Whether ' service charges' qualify as ' business charges' when profit earned by the assessee does not have a direct nexus with the export activity - NO: HC

Whether service charges can be allowed for deduction u/s 80 HHC - NO: HC

- Assessee's appeal allowed: BOMBAY HIGH COURT

In writ, the High Court observes that the petitioner fails to sufficiently explain the cause behind the delay in filing of returns and that the present petition seeks to buttress private causes, rather than to champion any public cause.

- Assessee's appeal dismissed: PATNA HIGH COURT

2020-TIOL-129-ITAT-DEL

Whether if the assessee demonstrates that it is a case of overvaluation adopted by survey team with reference to materials on record, then additions cannot be justified merely on the ground that it was offered for taxation earlier - YES : ITAT

- Revenue's appeal dismissed: DELHI ITAT

Whether if the assessee is following the same method to adjust the valuation of purchase & sale of goods with amount of any tax in the audit report for several AYs, no addition is warranted u/s 145A - YES: ITAT

Whether if all the conditions for availing the benefit of section 10A is complied with, income accrued from export of software from a 100% EOU under the STP scheme is available for deduction - YES: ITAT

Whether income accrued due to appreciation of foreign exchange proceeds at the time of the receipt is eligible for deduction u/s 10A as foreign exchange gain - YES: ITAT

- Revenue's appeal dismissed: AHMEDABAD ITAT

Whether in the absence of contrary being proved by the Revenue and following the order passed by the Tribunal in assessee's own case in the preceding AY, disallowance of interest expenses on ground that same pertains to CWIP can be removed as there is no nexus between the borrowed funds and CWIP - YES : ITAT

- Assessee's appeal allowed: DELHI ITAT

2020-TIOL-164-HC-AHM-GST

Mohit Minerals Pvt Ltd Vs UoI

GST - No tax is leviable under the IGST Act, 2007, on the ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India upto the customs station of clearance in India - Notification No.8/2017 – IT(R) and the Entry 10 of the Notification No.10/2017 – IT(R) both dated 28th June 2017 are declared as ultra vires the IGST Act, 2017 and unconstitutional as they lack legislative competency: HC

GST - Request of the Revenue Counsel to stay the operation, implementation and execution of the judgment is declined: HC

- Appeal allowed: GUJARAT HIGH COURT

2020-TIOL-155-HC-AHM-GST

Paresh Nathalal Chauhan Vs State of Gujarat

GST - Officers staying back at the residence, where the petitioner's mother, wife and young daughter reside, throughout the day and night to find out the whereabouts of the taxable person; recording conversations of family members on mobile phones - officers acting beyond powers vested in s.67(2) - High Court deprecates such conduct in strictest terms and directs the Chief Secretary of State to look into the matter - respondent tendered a report of inquiry made by Chief Commissioner of State Tax - Upon perusal of report, it emerged that it was no better than the earlier report dated 20.10.2019 submitted by Assistant Commissioner of State Tax, and did not meet with the directions issued by the Court in letter and spirit - It appeared that the Chief Commissioner of G.S.T. had taken a very lenient view in the matter and instead of examining the action of the officers concerned in the context of the relevant provisions of Goods & Services Tax Act, had tried to justify the action of the officers concerned, which is required to be deprecated in the strictest terms - The respondent prayed for time to submit another report and accordingly the the matter was adjourned - Accordingly, a report was submitted on 19.12.2019 by the Chief Commissioner of State Tax, Gujarat State and the matter was heard - High Court observed that the manner in which the search had taken place, whereby a search for any goods liable to confiscation or any documents or books or things, has literally been converted to a search for the taxable person and the search party has camped in the residential premises of the petitioner for in all eight days, during which period the family members of the petitioner were at the mercy of the authorised officer and were confined to the searched premises and kept under surveillance and were not permitted to leave the premises without the permission of the authorised officer, has shocked the conscience of this court; that, therefore, High Court is of the view that it would be failing in its duty as a sentinel on the qui vive if it were to turn a blind eye to the violation of the legal and fundamental rights of citizens by authoritarianism and remain a mute spectator - High Court has, therefore, thought it fit to comment upon the validity and nature of the search proceedings.

Held:

++ The entire action of the search party after the first day, i.e. from 12.10.2019 to 18.10.2019, was illegal, invalid and not backed by any provision of the GST Acts - The only reason why the search party remained back appears to be to intimidate the family members of the petitioner to extract information about the petitioner or records of his business, and to either coerce the petitioner to return home or to apprehend him if he returns home.

++ From the facts recorded in the panchnama, it is abundantly clear that while the authorisation issued to the officer concerned was to search the premises mentioned in the authorisation, the entire search was converted to a search for the dealer, namely the petitioner herein.

++ Admittedly, no summons was issued to the petitioner under section 70 of the GST Acts nor is it the case of the respondents that he was summoned, but had not remained present - While the petitioner was not present at the premises when searched, there could be a reasonable explanation for his absence - Moreover, even if the petitioner may have been intentionally avoiding the authorities, the same is not a valid ground for converting the search proceedings to a search for the petitioner, more so, when no such power is vested in the authorities.

++ Moreover, as is evident from the contents of the panchnama, the members of the petitioner's family were literally under house arrest and were not permitted to leave the premises without the permission of the authorised officer and at times without being escorted by a member of the search party.

++ It may be noted that there is no provision under the GST Acts which empowers the authorised officer to confine family members of a dealer in this manner and to interrogate them at all times of the day and even late at night as has been done in this case.

++ Apart from the illegality of the continuation of the search proceedings, the conduct of the search officers in confining the family members of the petitioner to the house and of interrogating them time and again is nothing but a blatant abuse of powers.

++ Since, the continued stay at the premises of the petitioner after 11 th October, 2019 was not for search of the premises but to search for the petitioner and to obtain further information about where else he could have secreted documents, books or things relevant for any proceedings under the GST Acts, such continued stay was totally unauthorised as it was not backed by any statutory provision.

++ Powers conferred by sub­section (2) of section 67 of the GST Acts is to search for goods liable to confiscation, documents, books or things which in the opinion of the proper officer shall be useful for or relevant to any proceedings under that Act.

++ Section 348 of the Indian Penal Code provides that whoever wrongfully confines any person for the purpose of extorting from the person confined or any person interested in the person confined, any confession or any information which may lead to the detection of an offence or misconduct or for the purpose of constraining the person confined or any person interested in the person confined to restore or to cause the restoration of any property or valuable security or to satisfy any claim or demand or to give information which may lead to the restoration of any property or valuable security, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine.

++ Unauthorised action of the concerned officers may tantamount to an offence under the Indian Penal Code; what is not permissible in law cannot be done under the guise of discharge of statutory functions. Action of the respondents cannot be countenanced.

++ GST Acts are new enactments. Officers acting under the relevant provisions are required to study the scope of their powers under the statutory provisions under which they are acting and cannot act on the basis of presumptions or past precedents under a previous enactment. If the common man is supposed to know the law and face penalty for any infraction thereof, the officers enforcing such provisions are required to be well versed with the statutory provisions and the scope and limits of their power and cannot take shelter behind ignorance of law to justify their illegal actions.

++ It appears that the idea behind taking assistance of the SRP constable appears to be to intimidate and shame the family members, more so, in view of the prolonged presence of the search party at the residential premises of the petitioner.

++ It may be noted that even the police, during the course of investigation, do not have the powers to reside at any residential premise and the officer concerned is required to carry out investigation and thereafter, leave the premises. The action of the respondents in continuing to reside at the residential premises of the petitioner without any valid reason despite the fact that search was concluded is unwarranted and uncalled for. It may be that ultimately, the respondents might have been able to extract some material from the conversation recorded in the mobile phone regarding where some books of account and other documents were secreted, but the end does not justify the means and does not validate the unauthorised and illegal action of the concerned officers.

++ Stand of the Chief Commissioner in the report is that in view of past precedent under the Gujarat Value Added Tax Act, 2003, the officers under the GST Acts have recorded statements of the family members of the petitioner.

++ Chief Commissioner has placed reliance upon the provisions of section 88 of the Gujarat Value Added Tax Act, 2003 which relates to authorisation to investigate; overlooking the fact that in the present case the authorisation was for search and seizure and not investigation inasmuch as recording of statements under section 161 of the Code finds place in Chapter XII thereof which pertains to “Information to the police and their powers to investigate” and not under the provisions of the Code relating to search and seizure.

++ One fails to understand as to what the officers concerned were doing at the residential premises of the petitioner for a whole week, along with two panchas and an SRP Constable when the search was concluded on day one. Such action on the part of the respondents is abhorrent and cannot be countenanced. No provision of the Code of Criminal Procedure, for investigation, search or seizure, empowers a police officer to remain a moment longer at any premises once the search is over.

++ In the facts of the present case, the power under sub­section (2) of section 67 of the GST Acts has not only not been exercised strictly in accordance with law, but has also not been exercised for the purposes for which the law authorises it to be exercised, namely that though the power was to be exercised for carrying out search and seizure of goods liable to confiscation, documents, books or things at the place in respect of which the authorisation of search was given, the search was converted to a search for the dealer and into an investigation to find out other places where documents, books or things could have been secreted, which was beyond the scope of the powers vested in the authorised officer.

++ It is a matter of deep regret that the Chief Commissioner of State Tax has attempted to justify such wrongful action on the part of the officers of the department by placing reliance upon the provisions relating to power of investigation under an earlier enactment to justify the actions of the concerned officers who were exercising powers of search and seizure under section 67(2) of the GST Acts.

++ One would expect the higher officer to reprimand the subordinate officers for their unauthorised actions. But in this case, the higher ups, for reasons best known to them are trying to shield the actions of the subordinate officers though they are not in a position to show the relevant provisions of law under which such officers were empowered to act in this manner. All that the court can say at this stage is that the reports submitted of the Chief Commissioner in response to the orders dated 25.10.2019 and 20.11.2019, do not meet with the standards expected from an authority of his stature.

++ Lastly, the court may sound a word of caution to the authorities exercising powers under the GST Acts. Sub­section (2) of section 157 of the GST Acts says that no suit, prosecution or other legal proceedings shall lie against any officer appointed or authorised under the Act for anything which is done or intended to be done in good faith under the Act or the rules made thereunder. An action like the present one which is not contemplated under any statutory provision and which infringes the fundamental rights of citizens under article 21 of the Constitution of India may not be protected under this section. An action taken may be said to be in good faith if the officer is otherwise so empowered and he exceeds the scope of his authority. However, in a case like the present one where the authorisation was for search and seizure of goods liable to confiscation, documents, books or things and the concerned officer converted it into a search for a person and an investigation, which is not otherwise backed by any statutory provision, it may be difficult to accept that such action was in good faith. Protection of such action under section 157 of the GST Acts may unleash a regime of terror insofar as the taxable persons are concerned.

++ It is clarified that this court does not condone any alleged illegal acts on the part of the petitioner and in case he has indulged in any illegalities, the law should take its own course.

++ However, the court found it necessary to pass the present order to curb any further abuse of powers in this manner by the authorities under the GST Acts.

++ Matter to be listed for hearing on merits on 23.01.2020.

[para 18 to 23, 25, 27 to 29, 31]

- Matter listed: GUJARAT HIGH COURT

2020-TIOL-13-AAR-GST

Ishan Resins and Paints Ltd

GST - Applicant intends to lease trucks or tankers without operator to Goods Transport Agencies (GTA) or any other persons - They seek a ruling as to whether such supply would be exempt in terms of Sr. no. 22(b) of 12/2017-CTR and if not exempted what would be the appropriate rate of tax; whether the credit of Input Tax paid on purchasing of motor vehicles would be admissible or not.

Held: As the control and possession of the vehicles would be transferred to the lessee who will engage operator and bear the cost of repair, insurance etc. such a service is not classifiable under SAC 9966 which is restricted to rental services of transport vehicles with operator - Impugned service of the applicant is appropriately classifiable under SAC 997311 as leasing or rental services concerning transport equipment without operator - same amounts to transfer of the right to use the goods and is taxable under Sl. no. 17(iii) of 11/2017-CTR - Moreover, s.17(5)(a) of the CGST Act does not allow Input Tax credit on inward supply of motor vehicles of specific category (i.e. those meant for transportation of persons having seating capacity not exceeding thirteen persons) - such restriction does not apply to the Goods Transport Vehicles - moreover Sl. no. 17(iii) of the rate notification does not prohibit claiming Input Tax credit on the goods given on lease: AAR

2020-TIOL-163-HC-AHM-ST

SAL Steel Ltd Vs UoI

ST - Notification Nos.15/2017 - ST and 16/2017-ST making Rule 2(1)(d)(eec) and Rule 6(7CA) of the Service Tax Rules and inserting Explanation-V to reverse charge Notification No.30/2012-ST is struck down as ultra vires Sections 64, 66B, 67 and 94 of the Finance Act, 1994: HC

ST - Proceedings initiated against the writ applicants by way of show cause notice and enquiries for collecting service tax from them as importers on sea transportation service in CIF contracts are quashed and set aside with all consequential reliefs and benefits: HC

- Petitions allowed: GUJARAT HIGH COURT

2020-TIOL-162-HC-KAR-ST

MFAR Constructions Pvt Ltd Vs UoI

ST - Petitioner, a registered service tax assessee, challenges the notification dated 09.06.2017 and the SCN dated 11.04.2018 issued in terms of s.174(2)(e) of the CGST Act asking him to show cause as to why certain sums of money allegedly "short paid" for the period between 2012-13 and 2016-17 should not be recovered with interest & penalty - Respondent Revenue submitted that the Writ Petition is premature; petitioner could not have approached the writ court without exhausting the alternate & equally efficacious remedy of replying to the Show Cause Notice; and the impugned Notification being legally valid, is applicable to the petitioner in the given fact matrix.

Held:

++ Impugned Notification is issued u/s 2(b) of the Central Excise Act, 1944 r/w Rule 3 of Central Excise Rules, 2002 laying down territorial jurisdiction of officers - contention that the Notification could not have been issued after the CGST Act, 2017 was enacted by the Parliament inter alia repealing Chapter V of the Finance Act, 1994, does not merit acceptance inasmuch as Section 174(2)(e) of the CGST Act, 2017 specifically provides that such repeal shall not affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings, recovery of arrears, remedy in respect of any such duty, tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment - power to initiate such proceedings is retained as a residue even after the said repeal: High Court [para 3(a)]

++ Second contention of the petitioner that the impugned Notification having been issued under the provisions of the Central Excise Act, 1944, cannot be made applicable to the proceedings that admittedly have arisen under the provisions of Finance Act, 1994, at the first blush appears to be attractive; however, a deeper examination in the light of the provisions of both Chapter V of 1994 Act and various other provisions of 1944 Act, robs off all and whatever sheen it has - several provisions incorporated in Chapter V of the Finance Act, 1994 both by definition, designation and implication make the Central Excise officials as its ex-officio functionaries; Sec.83A also vests power in the Central Excise Officer to adjudge liability of an assessee for penalty: High Court [para 3(b)]

++ Section 83 which finds place in Chapter V of the 1994 Act deems the service tax to be a "duty of excise" and thereby, makes the enlisted provisions of 1944 Act to be applicable to the proceedings under the 1994 Act, mutatis mutandis : High Court [para 3(c)]

++ A bare perusal of Rule 3 of CER, 2002 in general and Sub Rule (2) of the said Rule in particular makes it clear that the Board in its discretion can specify the jurisdictional limits of the Excise Officers, for the purpose of the Act and the Rules promulgated thereunder; this apart, Sub Rule (3) is structured in such a way that any Central Excise Officer may exercise the powers vested in his sub-ordinate officer; the impugned Notification thus needs to be interpreted in the light of sec.2(b) of the Act r/w Rule 3 of the 2002 Rules; in terms of the impugned Notification [ 13/2017-CE(NT) [Table IV]], the territorial jurisdiction of Bengaluru South Commissionerate is vested in the Commissioner of Central Excise and Service Tax, Audit-I, Commissionerate, Bengaluru as rightly contended by the Revenue: High Court [para 3(d)]

++ Issue relating to territorial jurisdiction ordinarily does not go to the root of the matter - contention as to incompetence and inapplicability of the impugned Notification, is liable to be negatived: High Court [para 3(e)]

++ It is a settled principle of law of precedent that a decision is an authority for what it actually lays down, and not for what all logically follows from what is laid down - much milk cannot be derived by placing reliance on the said ruling in Air India Vs. UOI and others, (1995) 4 SCC 734 : High Court [para 3(f)]

++ An assessee hastily may not knock at the doors of the writ court seeking quashment of Show Cause Notice; normally, the person to whom a Show Cause Notice is issued should show cause to the authority issuing the same since such authority is presumably in a better position to ascertain and understand the complexity of fact matrix more particularly arising under special legislations - writ court ordinarily may not undertake the exercise which the statutory authority designated for the purpose is expected to do; however, once a decision is taken by the authority after considering the cause shown by the noticee, writ jurisdiction may become invocable, subject to all just exceptions; therefore, Court declines to examine the validity and sustainability of the impugned Show Cause Notice: High Court [para 3(g)]

++ Writ Petition being devoid of merits, fails; however, petitioner is given a period of eight weeks to submit his reply to the Show Cause Notice in question - No precipitatory action shall be resorted to by the respondents against the petitioner till after his reply is considered, and also till the lapse of four weeks after the decision taken thereon, is conveyed to him: High Court [para 3]

- Petition dismissed: KARNATAKA HIGH COURT

2020-TIOL-159-CESTAT-DEL

ST - Refund - CENVAT - Dispute relates to the refund claims made by the respondent under Rule 5 of the CENVAT Rules 2004 - The respondent is in the business of software trading - To meet the demand, it purchases software, mainly through imports on which it pays service tax on reverse charge mechanism and the same is claimed as CENVAT Credit - The purchase of software, according to the respondent, becomes an input service for providing output service and therefore, eligible for CENVAT Credit - According to the Revenue, respondent is only an 'intermediary' for the reason that the nature of business of the respondent is arranging, facilitating and transmitting the main services from Microsoft India to the overseas clients and, therefore, the said services cannot be treated as "export service" and so the respondent would not be entitled to refund of CENVAT Credit.

Held: It would be seen from the Channel Agreement that the respondent has been granted a right to resell Microsoft license to its customers - The respondent can collect orders and receive payments from its customers - Clause 7(b) provides that the respondent would have complete discretion to negotiate and set pricing and payment terms and conditions with its customers and that the negotiations of such terms will not subject to review or approval by Microsoft in any way - Clause 8 (a) provides that payment by the respondent to Microsoft is not dependent on receipt of payments from the customers even if a customer is insolvent and that if the respondent fails to make payment by due date, Microsoft can take action specified in the said clause - Clause 20 (e) provides that the respondent and Microsoft are not a partnership or joint venture and that the respondent and the Microsoft do not have any agency, franchise or fiduciary relationship - It needs to be noticed that no commission was paid by Microsoft to the respondent and in fact the respondent independently sold the license to the overseas customers, after purchasing them from Microsoft, thus, the goods were supplied on its own account - In the present case, not only does the agreement specifically mentions that there is no relationship of principal and an agent between Microsoft and the respondent but it is also clear from the agreement that the respondent is free to sell the product at any price to the customer, though the price to be paid by the respondent to Microsoft is fixed - The agreement also provides that payment has to be made to Microsoft even if the customer does not pay the respondent - This is, therefore, a case where the respondent provides the service or supplies the goods on his own account - the respondent, therefore, has provided service on its own account and would not be an "intermediary" as defined in Rule 2(f) of the 2012 Rules - This apart what needs to be noticed is that the respondent was also selling the product to customers situated within India and was paying service tax under the category "Information Technology Service" - It was not paying service tax as an 'agent', for which a much lesser amount of service tax would have been levied, because service tax would be paid on the margin i.e. sale price of software minus the Purchase price of software - for all the reasons stated above the provision of service provided by the respondent has to be treated as "export of service" under Rule 6A of the 1994 Rules - The two reasons pressed by the Appellant Revenue for not treating it as export of service cannot be accepted - Rule 9(c) provides that in the case of 'intermediary services', the place of provision shall be the location of the service provider, however, this Rule would not be applicable as the respondent is not an ‘intermediary' - On the other hand, Rule 3 that provides that the place of provision of a service shall be the location of the recipient of service would be applicable and since the location of the recipient of service is outside India, the place of provision of the service would be outside India - Revenue appeal dismissed: CESTAT [para 6, 11, 17, 21, 22, 24, 25, 31, 34, 36]

- Appeal dismissed: DELHI CESTAT

ST - M/s.Shailaja Earth Movers

Appellants are engaged in the activities of drilling, blasting, excavation and raising (extraction) of iron ores from mines and crushing, screening, sorting, grading, processing etc. of iron ore in the processing unit - they have entered into a "raising contract" with Shri H.G.Ranganagoud in terms of which the appellants are paid Rs.110 per metric ton of iron ore excavated

Appeal No.ST/172/09 -Department contended that the activity undertaken by the appellants falls under the category of "Business Auxiliary Service" - SCN issued demanding ST of Rs.1.40 crore for the period 10.9.2004 to 30.9.2006 - SCN adjudicated vide O-i-O dated 21.1.2009 :

Held :- the appellants are undertaking process that would create iron ore ready to be marketed by their principals -in fact, the contract is for raising of the iron ore -the contract does not speak of any particular service -as contended by the appellants, the products manufactured, have a separate heading in the Central Excise Tariff Act and taxable in terms of section 3 of Central Excise Act and also Cess is collected as duty of Excise only when levy under section 3 of the CEA is attracted -irrespective of the fact that the said goods are exempted by virtue of notification no.4/2006-CE, they remain to be excisable goods chargeable to Excise Duty -this being the case, no merit found in the Commissioner's argument that the appellants are not engaged in manufacture - the issue of mining a product vis-à-vis levy of ST under "Business Auxiliary Service" came before the Tribunal and the different Benches were unanimous in considering that the activity of mining will not attract ST -the impugned order does not survive on merits -the appellants have also contended that the issue is barred by limitation -understandably, the levy of Service Tax on the activities undertaken by the appellants is a question of interpretation -the issue is certainly debatable -against the very same appellant, Department has issued various SCNs seeking payment of ST under different Heads -when the Tax administration itself is in doubt as to the nature of the service, allegation of suppression of fact on the appellants is not sustainable -therefore, the present appeal is allowed [para 7, 7.1, 7.7, 7.8]

Appeal No.ST/3568/12 - For the period 1.6.2007 to 30.9.2007, Department contended that the appellants are engaged in the services of "Site Formation and Clearance, Excavation, Earth Moving & Demolition Service", Business Auxiliary Service and taxable service in relation to mining or mineral service - SCN dated 21.10.2008 issued - demand of ST of Rs.16.66 lakhs confirmed along with interest, penalties imposed - the same has been upheld by the Commissioner (Appeals) :

Held :- the SCN has sought to demand duty under three different services -however, the adjudicating authority has found that the essential character of the service is mining, therefore, the entire activity should be considered under Mining - no infirmity found in such decision -the SCN charges the appellant for all the services without giving bifurcation either the period or the quantity -in the instant case, there is a non-vivisectable contract for Mining -there is no doubt that the activity of the appellant comes under Mining which is the essential character of the contract -therefore, the conclusion drawn by the Original Authority and upheld by the Appellate Authority cannot be faulted -therefore, this appeal is dismissed as far as the demand of ST - as the issue relates to interpretation of tax liability, penalties are set aside [para 8]

Appeal No.ST/20792/17 - Department has issued a SCN dated 15.10.2009 to the appellants covering the period 1.10.2006 to 31.5.2007 alleging that they have rendered "Business Auxiliary Service" and demanding a duty of Rs.14.04 lakhs -demand confirmed along with interest, penalties imposed - on appeal, the Commissioner (Appeals) set aside the order of the Additional Commissioner holding that the activity undertaken by the appellants has the essential ingredients of mining service - Department before CESTAT :

Held :- the service rendered by the appellants is clearly a Mining Service - therefore, the findings of the Appellate Authority are in conformity with the findings of the Bench - therefore, there is no reason to interfere with the same - accordingly, the appeal filed by the Department is rejected [para 9]

M/s.Balaji Mines and Minerals Pvt. Ltd .

Appellants had entered into agreements with M/s.E.Ramamurthy, M/s.Jyoti Brothers and M/s.T.V.Channanja Shettappaa and Brothers, individual Mine Owners, for undertaking excavation, drilling, blasting, sorting and screening of iron ores and supply of the same to the Mine owners for further sale to M/s.Salgaocar Mining Industries Pvt. Ltd., Goa

Appeal No.ST/490/2009 - Department issued a SCN dated 13.6.2008 (for the period 1.4.2006 to 31.3.2007, alleging that activities of excavation, extraction, producing and processing of crude iron ore into two or more types of iron ore is classifiable under "Site Formation and Clearance, Excavation and Earthmoving and Demolition Service" as defined under section 65 (19) of the Finance Act, 1994 and Business Auxiliary service - demand confirmed, penalty imposed :

Held :- in the instant case also, the contract is for raising of iron ore by the appellants for the persons with whom they have contracted with - apparently, the activity undertaken by the appellants is essentially that of mining - it cannot be vivisected into different elements and cannot be charged to duty under any other service during relevant period - as held in the cases discussed above, the contract being for the mining and essential character of the service rendered by the appellants is that of mining, it can only be taxable under "Mining of Minerals, Oil or Gas Service" - therefore, prior to 1.6.2007, no ST can be collected under the heads "Site Formation and Clearance, excavation and earth moving and demolition" service or "Business Auxiliary Services" - in the result, appeal is allowed [para 10]

Appeal No.ST/489/2009 - a nother SCN dated 3.10.2008 was issued (covering the period June 2007 to March 2008) alleging that the activity of surveying for the purpose of commercial exploitation of iron ore deposit for the mine owners during the period June 2007 to March 2008 is classifiable under "Survey and Exploration of Minerals Service"; activity such as drilling, blasting, excavation of iron ore and raising of iron ore etc., during June 2007 to March 2008 is classifiable under "Site Formation and Clearance, Excavation and Earthmoving and Demolition Service"; the activity of raising/extraction of minerals during the period June 2007 to March 2008 is classifiable under "Mining of Minerals, Oil or Gas Service" and the activities such as crushing, screening, sorting, grading, producing and processing of crude iron ore into end products of two or more types of iron ores comes under "Business Auxiliary Service" - demands confirmed :

Held - the Commissioner, though classified the services rendered by the appellants into four categories, he confirmed the demand together on all the four services without apportioning amount each of the service - the facts of this appeal are invariance with the facts discussed above in the case of Appeal No.ST/3568/2012 -in ST/3568/2012, though the SCN has discussed different types of services, the adjudicating authority and the appellate authority have come to a conclusion that the services fall under one category i.e., Mining of Ores, Minerals or Gas -therefore, there was no confusion in the mind of the adjudicating authority as to under which, the service of the appellants falls in -whereas, in the instant appeal, allegation was of four services rendered by the appellant and confirmation was also of the four services proposed in the SCN -however, the confirmation of duty was consolidated -this is not acceptable in view of the submissions of the appellant -as held by the Tribunal in the cases of CMS (I) Operations & Maintenance Co. P. Ltd. - 2007-TIOL-892-CESTAT-MAD - maintained (2017 (4) GSTL J5 (SC)] and Bishambar Lal Arora [2014 (36) STR 1050 (Tri.-Del.)] - it is held that the impugned order is not maintainable [para 11]

Accordingly, the appeals are disposed i.e., ST/127/2009, ST/489 & 490/2009; are allowed; Appeal ST/3568/2017 is dismissed as far as the demand of Service Tax is concerned -however, penalties are set aside - Appeal No.ST/20792/2012 filed by the department is rejected [para 12]

- Appeals disposed of: BANGALORE CESTAT

2020-TIOL-157-CESTAT-KOL

Ektara Export Pvt Ltd Vs CCE

2020-TIOL-156-CESTAT-AHM

Dhariwal Industries Ltd Vs CCE & ST

 

 

Cus/CX- Illegal diversion of duty free imported and indigenous raw materials - vide impugned order, demand of customs and central excise duty pertaining to two SCNs were confirmed against the appellant unit [M/s.Laurel Apparels Pvt. Ltd.] - penalties were also imposed on the appellant and co-appellants - the Revenue also filed two appeals being aggrieved to the extent that while imposing penalty u/s 112/114A of the Customs Act, 1962 the adjudicating authority has erroneously given the option to pay reduced penalty of the first proviso of section 114A of the Customs Act to the assessee without any authority of statute.