that the project was awarded by Ministry of Home Affairs to M/s Coastal Projects Private Limited, A Government of India Enterprise, who have further subcontracted the same to the assessee on back to back basis - The contract involved both supply of material and installation and commissioning of the equipment with no clear demarcation/vivisection between the service component and the material component thereof - There is nothing on record which shows that there are two different contracts or a single contract with two separate distinct components for supply of material and rendition of services - The contract in question is a composite works contract - Composite works Contract involve both rendition of service and deemed sale/sale of the materials used in rendering such services - The Apex Court has observed in case of Larsen & Toubro - 2015-TIOL-187-SC-ST that works contract is a separate specie of contract known to the trade and commerce distinct from a contract for supply of goods or a contract for supply of services - Thus, the contract in question is a composite works contract and could have been taxed only under the head of "Works Contract Services" post 01.06.2007 - The demand in this case has been made under Erection, Commissioning and Installation Service - ECIS does not include the contract where transfer of materials is involved - Since the demand has been raised under ECIS and the nature of contract does not fall under this category, the demand on this head has fail - Accordingly, the demand is set aside to this extent on this ground alone - As far as the service tax on GTA Service is concerned, the demand has been computed on freight expenses incurred by assessee during various years - It is seen from SCN that the entire demand was raised only based on the records of assessee indicating the freight expenses incurred by them - The department has no other evidence to show that the assessee had availed the services of GTA operators - Having accepted the assessee's records that amounts have been paid towards goods transport, the department cannot reject the contention that a part of it was paid directly to their vendors and in the absence of any evidence to the contrary - The contention of department is not sustainable and the demand on this ground must also fail - Regarding the third issue of demand of interest on the delayed payment of service tax on the amounts received as mobilization advances, the question of taxability on mobilization advances has been well settled and this Bench in the case of GJF Construction Company Limited - 2018-TIOL-2941-CESTAT-HYD and CESTAT Mumbai in case of Thermax Instrumental Limited - 2015-TIOL-2736-CESTAT-MUM held that mobilization advance received by the assessee is not chargeable to service tax, if it is in the nature of an advance - On this ground, the demand under this head also needs to fail - Since the demand on all three accounts is not sustainable, interest and penalties also needs to be set aside: CESTAT
- Appeal allowed: HYDERABAD CESTAT
CENTRAL EXCISE
2020-TIOL-71-CESTAT-DEL
Lupin ltd Vs CC, CGST & CE
CX - Appellant, located in Indore Special Economic Zone, had claimed refund of service tax paid on input services received in their SEZ unit for authorised operations in terms of 12/2013-ST - as the same was rejected as barred by time by the lower authorities, appellant is before the CESTAT contending that the period of one year has to be reckoned from the date of actual payment of service tax made by the SEZ unit; that the appellant's unit has an ISD at its HQrs in Mumbai and the adjudicating authority had wrongly taken the date of invoice to the said ISD as the relevant date for computing the period of one year whereas the payment was made by the appellant subsequent thereto; that even assuming that there was a delay in filing the refund claim, the notification provides the adjudicating authorities the powers to condone the delay and that too for unlimited period; that the original authority has been silent about exercising the said discretion.
Held: Since part of the refund has been sanctioned, it is clear that the services received in the SEZ were for the authorised operations - a perusal of the sub-clause (iii)(e) of the clause 3 of the notification makes it clear that the relevant date to reckon the period of limitation is the end of the month in which the SEZ unit had paid the service tax - from the order it is clear that the date of invoice to the ISD of the appellant SEZ is taken as the starting point for the period of limitation, however, the date of payment of service tax is not on record - Since the Bench is unable to verify whether the date of invoice and date of payment of service tax are same or not, the matter is required to be remanded to the original authority for verification and also for a decision as to whether the delay, if any, found can be condoned or not in terms of the notification: CESTAT [para 5, 6, 7]
- Matter remanded: DELHI CESTAT
2020-TIOL-58-CESTAT-DEL
Seva Udyog Vs CCE & CGST
CX - The assessee, a SSI unit is engaged in manufacture of various types of batteries inverter battery, tubular battery and automotive battery which are dutiable - On 31.07.2014, search and seizure was conducted under panchnama at the premises of assessee and found that the assessee was not registered with Department and was running plant for manufacturing batteries under the brand name 'Seva' and 'Solar', lead plates and other materials also - On a reasonable belief by the officers that 606 numbers of manufactured batteries found at Seva Udyog were not recorded in the stock register, nor the description of manufacturer i.e. name and address were not mentioned on the batteries lying in their premises, with intention to remove clandestinely and thus were liable for confiscation, the officers seized goods valued at. Rs. 34,77,658/- - Further, it appeared that 206 nos. of various types of batteries were cleared from M/s Seva Udyog valued at Rs. 10,01,275/- and found stored in the premises of M/s Seva Metal and the same was also seized - Arising from the same investigation and for the same period, two show cause notices have been issued - One for the seizure part and one for the duty part alongwith interest and penalty - As regards the duty part, vide O-I-O, the adjudicating authority have allowed conclusion of proceedings under Section 11AC(1)(d) of Central Excise Act - The said section provides for conclusion of all proceedings, arising from an investigation - Thus, Revenue has erred in passing separate order of confiscation and penalty, arising from the same investigation - Thus, the entire proceedings against the assessee including the proposed confiscation stand concluded by O-I-O - Further, O-I-O dated 17.05.2017 is declared as non est and without jurisdiction - Accordingly, the impugned order is set aside: CESTAT
- Appeal allowed: DELHI CESTAT
2020-TIOL-57-CESTAT-AHM
Span Intermediates Pvt Ltd Vs CCE & ST
CX - Assessee has deposited duty during the appeal stage - The Tribunal while passing the stay order considered the said deposit as pre-deposit required under Section 35F, thereafter the demand case has been finally decided by Tribunal and demand was dropped with consequential relief - The assessee filed a refund by way of a letter to the department which was rejected and the same was upheld by Commissioner (A) on the ground that the deposit made is payment of duty and not deposit under Section 35F, therefore, the refund should have been filed under Section 11B - Assessee submits that the Tribunal in stay order clearly stated that the amount of duty deposited by them is a sufficient deposit in terms of Section 35F, therefore, the refund is of pre-deposit made under Section 35F for which section 11B need not to be followed - In case of deposit under Section 35F, the Board circular F.No. 275/37/2J-Cx. has categorically clarified the mechanism for refund - From the said clarification, it is clear that any amount which is paid under Section 35F, no formal refund application under Section 11B is required, merely a letter claiming the refund is sufficient which the assessee has admittedly submitted within time after the Tribunal's order dropping the demand - The very same issue has been considred by Bombay High Court in case of Suvidhe Ltd. - 2003-TIOL-188-HC-MUM-CX - In view of the Board Circular as well as High Courts judgments, whatever amount has been deposited by assessee, since has been considered by Tribunal as a deposit under Section 35F for granting the stay, the same needs to be refunded without following the procedure of Section 11B - The assessee have admittedly submitted a letter for refund of the amount, therefore, they are entitled for the refund - Accordingly, the impugned order is set aside: CESTAT
- Appeal allowed: AHMEDABAD CESTAT
CUSTOMS
Cus - Issue before the Bombay High Court was whether the Directorate of Revenue Intelligence had legally and validly commenced the investigation against the petitioner into alleged commission of offence punishable under Section 135 of the Customs Act, 1962 and whether or not, based on the said investigation set into motion, it is entitled to take recourse to the provisions of Section 166-A of the Code of Criminal Procedure, 1973 for issuance of the Letter of Rogatory by the Magistrate - Bombay High Court opined that Section 166A is not an independent island on which any investigating/inquiring authority can jump on without taking recourse to Section 154/155 and, therefore, held and declared that the action of the respondents in giving effect to the letter of Rogatory issued by the Metropolitan Magistrate, Mumbai in relation to the import of coal of Indonesian origin cannot be sustained and it deserved to be quashed and set aside - Bench also made it clear that it had not gone into the merits of the letter of Rogatory issued by the Magistrate - accordingly, Bombay High Court allowed the Writ petition in terms of prayer clauses (a) and (b) - DRI in appeal before Supreme Court.
Held: Interim stay granted of operation of the impugned judgment and order dated 17.10.2019 passed by the Bombay High Court - To issue notice returnable in two weeks: Supreme Court
- Interim stay granted: SUPREME COURT OF INDIA 2020-TIOL-59-HC-MUM-CUS
CC Vs Aban Offshore Ltd
Cus - Application filed by Revenue seeking condonation of delay of 452 days in filing appeal against the order of the Commissioner of Customs (Imports) was dismissed by the CESTAT by observing that the delay in undertaking a statutory obligation cannot be condoned on the ground of heavy workload and transfer of officers; that if such a ground is pleaded and admitted, then the prescription of statutory time limit would lose its relevance; that no substantial cause has been shown for delay; that the issue raised by Revenue is no longer res integra and was squarely covered against the Revenue and that even if the COD application was allowed, the appeal itself could not have sustained on merits; that no prejudice was being caused to the Revenue in the matter by dismissal of the COD applciation - Revenue in appeal before the High Court.
Held: Reading of the reasons in the application for condonation of delay would show there are no particulars, and only a general statement is made that there were transfers of officers due to annual general transfers and there was heavy workload - It is not asserted that the officers-in-charge of filing the appeal had a heavy workload and of urgent nature - It is also not stated that the officer-in-charge of filing the appeal was transferred - Nothing is stated as to who was the officer responsible for filing the Appeal - Faced with such averments, the Tribunal referred to the dicta of the Supreme Court in the case of Chief Post Master General - 2012-TIOL-123-SC-LMT that the delay need not be condoned mechanically because the appellant is the Government - In the absence of any particulars, if the Tribunal followed the decision in Chief Postmaster General, Bench cannot hold that the view taken by the Tribunal is perverse - Since no substantial question of law arises, the Appeal is dismissed: High Court [para 6 to 8, 10]
- Appeal dismissed: BOMBAY HIGH COURT
2020-TIOL-55-CESTAT-ALL
Kishan Lal Jewels Pvt Ltd Vs CC
Cus - Assessee, a SEZ unit is engaged in import of gold for conversion into gold jewellery and export of the same - All the imports being made by them are reflected in statutory records required to be maintained during the course of their business - One of the assessee's employees Shri Aminul Islam was caught near exit gate of SEZ area and his search recovered three kg. pure gold of around three kg. jewellery items - Revenue entertained a view that the said goods were attempted to be illegally smuggled out of the zone by said employee and accordingly undertook further investigation - Without going into the detailed merits of the case, the appeals can be disposed of on legal issue - As per the panchnama, allegations are that the gold jewellery in question was attempted to be smuggled out of SEZ area - The other documents and the records made in his impugned order also indicate that the person was intercepted at the exit gate of SEZ area leading Tribunal to believe that the intercepted person was still in the SEZ area - The question which arises is as to whether the Customs officer can search and seize the goods from a person, who is located in the SEZ area as the legal authorized unit indulging in legal import of the goods - The Tribunal in catena of judgments has held that Customs officers has no jurisdiction to deal with the matter in respect of units located in SEZ area and has no powers to issue the SCN - This was held by Gujarat High Court in case of Bharti J. Gandhi - 2009-TIOL-842-HC-AHM-MISC - To the same effect the decision of this Bench in the case of Morgan Tectronics Ltd. wherein after taking note of the Tribunal's earlier decision in case of the same assessee it was held that Customs Authorities have no jurisdiction to deal with gold imported by unit located in SEZ - Reference can also be made to the case of Charisma Jewellery Pvt. Ltd. which deals with the relevant provisions of Customs Act - Inasmuch as the issue stands decided in said decision, no merits found in the impugned orders - Accordingly the same are set aside: CESTAT
- Appeals allowed: ALLAHABAD CESTAT | |
